FavBet vs 1xBet: bookmaker battles without rules

FavBet vs 1xBet: bookmaker battles without rules

Big players in the gambling business pulled the authorities, the media, and civic activists into their dirty conflicts.

Back in 2019, when the “greens” who came to power were only starting to toy with the idea of legalizing gambling, many had a foreboding that something monstrous and foul-smelling would come of it. The state budget would not swell from the sale of licenses and payment of taxes by casinos and bookmakers, nor would the country turn into a thriving Las Vegas. At least because the lobbyists for the relevant law showed not just ears but the horns of the mafia. And that is exactly what happened.

Large online casinos and bookmakers present in Ukraine, if they did not have Russian roots, were historically heavily tied to the aggressor country (in terms of potential audience it’s the largest market in the former Soviet space). That was true after the annexation of Crimea and when our guys were dying at Donetsk Airport and near Ilovaisk. Bookmakers accepted bets and paid out winnings even in ORDLO. And it seemed that 24.02.2022, when Russian missiles began falling on Ukrainian cities, changed everything. Now ordinary people sometimes feel like throwing something heavy in the direction of the sound of the Russian language. What’s to be said about doing business with Russians or in the aggressor country — it looks not just disgusting but criminal.

The accusation of working with the occupiers became the main argument in the bookmakers’ war for the wallets of gambling slaves, waged by them in Ukraine. But let’s go in order.

2 September 2019-year, half a year after being elected, President Zelensky gave the green light to the process of legalizing gambling in general, and bookmakers in particular. Society was fed this matter with the sauce that legalization would open the door to fat foreign investments. However, the presence in this performance, and in leading roles, of Borys Baum — a figure connected to the “Luzhniki” organized crime group — suggested that the “game” would be legalized for former Russian bandits.

Borys Baum

However, even then experts pointed out that legalization (in the part concerning betting) was being carried out in favor of the two largest domestic bookmaker networks — Parimatch and FavBet. They based their suspicion on the fact that the relevant bill was virtually written by the friend of MP Dmytro Arahamiya, the “watcher” from Servant of the People over the process — owner of the law firm Eterna Law Andriy Astapov. Among Mr. Astapov’s grateful clients is the bookmaker Parimatch. By the way, investigative journalists repeatedly spotted Arahamiya himself at meetings in the main office of that bookmaker during the wrangling over the “legalize” issue.

Both Favorit and Parimatch have ambiguous backgrounds.

The Schwindlerman — Biloruska outfit

Founded in 1994, Parimatch is controlled by Ukrainian gambling magnate Eduard Schwindlerman and his daughter Tetyana Biloruska.

Eduard Schwindlerman and Tetyana Biloruska

As Komentari reported, following the ban on bookmakers’ activities in Ukraine in 2009, Parimatch’s operations fell outside the law. However, it managed to circumvent the ban on betting-related businesses by registering them as Toto lotteries (the Verkhovna Rada of Ukraine website provides the relevant term: Lottery toto — a lottery whose winners are determined by guessing the outcomes of random events in various types of professional and/or amateur competitions included in the published drawing program of the lottery).

From a ruling of the Pechersky District Court it is known that on 15 October 2015 a search was conducted at the residence of one of the founders of the bookmaker. The National Police investigated the operation of the gambling business. During searches, documents, items, and objects were found "indicating the organization and conduct of gambling under the Parimatch logo on the Internet." The ruling also mentions a company of the same name.

In July 2018 Parimatch again “flashed” in connection with a “card.” As Apostrof wrote, according to the investigation, under the Parimatch brand there allegedly operated a virtual casino that laundered funds (up to $350 million per year) “in the direction of Russia and offshore zones.”

The gambling empire of Andriy Matyukha

Behind the bookmaker FavBet (BK "Favorit", "Favorit Sport") stands the very private businessman Andriy Matyukha. During the ban on gambling, it also operated in Ukraine as a Toto lottery.

Andriy Matyukha

As the online publication Finalmatch wrote, a number of companies controlled by Matyukha under the Favorit brand operated back in the 2000s until the casino ban in 2009. Later the network partially turned into a kind of "internet cafés," lotteries, and sports "poker clubs," such as the Grand Victoria casino in the Obolon district of Kyiv. It partially moved into a virtual format, legalizing in jurisdictions where all regulatory “doors” for gambling were open.

Court rulings in the registry indicate that most of Matyukha’s establishments continued to operate in Ukraine illegally during 2009-2020. Obviously, illegally.

Most companies in Matyukha’s group are registered in Kyiv at Marshal Tymoshenko Street, 21, bldg. 3. According to the Commission for the Regulation of Gambling and Lotteries, the group held the following licenses at the beginning of this year:

1 . LLC “Bookmaker Company Favbet” (43457382) - organization and conduct of casino gambling on the Internet; brand Favbet, website favbet.ua; 2. LLC “Billionare Casino Company” (43457293) - organization and conduct of gambling in casino premises, slot machines, gaming tables, brand Billionaire; 3. LLC “Favorit Casino Company” (44101120) - organization and conduct of gambling in casino venues, gaming tables, roulette tables, slot machines, brand Favbet; 4. LLC “Favbet Game Slots” (43457335) - organization and conduct of gambling in slot machine halls, brand Favbet.

At the same time, the publication claimed, none of the companies registered to Andriy Matyukha had licenses for organizing and conducting actual bookmaker activities, although separate permits are required in Ukraine to operate casinos, accept bets on sports, cybersports, and online poker tournaments.

Matyukha also owns the gambling websites, which he controls through Favorit United NV (121466), registered on the Caribbean island of Curaçao. The managing director of that company is Ukrainian citizen Ihor Sosonyuk — Matyukha’s business partner.

That company operates under a sub-license issued by one of Curaçao’s four licensees — Antillephone NV — and the sublicense was signed on behalf of Favorit United NV by Matyukha himself.

The payment acceptance and processing agent is the Cypriot company Bintpash Ltd (NOT 359736), whose founder is the aforementioned Favorit United NV, and whose manager is the same Ihor Sosonyuk.

According to registration data, Ihor Sosonyuk is also the director of LLC "Planeta-Zemlya" (37047683), whose participants during 2012-2016 included Andriy Matyukha (90%) and Darya Matyukha (10%). The latter was the head of that firm in those years.

In 2016-2018, 100% of LLC "Planeta-Zemlya" became owned by the Belizean company Roliatto Group Ltd. (124466), which was also an applicant for one of the trademarks for Favbet (application number m201220783).

According to the publication, Matyukha also owns the domain favbet.com and is the ultimate beneficial owner and director of UK-registered companies Andalidi Assets Ltd (08322630), Favbet Invest LLP (OC381256), Bet Invest Ltd. (08348255), Premier Property Invest Ltd. (08404215), Maltese companies Favbet Holding Limited (C84426), Favbet Limited (C84427), and finally the online casino favbet.eu operating under a Maltese license.

According to the UK trademark registry, the FAVBET brand rights belong to the British company Favbet Invest LLP, whose participants are two UK companies Andalidi Assets Ltd and Andalidi Invest Ltd. Both are fully controlled by Andriy Matyukha.

In addition, allegedly the developer of software and technical support for the group’s sites is the British company Bet Invest Ltd, and administration takes place at: Kyiv, Stepan Bandera Avenue, 8, bldg. 16-a.

In turn, Bet Invest Ltd is a 100% participant in two Ukrainian companies — “Atlant Triumph,” whose main activity is listed as computer programming, and “City Gate.” The latter is registered at: Kyiv, Stepan Bandera Ave., 8, bldg. 39, 39a.

According to a ruling of the Dnipro District Court of Kyiv dated 11 September 2020 in case 755/1439/16-k, funds received from Favorit’s customers are deposited into the accounts of LLC “Primefort”, LLC “Neuron Gold” and then transferred to companies LLC "Sport Planeta", LLC "Sport Arena", LLC "Sfera Max".

The equal participants of LLC “Sport Planeta” are Andriy Matyukha and Yuriy Pylypenko. The latter is a 100% participant of LLC “Sport Arena” and director of LLC “Atlant Triumph”, whose beneficiary via the British company Bet Invest Ltd is Andriy Matyukha.

LLC “Sfera Max” is owned by Yuriy Sharipov, but during 2017-2020 it had only one participant, LLC “Renaissance Group”, controlled by Andriy Matyukha (99%).

The sole participant and director of LLC “Primefort” is Georgian citizen Djikia Irakli. According to Ukrpatent information, in 2019-2020 this legal entity filed 27 applications to register trademarks for goods and services exclusively related to Favbet and Favorit.

Of course, the activities of Andriy Matyukha’s semi-underground business empire occasionally interested law enforcement.

In 2014 the Sviatoshyn District Prosecutor’s Office of Kyiv organized a review of the lawfulness of the activities of the Favorit chain of gambling venues operating under the guise of distributing state lotteries. Within the criminal proceedings under part 1 of article 203-2 of the Criminal Code (engaging in gambling business), law enforcement carried out a number of searches, during which about 100 units of computer equipment were seized.

At the end of 2016 the SBU reported the “liquidation” of Ukraine’s largest bookmaker — Favorit. The message claimed that the company’s activities financed terrorist activities in eastern Ukraine, a crime under articles 258-5 of the Criminal Code of Ukraine — financing terrorism. During investigative actions at 28 addresses in office premises and at the residences of persons involved with the firm, law enforcement seized nearly a thousand units of computer equipment, documentation, gaming devices, and over seven million hryvnias in cash.

In January 2020-year there were further searches at "Favorit Sport." According to the Kyiv prosecutor’s office, after reviewing the websites favbet.com and favorit.com.ua it was established that they provided illegal access to gambling.

“During the pre-trial investigation it was established that a group of persons, with the aim of obtaining excess profits under the guise of issuing and selling Favorit Sport lotteries and creating the relevant website on the Internet, actually conducted illegal bookmaker activities that fall under the provisions of the law of Ukraine ‘On the prohibition of gambling business in Ukraine’,” the statement said.

As Ukrainska Pravda wrote, the company later refuted these claims, accusing Russian companies — allegedly dissatisfied with the norms of the bill “On State Regulation of the Organization and Conduct of Gambling Activities” that was then adopted in the first reading — of an information attack (an interesting caveat, worth remembering — editor’s note).

However, despite the high-profile searches and statements by law enforcement, this gambling empire continues to exist and actively develop. No criminal cases have been opened against its owner Andriy Matyukha.

The invasion of the Russian “Cypriots”

At the end of May (to be exact, on 23) this year, Matyukha’s FavBet came under a harsh information attack. Its primary source was the online publication delo.ua. In the article “Nothing personal, just business: does the Ukrainian bookmaker Favbet not pay taxes and work with Russians?” journalists reasonably accused the bookmaker of operating without the proper license and evading taxes on a huge sum. But in Ukrainian realities such accusations are not surprising, so the authors, through a “forensic experiment,” produced extremely damaging kompromat: despite the bloody invasion of Russian troops FavBet allegedly continued to accept bets from Russians and (theoretically) pay out their winnings. In other words, the publication leads to the conclusion that Matyukha’s firm cooperates with occupiers and killers.

The delo.ua investigation was very quickly “cleaned up.” Not only from the publication’s site but also from Google’s cache. However, someone made sure that it was reposted in full and in shortened form by sites from various echelons. The specifics of the deleted delo.ua material’s spread suggest that this was likely not a private initiative of individual publishers but an organized targeted campaign by certain interested parties.

About a month and a half before this information war in Ukrainian betting, a significant and partially unexpected event occurred (because some interested parties did not expect it). On 30 March, KRAIL issued a license for bookmaker activity to LLC “Tvoja Bettingova Kompaniya.” According to registration data, this firm is registered to the “chump” Serhiy Petrovych Tsybin. It intends to operate under the brand 1xBet, well known to frequenters of pirate online cinemas.

As claimed in an investigation by the InformNapalm community, the legalization of 1xBet in Ukraine was personally lobbied by the aforementioned head of KRAIL’s advisory-expert council Borys Baum. And the petition to Baum for this bookmaker supposedly came from his longtime comrade from the Luzhniki OCG, Mykhailo Spektor. One decisive factor that reportedly influenced the commission’s decision to grant the license was the promise of “Tvoja Bettingova Kompaniya” to purchase half a billion hryvnias worth of government internal loan bonds.

As mentioned earlier, FavBet under Matyukha, due to pressure from regulatory bodies for years, has been blaming the machinations of Russian competitors. It’s not hard to guess who he hints at: 1xBet is virtually the only conditional Russian firm persistently trying to legalize and secure a foothold in Ukraine. The latter is unattainable without displacing the mastodon that long ago took a lion’s share of the Ukrainian betting market — Matyukha’s bookmaker network.

The counterstrike against 1xBet came quickly. They were hit in kind: accused of being Russians and operating in the aggressor country.

The bookmaker 1xBet appeared in 2007 in Bryansk, Russia. It was founded by locals Roman Semiohin, Serhiy Karshkov, and Dmytro Kazorin. It quickly expanded to Eastern Europe, then West, Africa, and Latin America. In 2014 Russia introduced mandatory licensing for bookmakers. 1xBet either couldn’t or didn’t want to obtain a license but continued to extract money from gamblers across the border. However, Roman Semiohin launched the project “1xStavka,” which still operates in Russia quite legally. The founding parents of the firm prudently moved to Cyprus and obtained local citizenship.

Roman Semiohin

They acted very sensibly. In 2019 criminal proceedings were opened against them in the aggressor country on suspicion of illegal bookmaker activity, money laundering, and tax evasion, and the next year they were declared wanted. All their assets in Russia were seized and are gradually being distributed. 1xBet’s main sites are blocked in Russia, but the firm continues to take bets via “mirrors” with mixed success.

Semiohin and Co.’s problems in Russia did not begin after 2014-year due to any civic stance regarding their homeland’s war against Ukraine. (Although, to be fair, after 24.02.2022 1xBet donates large sums to Ukrainians affected by the war, which provokes resentment among Semiohin’s former compatriots.) The issue is more about the redistribution of the gambling market in the aggressor country, for which the newly rich from Bryansk, lacking a serious “roof,” were simply unprepared.

This redistribution has been ongoing for quite some time, reaching a peak last year. As The Bell reported, at the end of January 2021 in Russia the largest online casinos temporarily stopped accepting bets via bank cards. Smaller gambling establishments shut down entirely. Spinning the virtual roulette wheel was reserved for VIP clients (with an average deposit of $100.000), who were collected “offline” individually; the rest of the gamblers had to exchange rubles for bitcoins. Why? Because the Russian Central Bank began methodically cutting off billing for gaming operators across the country.

The thing is that the “bunker grandpa” in December 2020 signed a law whereby, roughly speaking, all gambling and betting within reach of the twisted arm of the Russian state must be completely “cured” by lickspittles of the Kremlin dwarf.

The 1xBet brand, despite serious claims from the authorities against its creators, continues to operate in the aggressor country. Moreover, it sponsors mass events where Russia’s aggressive war against Ukraine is not only justified but promoted.

And here’s another point. In Russia, besides the underground 1xBet of Semiohin & Co., a legal 1xBet collects bets. That brand is used by the above-mentioned 1xStavka, registered to LLC “Bookmaker Pub.” Semiohin owned 87,9% of “Bookmaker Pub” until 2016, when his share was bought for €1,4 million by the Cypriot offshore Ehrlich Ltd. Ehrlich Ltd is registered to a “chump,” a lawyer from Cyprus. A month ago, after the State Duma floated the idea of banning residents of “unfriendly countries” from gambling in Russia, the offshore share in “Bookmaker Pub” was transferred to Saratov’s JSC “Konstruktor,” whose sole shareholder is an obvious front person. Who the real beneficiary of 1xStavka is can only be guessed.

In the information counterattack against 1xBet, launched after it “attacked” Matyukha, there is a reference to research by volunteers from BraveUkraine. They analyzed and compared the software used by the 1xBet that is trying to enter Ukraine with the software used by Russia’s 1xStavka. In publications spread across the Internet, it is claimed that volunteers concluded: “1xStavka, which still operates in Russia, and 1xBet — in fact are the same company.”

But if you open the BraveUkraine report, you won’t find that claim. In reality, the volunteers wrote in their conclusion: “The sites, web services, and mobile applications have a lot in common, which indicates that the same company developed them.”

Agree that “it’s the same company” and “the sites and apps were developed by the same company” are somewhat different in meaning.

However, neither the author of this article nor the administration of the project that published it can argue with the notion that 1xBet is too toxic to operate in Ukraine. That is beyond doubt.

A brutal “response” and shameless PR

The information attack on FavBet, which very likely was orchestrated by 1xBet, was preceded by one important event. On 27 April, four weeks after the license was issued to “Tvoja Bettingova Kompaniya” operating under the brand of the Russian Cypriots, the Bureau of Economic Security under the supervision of the Podil Prosecutor’s Office of Kyiv opened criminal proceedings No. 42022102070000148. The case is being investigated under part 3 of article 190 of the Criminal Code (large-scale fraud) and part 3 of article 110-2 (financing actions aimed at violent changes of Ukraine’s borders, etc., by prior conspiracy of a group of persons). Note that both charges are quite serious and carry imprisonment of up to eight years.

The author could not find the case’s narrative, but from documents already in the court register it’s quite obvious who the investigators are targeting. In particular, one court ruling shows that investigators are very interested in “...information and documents on obtaining the license of LLC ‘Tvoja Bettingova Kompaniya’ for conducting bookmaker activities that relate to the owners of the brand of the gambling organizer 1xBet, as well as funds from the specified illegal activity without supporting documents on their origin and other documents.”

It is encouraging that law enforcement is concerned about whether one of the largest bookmakers in Eastern Europe funds mass murders of Ukrainian citizens. The question is why the Bureau of Economic Security together with the prosecutor’s office became concerned only after 1xBet officially entered Ukraine, putting the profits of the entrenched local gambling business at risk? After all, the firm offered to legalize here through “Tvoja Bettingova Kompaniya” even before 24.02.2022, and the aggressor country has waged war against Ukraine for eight years. The conclusion suggests itself.

According to the court register, the first search in case No. 42022102070000148 was conducted on 23 May. And that same day the first portion of kompromat on Andriy Matyukha’s FavBet, accusing it of cooperating with occupiers, was released. No, this was hardly a coincidence. No.

It is worth noting separately that Matyukha’s team managed to quickly extinguish that negative “drop.” As mentioned above, the original source was removed, as were first-tier online republications. The information space was massively filled with positive coverage about FavBet. Ukrainian media write about this bookmaker as if about President Zelensky after the large-scale invasion — good or very good.

Here is, for example, how the top news results on Google looked at the time of writing these lines:

It’s hard not to dwell on one nuance. A very nasty one.

In the last month and a half to two months the internet has been full of image-building publications about how generously FavBet helps the army. At times it even seems that this bookmaker armed at least a Territorial Defense battalion to the teeth, although in reality the company purchased only one rifle for $18 thousand — it simply heavily promoted its contribution.

Or quite recently FavBet’s press service trumpeted via all possible channels that it helped the army by as much as 30 million UAH. Although, if you read the release carefully, it was actually 25 million UAH.

If you believe Matyukha’s competitors, before the large-scale invasion the domestic betting monthly turnover reached $1 billion, of which, according to experts, at least 25% (that is about $250 million per month) went through Matyukha’s bookmaker network. If one assumes that Andriy Matyukha receives no more than 10% of the revenues passing through the network, the conclusion follows. It looks very much like over eight months of heavy invasion the FavBet beneficiary spent on aid to defenders and war victims no more than 4% of the amount that lands in his accounts in one month.

Moving on.

After the information attack on FavBet (which apparently was a reaction to the criminal case and searches) was repelled, the 1xBet company began to be “squeezed” with particular severity.

From the second half of June a series of journalistic investigations appeared demonstrating that 1xBet are Russians who finance Russian occupiers and murderers, and therefore the license of “Tvoja Bettingova Kompaniya,” the Ukrainian arm of the firm, should be revoked.

The Commission for the Regulation of Gambling and Lotteries refused to do so because it found no documented evidence of a direct link between 1xBet and the aggressor country. But, to be on the safe side, it dissolved its advisory-expert council through which Borys Baum allegedly lobbied the license for 1xBet.

But the public had already begun to rage. The site Myrotvorets added all those involved with 1xBet to its “blacklist.” Director of the Bureau of Economic Security Vadym Melnyk assured on the “United News” telethon that the case is under control, the guilty will be found, and the license, if necessary, will be revoked.

But the outraged public did not want to wait for the slow-moving investigation and took matters into their own hands.

On 8 July someone named Vasyl Lebedev registered a petition on the official Internet representation of the President of Ukraine calling to revoke the ill-fated license. The petition was promoted in the media, so it’s not surprising that in a week it collected the 25 thousand votes required for consideration by the head of state. At the same time civic activists and opinion leaders launched a flash mob calling on the NSDC to impose sanctions on 1xBet (this initiative was also promoted in the media).

Meanwhile Volodymyr Oleksandrovych considered the petition. And on 8 August he responded. The reply boiled down to a proposal to the Prime Minister of Ukraine Dmytro Shmyhal to “ensure, with the involvement of law enforcement agencies, the study of the issues raised in the electronic petition and the taking of appropriate measures.”

Wide coverage of this epochal decision by the supreme commander was also stimulated in the media. So at the moment the author wrote this paragraph, Google news results for the query “1xBet” looked like this:

In this information flow accompanying the scandal, seemingly insignificant elements are interesting.

For example, on 3 August, People’s Deputy from Servant of the People Oleg Marusiak told UNN the following:

“Then this 1xBet appears. When everyone raised a cry, like, what is this, why did it appear here — I didn’t get a direct answer from this because I personally didn’t communicate with 1xBet. At first they were not interested in contacting Ukraine because they previously lived fatly in Russia. And now they have appeared here and allegedly closed their activity in Russia. I emphasize — allegedly, because it’s very easy to check whether they still operate there.”

Oleg Marusiak

It matters both what was said and who said it.

Between the lines of this comment reads outrage and offense. Indeed, the issuance of a license to 1xBet seems sudden and unexpected. As Business Censor wrote, “Tvoja Bettingova Kompaniya” applied to KRAIL to conduct bookmaker activity under the 1xBet brand on 22 March, sent supporting documents on 29, and already on 30 March the commission issued it a license. But it was hardly a secret to those involved in gambling and its legalization that 1xBet intended to enter Ukraine. It seems they were surprised that KRAIL allowed it.

The comment’s author, Oleg Marusiak, also known as the coordinator of the “Pavlyuk group” within the Servant of the People parliamentary faction, is probably one of the most involved figures in the legalization of gambling. If faction head Dmytro Arahamiya was considered the “watcher” in parliament over gambling legalization, Borys Baum was called the main lobbyist for the “gambling mafia,” then Marusiak, head of the VR subcommittee on the organization and taxation of gambling, de jure authored the law by which betting and gambling are now legalized and operate in Ukraine. It was through him that all the wishes of the biggest market players who staked their claim here were coordinated. Even the wish not to let “unauthorized passengers” in.

But the “unauthorized passenger” 1xBet found an approach to the pockets of decision-makers bypassing the so-called “central cash desk.” Which could not but anger the main “cashiers” and already dispossessed players who had been assured that no one would claim their slice of the pie.

So the story with 1xBet is primarily not about cooperating with occupiers and killers. It’s about greed and corruption. It’s about dirty disputes among mafia clans and their corrupt “roofs,” which dragged in journalists, activists, law enforcement, and the supreme commander.

Ivan Pomidorov, reviewer for the CRiME project, especially for [loud cases]