iGaming Firm Accused of Tax Evasion Loses $19M to Ukraine Authorities

Published on: February 8, 2024, 11:59h. 

Last updated on: February 8, 2024, 11:59h.

Ukraine has taken legal action against one of its largest online casino operators over tax evasion charges, which allegedly involved the creation of mirror websites to conceal its illegal activities.

Ukraine iGaming online casino website
Ukraine has seized almost $19 million from an online gaming platform accused of tax evasion. The country also alleges the iGaming firm used mirror websites to conceal its criminal activity. (Image: Pixlr)

This action revolves around Cosmolot, an online platform that hosts interactive casino games, including slots, live dealer table games, and lotteries, which is accused of intentionally hiding significant revenue to avoid tax obligations on the income.

According to investigators, the company utilized more than 30 mirror sites with similar interfaces to direct gaming revenue to separate bank accounts, leading to allegations of deliberate tax evasion.

Following the investigation, it was discovered that the company’s gaming licensee was not located at the address specified in the license. Moreover, officials are accused of deliberately concealing evidence essential for an impartial investigation of the crime.

Cosmolot, with its base in Ukraine, also has US and UK-based investors, as confirmed by the company’s LinkedIn profile.

Funds Seized

Ukraine’s Economic Security Bureau reports having seized approximately $18.64 million from Cosmolot’s banking accounts, underscoring the government’s determination to prosecute potential criminal breaches.

The ongoing case is being pursued by the office of Ukraine Prosecutor General Andriy Kostin, with the Cosmolot platform maintaining its operations amid the legal proceedings.

In 2022, a significant increase in tax rates for online casino operators in Ukraine was witnessed, coupled with a new anti-money laundering legislation designed to combat illicit financial operations in the industry.

It is worth noting that previously, Ukraine took definitive steps to prevent the operations of Russian-linked 1xBet websites in the country after discovering various compliance violations by the parent company.

Cosmolot Denies Allegations

In response to the allegations, Cosmolot has vehemently denied the charges and has refuted any involvement in orchestrating activities related to uncanny mirror websites for tax evasion.

According to the company, their employees are solely involved in the support and maintenance of the official website that operates within the confines of an official license, thereby dismissing any nefarious involvement with cloned websites and subsequent revenue concealment.

As Ukraine’s legal battle with Cosmolot escalates, the iGaming firm faces potential loss of its operating license and hefty financial penalties if found guilty of all charges. The legal argument against Cosmolot highlights the complexities of gambling regulation and compliance in the Eastern European country, particularly in the aftermath of legalizing the iGaming industry just a few years ago.

Casinos have only recently been permitted in Ukraine, subject to strict regulations and operational requirements, ushering in a new era for legal gambling in the nation.

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