New Betting Law: One Step Forward, Two Steps Back?

Moves are afoot in Europe to raise standards in a sector – betting and gambling – that rarely finds itself onto the political agenda.

But radical change is firmly being mooted in this sometimes shadowy sector.

And it is not just in the EU that such reform efforts are being made.

For example, MPs in Kazakhstan have just passed the second reading of what is turning out to be something of a controversial new law on betting.

The current debate in the landlocked nation is particularly timely as it also comes at a time with efforts also being made in the European Union and its EU Member States to introduce more robust anti-money laundering guidelines for Europe’s online gambling sector.

One objective of the moves in Europe is to help foster higher industry standards for what is a highly lucrative sector in Europe.

But reform is firmly on the agenda not just here in the European Union but in other areas, including Kazakhstan.

Kazakhstan’s economic and social reforms have grasped the attention of the world. Since President Tokayev has taken power, a new era has ushered in Kazakhstan making the country more transparent and open to do business with the world.

The Kazakh Parliament, however, appears to have a different idea about how Kazakhstan is supposed to be governed.

On 5th June, under an apparent haste to get things done, the Kazakh parliament passed the second reading of a controverisal gambling legislation only 2 days after the first reading was approved.

The legislation which has been introduced as a ‘public health law’, contains elements of central control.

The legislation proposes to establish a third party regulatory authority called the, “Unified Accounting System” with sweeping powers to control the betting market; including regulating all payments through it, deciding whether an actor can or can not participate in the market and also demanding a cut of up to 1.5% of all transactions (with no obvious clarity where these funds will be used).

Kazakhstan has a history of trying to introduce legislation to establish control of the gambling industry since 2017. In 2020 a similar legilslation with a similar regulating authority was introduced, and the authority was then named, “ Betting Account Centre”.

However, it was struck down after elements of alleged wrong doing and hidden political motives were discovered. While public accountability and public well-being won back then, it is unclear what the senate and President do this time around.

The EU maintains stringent regulations and is implementing additional measures to engage with states based on shared values rather than purely transactional relationships.

The EU is Kazakhstan’s largest trade partner responsible for around 40% of the country’s trade and about 45% of FDI since 2005. As the country is moving ever closer towards the EU and establishing more free market principals and transparency this bill, it has been argued,could go in the opposite direction.

Transparency stands as a core principal of members of the EU, and the bill in motion currently does not meet such standards,it has been argued by some.

Firstly, the perceived lack of information being made public about the bill, with some details aunknown, have raised concerns about its real intentions.

Furthermore,voting on the bill was not on the Parliament’s agenda until a day before voting started which, it is suggested, could either be a mere clerical error or a way to swiftly push the bill through without any backlash. Such measures could, it is suggested raise barriers between investors and the Kazakh market.

The betting market in Kazakhstan has also shown a degree of discontent with the bill – some describing it as a “tradition of the old Kazakhstan.”

The region’s fintech market will be at the disposal of a third party regulator and this will dictate how it participates in the betting industry. Additionally, the sweeping powers will also allow the regulator to collect data of participants which,potentially, could be in direct breach of privacy.

Therefore, as the bill enters its final round before becoming a law, all eyes are on the issue of transparency and the hope that open market principles may prevail.

Whatever the outcome, these clearly are turbulent times for the betting and gambling industry – both in the EU and much further afield.

Main Image: By Jamie Adams from Hull, United Kingdom – Poker chips, CC BY-SA 2.0, https://commons.wikimedia.org/w/index.php?curid=2486344