The Capone Problem

06.12.2011 | kyivweekly.com.ua

Gambling back on the table?

It happened to Al Capone and now its happening to the Premier Palace Hotel in Kyiv. The State Tax Administration assisted by two long arms of the law the Prosecutors Office and Kyiv District Court shut down an illegal gambling operation in the hotel. And like Capone, the casino, which tried to masquerade as a computer club, got fined a whopping (UAH 6.9 mn). This casino has been in trouble before, openly operating in downtown Kyiv. However, the hotel claims secret court documents can prove that its operations are legal. In June 2009 the Tymoshenko government banned casino gambling in Ukraine after a deadly fire at a joint in Dnipropetrovsk. When casino owners protested the ban, shouting job loss, the Cabinet refused to return licensing fees, saying the casinos had earned enough profit and even then-president Viktor Yushchenko refused to veto the bill. Today, the situation has changed. On the one hand, the authorities seem to be upholding the law by shutting the casino down; on the other, this appears to be a desperate attempt to fill state coffers. The large fine, rather than jail time like everyone else is getting, implies a cash grab. Casino owners want back their lucrative profits and they have the governments ear. Todays the authorities have put aside their moral inhibitions about gambling and have shut out the social problem it creates. Infrastructure Minister Borys Kolesnykov vowed to have casinos fully back in operation for Euro-2012, and has even floated an idea of turning Crimea into a Ukrainian Monaco. But here is the dilemma casinos bring in huge revenues and taxing the profits could make the much-needed funds to cover the governments lack of economic imagination (and reforms). However, the president has personally promoted himself as a morally-upright church-going man, so selling out to casinos would hurt this image. There is also much public opposition. In the end, money will win. Fining casinos for now and legalizing them later appears to be the strategy to meet wage demands and energy costs. If they really want to fill the treasury, they might consider selling the whole idea to Hollywood. Think how much Capone movies have made over the years.

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