In its biggest operation to date, the Slovak Financial Administration has seized a large number of gambling machines in a crackdown on illegal betting in the country.
Five quiz machines and 75 gaming machines have been taken out of circulation as a result of the operation, which involved officials inspecting around 100 gaming facilities in Slovakia.
Tax officers also took away tax documentation for 14 companies during the operation. Industry insiders say the issues could be rooted in the over-regulation of the industry, along with the fact that illegal operators will be seeking increasingly innovative ways to evade being caught out by investigators.
A widespread operation
During what was dubbed the Diamant Operation, 180 comptrollers and customs officials searched approximately 100 establishments across the country. The goal was to uncover breaches of gambling laws that came into effect earlier this year. The head of the financial administration’s criminal department, Ľudovít Makó, said of the operation: “It wasn’t an easy action, first, the controllers had to visit the facilities and try the machines to ascertain whether their use could be deemed as gambling or not. In some facilities, the gambling machine was turned off during the investigation, while in the others there were missing internet connections and power supplies.” Many of the premises where machines were seized have been closed pending investigation.
Machines to be checked
Quiz machines are more of a grey area regarding Slovakian law: The act of playing them is considered gambling due to the simplicity of the questions that need to be answered in order to play. However, the Financial Administration has sent all potential gambling machines that were seized by the Technical Testing Institute for them to be analyzed. There is also a question about whether or not venues had sufficient safeguards in place to ensure that players were all aged 18 or over.
Servers located outside the country are often used to run quiz machines, but Slovakian law requires that servers be located within the country’s borders. There are currently thought to be around 800 quiz machines in circulation in Slovakia, most of which are registered in the Bratislava, Trnava, and Zilina areas, according to the news agency SITA.
Accounting documents seized
In addition to the quiz machines, the financial administration also took possession of four companies’ 2017 and 2018 accounts. These companies were all operating the quiz machines. Accounting documents from companies that ran the facilities where the machines were located were also seized.
It is understood that officials from the government’s tax department will now analyze the documentation to check whether or not it corresponds with the details provided by the servers. The government’s concern is that the companies may have avoided paying value-added tax. The stakes are high for operators and, if they are found to be in breach of the new legislation, they could be liable for criminal prosecution.
Slovakia to issue further fines
The number of fines issued for violations of gambling regulations rose in 2017 compared to previous years and seems very likely to continue to rise year on year by the end of 2018, too. Fines totaling €378,660 (£333,736; $440,300) were issued in 2017. The number of fines rose from 57 to 153 year on year, although the amount of money fined only increased by 3.75%. This would indicate that there are increasing levels of petty crime happening in the sector, as opposed to an increase in sizeable organized crime cells being dismantled.
Dominika Lukáčová, the spokesperson for the Association of Entertainment and Gambling, said: “We welcome the fact that the state has the ambition to fight illegal gambling, but we have to realize that it cannot erase the legal concerns.” The concern of the Association of Entertainment and Gambling is that illegal practices are emerging because of over-regulation within the market. According to Ms. Lukáčová, fraudsters are outsmarting regulators by hacking the quiz machines to erase data and software from a distance in order to avoid possible charges and fines. She added that legal operators had not used such tactics.
