By Martin Banks
The Kazakh parliament is currently mulling over legislation that will impose tighter regulations on the gambling industry.
A number of changes, including raising the average age are being considered, directly promoting public health.
It should be noted that around 80% of gambling in Kazakhstan happens illegally; the small proportion of private sector are receptive to promoting responsible gambling.
However, and most significantly, Kazakh commentators fear that the law will reintroduce the idea of the “Betting Accounting Centre” (BAC), a third-party watchdog, that can be a private sector company that would quickly be able to control the entire market.
It has been argued that this private regulator, first proposed in 2020 and shelved since, would have extensive powers.
The BAC would have the power to force bookmakers and casinos to share detailed financial information and business plans; conduct gambling compliance checks; collect and report data about the size of bets, losses and winnings to the tax authorities; and it will have the right to take up to 1.5% of any transaction.
First proposed in 2020
Talk around BAC is not new. The creation of BAC was first proposed in Kazakhstan back in 2020 but paused in 2021.
The winner of that original tender was won by Exirius LLP, the only company able to fulfil the tender requirements. Only in 2024 has conversation around this law restarted.
While other aspects of the gambling reforms seem more pragmatic, such as extending the criminal liability of gambling venues on underage infringements and providing illegal gambling services, the BAC, if introduced, offers less clarity.
A privately run BAC would, it has been said, be poised to take on existing government functions, particularly those of the Financial Monitoring Agency, possibly creating inefficiencies and unnecessary redundancy in the regulatory framework.
If introduced, what would the benefit be of the revival of BAC in the Kazakh gambling sector if it doesn’t seem to be solving a legitimate problem or filling in any gaps?
Is a new body really needed?
The responsibilities of BAC overlap with the Kazakh Financial Monitoring Agency that exists, suggesting that there appears to be no specific need for it.
The lack of rhyme and reason for the BAC and its sudden resurgence has raised questions among the Kazakh press and gambling circles. Indeed, the company that gets ‘chosen’ to be the BAC will be granted significant powers and monopolistic control over the Kazakh gambling market.
The Kazakh gambling market is a lucrative sector and by 2025, the turnover of the gambling industry in Kazakhstan is projected to increase to $500 million.
It isn’t clear from the legislation that is currently being reviewed as to how the activities of BAC will be monitored and managed by the government.
The checks and balances of BAC’s activities have not been specified; despite the considerable status it would be awarded. The lack of regulatory oversight exposes BAC to possible risks of corruption and opaque practises.
It will also make it more difficult for legitimate gambling companies to operate, particularly smaller to mid-size betting agencies.
More questions than answers
Overall, this new regulatory body raises more questions than answers, and legitimate businesses in Kazakhstan are getting nervous.
The Kazakh parliament (Majilis) needs to consider if BAC will be effective at all. More importantly it should focus on who will gain to benefit from this new watchdog, which would likely be the company that wins the tender.
It is argued that from the outset it does not seem like BAC will solve any of the gambling industry woes, only add to it.
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