Gaming Law 2020

Last Updated November 24, 2020

Kazakhstan

Law and Practice

Authors



4H Agency is a boutique consulting firm fully dedicated to serving members of the gambling business ecosystem in their quest to open up new opportunities, be it a new market, a new vertical, or a new product. The firm's team members, who work in offices in Cyprus, Ukraine and Russia, have experience at the top international law firms as well as international gambling operators and service providers. Moreover, 4H Agency has an established network of various regional service providers and agents (local law firms, HR agencies and seasoned experts in different fields, including marketing and PR, payments and business analytics), which have been carefully chosen in order that 4H is able to act as a “one-stop shop” for international gambling operators entering certain jurisdictions.

Taking into account that a huge reform of the gambling sector in Kazakhstan took place in July 2020, there are no significant changes which are expected to be introduced to the regulation of gambling.

Summer 2020 brought a lot of new provisions to Kazakhstan's gambling regulation, which seriously changed the gambling business ecosystem.

The main changes are the following.

  • The types of events on which betting operators can accept bets were limited to sport events.
  • Starting from 4 January 2020:
    1. betting shops and totalisators can be located only within the territory of designated gambling zones (the same limits as on casino and slot-machine halls); and
    2. a new “centre for accounting of bets” would be created and all online betting operators and totalisators should provide information about all their bets to it.
  • New mechanisms for the blocking of offshore gambling operators were introduced into the respective regulations.
  • The Gambling Law (as defined in 3.1 Key Legislation) was supplemented with new measures of responsible gambling.

Overall, changes that were introduced into the Gambling Law and related regulations demonstrate a paternalistic approach on the part of the authorities to the gambling business.

According to the Gambling Law, betting and the totalisator are permitted, and are regulated under specific licences.

Any online casino games and online slot games are strictly prohibited by the Gambling Law. It should be noted that by "casino games", the Gambling Law means any games that are conducted by means of gambling tables. Ultimately, gambling tables are considered as the gambling equipment that is used for the organisation of gambling.

In order to clearly address the prohibition against any forms of online casinos, the Gambling Law provides definitions of “internet casino” and “electronic casino”:

  • an internet casino is defined as “an internet resource that implements the possibility of organising and conducting gambling in real time via the internet and/or electronic money, and providing for winnings”; and
  • an electronic casino is defined as "an institution using a hardware and software complex and/or an internet resource that implements the possibility of organising and conducting gambling in real time via the internet and/or electronic money, and providing for the winnings”.

Lotteries are not considered to be a form of gambling and are regulated by a separate law, which provides that lotteries may be offered in an online format.

The Gambling Law does not provide for any separate licences for the online sector. In other words, the online betting and online totalisator sectors are covered by the respective land-based licences mentioned in 2.2 Land-Based.

The following types of land-based offerings are permitted and regulated under different licences:

  • betting;
  • totalisator;
  • casinos (including poker); and
  • slot-machine halls.

As mentioned in 2.1 Online, lotteries are not considered to be a form of gambling and are regulated by a separate law, which provides that lotteries may be offered in a land-based format.

As mentioned in 2.1 Online, the Kazakhstan Gambling Law determines any games that are conducted by means of gambling tables as casino games. In other words, mostly all known casino games can be conducted by land-based gambling operators.

The Gambling Law

One of the key pieces of legislation regulating the organisation of gambling in Kazakhstan is the Kazakhstan law “On the Gambling Business” (the Gambling Law).

The Gambling Law outlines:

  • those gambling verticals which are regulated;
  • requirements for gambling operators;
  • responsible gambling requirements;
  • the key principles of state control over the activities of gambling operators; and
  • other vital aspects connected with the organisation of gambling activity in Kazakhstan.

Secondary Legislation

As well as the Gambling Law there are also a number of key pieces of secondary legislation that apply to gambling activities.

  • Order of the Minister of Culture and Sports of the Republic of Kazakhstan “On the Statement of the List and the Form of the Documents Confirming Conformity of the Gambling Operator with Qualification Requirements”.
  • Order of the Minister of Culture and Sports of the Republic of Kazakhstan “On the Approval of the Reporting Form for the Organiser of the Gambling Business, the Rules for the Collection and Analysis of Reports Submitted by the Organiser of the Gambling Business”.
  • Order of the Minister of Culture and Sports of the Republic of Kazakhstan “On Approval of the Rules for the Provision of State Services in the Field of Gambling”.
  • Resolution of the Akimat of the Akmola region “On the Determination of Territories for the Placement of Casinos and Slot-Machine Halls in the Burabay district of the Akmola Region”.
  • Resolution of the Akimat of the Almaty region “On the Determination of the Coast of the Kapchagai Reservoir as a Territory for Location of Casinos and Slot-Machine Halls”.
  • Resolution of the Government of the Republic of Kazakhstan “Issues of the Ministry of Culture and Sports of the Republic of Kazakhstan”.
  • Joint Order of the Minister of Culture and Sports of the Republic of Kazakhstan and the Minister of National Economy of the Republic of Kazakhstan “On Approval of the Risk Assessment Criteria and Checklists for Compliance with the Legislation of the Republic of Kazakhstan on Gambling Business”.

General Business Law

In addition, as in the vast majority of ex-USSR countries (which are usually countries with a civil law system), the Kazakh gambling sector will also be affected by general laws which cover all spheres of business, for instance:

  • the Law “On Permits and Notifications”;
  • the Law “On Technical Regulation”;
  • the AML Law;
  • the Advertising Law;
  • the Criminal Code; and
  • the Code of Administrative Offences.

The Gambling Law defines gambling as “a risk-based agreement on winnings entered into by the participants of gambling among themselves or with a gambling operator, in respect of the event participants take part in”.

The Gambling Law does not provide for a definition of “land-based gambling”.

Instead, there is a set of definitions outlining the status of “gambling organisers” within different regulated sectors (which are outlined in 2.2 Land-Based).

  • Land-based betting – the definition used is “bookmaker's office”, which is defined as “an organiser of a gambling business who makes a bet with participants”.
  • Land-based totalisator – the definition used is “totalisator”, which is defined as “a gambling business organiser providing intermediary services when a bet is made between participants”.
  • Land-based casinos – the definition used is “casino”, which is defined as “a gambling establishment in which gambling tables are used to organise and conduct gambling”.
  • Land-based slot-machine halls – the definition used is “slot-machine hall”, which is defined as “a gambling establishment in which only slot-machines are used to organise and conduct gambling”.

The Gambling Law does not provide for any overarching definition of online gambling.

Instead, the Gambling Law provides only for a definition of the “electronic cashier of the betting and totalisator”, defining it as “an information system through which bets are accepted (recorded) and winnings are paid using information and communication networks”. Virtually, this definition allows for online offerings to be in place.

Offences are provided by the Criminal Code as well as the Code of Administrative Offences.

In terms of the description of the key offences, it is practical to divide them into two groups: offences provided by the Criminal Code and offences that are provided by the Code of Administrative Offences.

Criminal Code Offences

The Criminal Code provides, inter alia, for the following key offences:

  • the illegal opening of a gambling establishment;
  • the provision of premises for illegal gambling business;
  • the organisation and conduct of gambling outside the places established by the Kazakhstan laws on gambling business; and
  • the organisation of gambling business without a licence.

Offences of the Code of Administrative Offences

The Code of Administrative Offence provides, inter alia, for the following key offences:

  • failure to comply with the requirements for the location of gambling establishments or gambling equipment;
  • failure to comply with the requirements regarding organisation of gambling, accepting bets and payment of winnings outside the regulated locations, which are determined by the Gambling Law;
  • payment of winnings in a form other than money;
  • failure of the gambling operator to comply with requirements regarding obligatory funds; and
  • failure to comply with the requirements regarding the number of slot machines in the casino.

Possible penalties for gambling-related offences include correctional labour or community service, imprisonment, confiscation of properties, fines and revocation of licence.

In cases of criminal liability of the gambling operator, key penalties include:

  • fines in the amount of up to 20 times the income received from the unlawful actions;
  • correctional labour or community service of up to 1,200 hours;
  • imprisonment for up to seven years; and
  • confiscation of the property of the gambling operator.

In cases of administrative liability, key penalties include:

  • fines in the amount of up to EUR11,000;
  • suspension or revocation of the gambling licence; and
  • confiscation of the income of the gambling operator obtained as a result of the unlawful actions.

Taking into account the substantive change of the gambling regulations in July 2020, there is no information of any pending legislation at this point.

According to the Kazakh laws, the government authority which is responsible for the regulation of gambling matters is the Ministry of Culture and Sports of the Republic of Kazakhstan (the Regulator).

Kazakhstan, being a rather police-ridden state, strictly monitors the compliance of gambling operators with the established gambling regulations.

The enforcement of the penalties provided by the laws is aimed at all participants in the gambling market and there are many cases of the enforcement of these penalties.

At the beginning of 2020, the Kazakh authorities initiated criminal proceedings against one of the largest betting operators in the county due to their suspicion that this betting operator organised an “electronic casino”, which is strictly prohibited by the Gambling Law.

To add to that, Kazakh authorities acknowledge the existence of offshore gambling operators and have established measures to eliminate their activities within the territory of Kazakhstan. More details regarding these measures can be found in 6.6 Technical Measures.

The available licences are matched to the list of regulated activities under the Gambling Law:

  • betting;
  • totalisators;
  • casino; and
  • slot-machine halls.

As mentioned in 2.1 Online, online casinos and online slots are prohibited.

It should be noted that there are no separate licences for online offerings. In other words, it is impossible to conduct online activities without a land-based presence.

Licences are readily available.

All types of licence are issued for a period of ten years.

An entity wishing to obtain a licence should apply for it, provided that the applicant (ie, the entity that will be the gambling operator upon obtaining a licence) is in compliance with the requirements that are established for gambling operators by the Gambling Law.

In this regard, the applicant should meet, inter alia, the following conditions.

  • For a casino licence:
    1. buildings (premises) which are located in an, at least, three-star hotel;
    2. such buildings (premises) should be owned or leased by the applicant and located in the special designated gambling zones specified in 5.1 Premises Licensing; and
    3. deposits in the amount of EUR330,000 in the bank from the list approved by the Kazakhstan authorities.
  • For a slot-machine hall licence:
    1. buildings (premises) which should be owned or leased by the applicant;
    2. such buildings (premises) should be located in the special designated gambling zones specified in 5.1 Premises Licensing; and
    3. deposits in the amount of EUR330,000 in the bank from the list approved by the Kazakhstan authorities.
  • For a betting and totalisator licence:
    1. buildings (premises) which should be owned or leased by the gambling operator.
  • For a betting licence:
    1. deposits in the bank from the list approved by the Kazakh authorities in the amount of EUR220,000.
  • For a totalisator licence:
    1. deposits in the bank from the list approved by the Kazakh authorities in the amount of EUR55,000.
  • Gambling equipment which should be owned by the gambling operator.
  • Agreements with the security organisation which has obtained the respective security licence.
  • A document confirming the payment of the application fee.

Management and Shareholders of the Gambling Operator

The shareholders of a gambling operator cannot be:

  • individuals who have an unexpunged or outstanding conviction for a crime committed in the area of economical offences or, for intentional crimes of average gravity, grave crimes; or
  • individuals who were the founders or participants of a legal entity that has tax arrears or has been declared bankrupt.

In addition, the Gambling Law also prohibits such individuals from being involved in the management of a gambling operator.

It takes ten working days, from the moment of application, to receive a licence.

Depending on the type of licence being applied for, the licence fee will be:

  • casino – EUR20,000;
  • slot-machine halls – EUR20,000;
  • betting – EUR3,500; and
  • totalisator – EUR3,500.

It should be noted that such fees are payable only once upon application for a licence.

Licence Fees

Along with application licence fees, Kazakh law also provides for the following annual licence fees (in the Tax Code such fees are determined as “fees for the usage of a licence”):

  • casino licence – EUR20,000;
  • slot-machine halls – EUR20,000;
  • betting – EUR3,500; and
  • totalisator – EUR3,500.

It should be noted that such fees are payable annually in equal portions not later than March 25th, June 25th, September 26th and December 25th of each year.

For instance, annual payment for the usage of a casino licence would be calculated in the following way:

  • EUR5,000 should be paid by March 25th;
  • EUR5,000 should be paid by June 25th;
  • EUR5,000 should be paid by September 26th; and
  • EUR5,000 should be paid by December 25th.

Re-issuance Fee

  • The cost of having a licence renewed is 10% of the initial application fee (payable once upon submitting of application regarding re-issuance of the licence).

According to the Gambling Law there are two types of requirements regarding the location of gambling premises (buildings):

  • general requirements applicable to all gambling operators; and
  • specific requirements that are applicable to either operators of casinos and slot-machine halls or to the betting operators or totalisators.

General Requirements

All gambling venues should be located in non-residential premises. To add to that, the Gambling Law establishes certain prohibitions regarding the location of such premises. It is forbidden to locate gambling venues in:

  • non-residential premises of residential buildings;
  • buildings of industrial enterprises;
  • communal and warehouse facilities;
  • religious buildings (structures);
  • buildings of state bodies and institutions;
  • educational organisations;
  • healthcare buildings;
  • cultural buildings;
  • airports;
  • train stations; and
  • all types of public transport (urban and suburban) station.

Specific Requirements

The Gambling Law also establishes an additional requirement for the location of casinos and slot-machine halls. Namely, casinos and slot-machine halls can be located only within the specially designated zones.

  • The coast of Kapshagai reservoir of Almaty oblast.
  • The Burabai district of the Akmola region.

Moreover, casino and slot-machine halls can be located only in at least three-star hotels.

According to the changes introduced into the Gambling Law, which become effective starting from 4 January 2021, betting shops and totalisators can be located only in specially designated zones (see 5.1 Premises Licensing).

The only possible online verticals are betting and totalisators. It also should be noted that the Gambling Law does not provide for any separate licences for online activities.

In other words, such verticals as online betting and totalisators cannot be conducted without a land-based presence.

In addition, the Gambling Law does not define any differences between the online activity of betting operators and totalisators and land-based activity, except for several provisions regarding the “electronic cashier of the betting or totalisator”, which is defined as the “information system through which rates are accepted (accounted for) and winnings are paid out using information and communication networks”.

The Gambling Law does not provide for any explicit regulation of B2B licences.

The Gambling Law does not provide for any explicit regulation of the use of affiliates.

The Gambling Law does not provide for any explicit regulation of the use of white-label providers.

According to the changes introduced into the Gambling Law, which become effective from 4 January 2021, online betting operators and online totalisators will be obliged to provide information about all their bets to the special system called the centre for the accounting of bets. It should be separately noted that the required infrastructure is yet to be created.

Kazakhstan law provides for mechanisms for the blocking of websites of illegal offshore gambling operators. Such blocking is made by the authority which is responsible for telecommunication services on the basis of an order from the prosecution authorities.

It should also be mentioned that the blocking mentioned above was enacted only in July 2020; however, previously government authorities were also conducting website blocking by the means of court decisions. According to such court decisions, these websites were considered as products of foreign media, which violated the advertising ban on online casinos.

Kazakh laws do not regulate the concept of “responsible gambling”. Nevertheless, the Gambling Law provides for the implementation of certain measures that are aimed at addressing the problem of excessive gambling.

Such measures include:

  • mechanisms of self-exclusion; and
  • mechanisms of judicial exclusion.

It should be noted that the basic mechanisms related to responsible gambling were introduced into the Gambling Law only in July 2020. According to the authors' information, the required infrastructure (eg, a register of self-excluded individuals) is still to be created.

The Gambling Law provides for the following main tools that should enact measures for responsible gambling.

  • Self-exclusion, which can be established for a term from six months to one year; the excluded individual is included in a special register that is accessible by all licensed gambling operators.
  • Judicial exclusion, which is applied if an individual, as a result of participation in gambling, puts him or herself and/or his or her family in a difficult financial situation.

Upon the decision of the court, such an individual is deemed partially incapacitated for an indefinite period of time. This exclusion can be lifted only upon a subsequent decision of the court.

According to the Gambling Law, the key AML legislation applicable to gambling operators is the Law “On Preventing and Countering the Legalisation (Laundering) of the Proceeds of Crime, and the Financing of Terrorism” (AML Law).

According to the AML Law, gambling operators should ensure that they do the following.

  • Implement a system of internal controls, which should include:
    1. policies regarding minimisation of risks associated with the legalisation of the proceeds of crime, the financing of terrorist activities and the financing of the proliferation of weapons of mass destruction;
    2. policies regarding identification, documentary recording of suspicious financial transactions, financial transactions subject to special control, and timely submission of information and documents to the financial monitoring body (the threshold for all transactions is set at EUR6,000); and
    3. policies ensuring the preparation and transmission of reports of financial transactions subject to special control and suspicious financial transactions by employees carrying out financial transactions.
  • Implement procedures for AML risk-handling, which should include:
    1. identification and assessment of risks associated with AML requirements, including the risk of working with a client;
    2. monitoring and control of risks associated with AML requirements; and
    3. limitation (reduction) of risks associated with AML requirements.
  • Identify the players, which includes the gathering and storage of information in respect of suspicious transactions.

The Ministry of Information and Social Development of Kazakhstan, and its regional units, are responsible for the regulation of matters related to the advertising of gambling activities.

According to Kazakh law, advertising is defined as “information disseminated and (or) posted in any form by any means, intended for an indefinite circle of persons and designed to form or maintain interest in an individual or legal entity, goods, trademarks, works, services and promote their implementation”.

Kazakh regulations with regard to advertising are of a restrictive nature (the same approach is employed by other ex-USSR countries). For a detailed description of such restrictions, please see 9.4 Restrictions on Advertising.

According to the Gambling Law, it is strictly prohibited to advertise online casinos.

In addition, according to the Advertising Law, it is also prohibited to advertise activities that are deemed unlawful in Kazakhstan.

This leads to the prohibition of advertising for any gambling activities that are not licensed and (or) prohibited.

Violation of the advertising regulations is penalised by:

  • a fine of up to EUR5,500; and
  • blocking of the websites of illegal offshore gambling operators.

The Kazakh authorities regularly check websites of non-locally licensed operators and block access to them. There are a large number of judicial cases which have imposed such website blocking.

The Gambling Law does not provide for any definitive requirements with regard to acquisitions and changes of control of gaming and gambling companies.

Please see 10.1 Disclosure Requirements.

Please see 10.1 Disclosure Requirements.

According to the Gambling Law, the Regulator has, inter alia, the following powers:

  • implementing state policy in the field of gambling business;
  • monitoring compliance by the gambling operators with the laws of Kazakhstan on the gambling business, as well as compliance with the legislation regarding AML requirements;
  • maintaining the electronic register of the licensor;
  • carrying out a systematic collection of information and analysing the content of internet resources for signs of an online casino; and
  • maintaining a register of cash registers of the operators of betting and totalisators.

The Regulator conducts inspections of licensed gambling operators on a regular basis. These inspections are aimed to check the compliance of the gambling operators with the established licensing requirements and/or the provisions of the gambling regulation.

In cases of breach of the established licensing requirements and/or the provisions of the gambling regulation, the gambling operator may be held administratively liable, which can result in the imposition of fines, confiscation of properties or suspension or revocation of the gambling licence.

Furthermore, officers of offshore gambling operators operating within the territory of Kazakhstan may be subject to criminal liability as it is forbidden to operate without the respective licence.

The general approach of the Regulator is rather strict and, as evidence of this, there have been many judicial cases where either licensed gambling operators or offshore gambling operators have been subject to various types of liability.

Taking into account that financial penalties are considered to be the result of the imposition of administrative or criminal liability, the means of their enforcement do not differ from the sanctions described in 11.2 Sanctions.

The concept of “social gaming” is not recognised by the Gambling Law and there are no specific regulations for this activity.

In accordance with the order of the Committee for Sports and Physical Culture of the Ministry of Sports and Culture of the Republic of Kazakhstan No 180, dated 25 June 2018, esports are recognised in Kazakhstan as an official sport.

To add to that, there is also an official organisation: the Qazaq Cybersport Federation registered in accordance with the laws of Kazakhstan.

The concept of “fantasy sports” is not recognised by the Gambling Law and there are no specific regulations for this activity.

The concept of “skill gaming” is not recognised by the Gambling Law and there are no specific regulations for this activity.

At the end of June 2020, the president of Kazakhstan adopted a law which amended various laws in the sphere of digital technology regulation.

This law provided for the basic regulation of, inter alia, blockchain, cryptocurrency mining and decentralised data platforms.

Please see 1.2 Recent Changes.

Gambling tax is calculated on the basis of taxable items per month (payable per month):

  • each gaming table – EUR9,500;
  • each slot machine – EUR350;
  • each totalisator and betting counter – EUR1,770;
  • each online totalisator counter – EUR23,600; and
  • each online betting counter – EUR17,700.
4H Agency

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3036, Limassol
Cyprus

+7 915 353 34 08

im@4h.agency www.4h.agency
Author Business Card

Law and Practice

Authors



4H Agency is a boutique consulting firm fully dedicated to serving members of the gambling business ecosystem in their quest to open up new opportunities, be it a new market, a new vertical, or a new product. The firm's team members, who work in offices in Cyprus, Ukraine and Russia, have experience at the top international law firms as well as international gambling operators and service providers. Moreover, 4H Agency has an established network of various regional service providers and agents (local law firms, HR agencies and seasoned experts in different fields, including marketing and PR, payments and business analytics), which have been carefully chosen in order that 4H is able to act as a “one-stop shop” for international gambling operators entering certain jurisdictions.

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