On June 14, 2022, the Economic Security Council of Ukraine and the international intelligence community InformNapalm published a joint research on how firms from Switzerland, Italy, and Germany assist Russia in circumventing sanctions to make weapons. This study has been translated into a number of languages and has received a lot of attention in the Ukrainian and international media. Readers have correctly pointed out that not only European countries, but also Ukraine, host Russian companies attempting to avoid sanctions. We provide a fresh analysis on the activities of the 1XBet bookmaker and the influence it has to uncover such business. A company has russian final beneficiaries, yet it was licensed during the war in Ukraine and now, it is trying to use its influence to circumvent sanctions in various countries.
Who owns 1XBet?
1XBet was successful in Ukraine. Money was being laundered through miscoding long before gambling was legalized in the country. Payments to the betting site were renamed housing and community services in PrivatBank in this fashion.
Your Betting Company LLC (Ukr. «во еттiнова коман») will operate on behalf of the “official” 1XBet registered in Ukraine. It was registered in June 2021 and, apart from the brand, has no legal ties to the Russian corporation. The Ukrainian Commission for the Regulation of Gaming and Lotteries (KRAIL) came to this decision, which is why they granted Your Betting Company LLC two licenses: one for bookmaking and the other for arranging gambling on the Internet. Serhiy Petrovych Tsybin is the sole “owner” of the company. Other questionable assets belong to this Dnipro businessman. He and his family have ties to a number of firms both in Ukraine and internationally.
Officially, 1XBet is a big, disjointed organization made up of hundreds of enterprises located all over the world. It’s a multi-tiered network of offshore businesses linked by people, services, and contracts. Some companies are in charge of development, while others are in charge of marketing, finance, intellectual property, and other activities. Legally, there is no single ultimate owner in this group, and some of the entities may appear to be unrelated. This mechanism was designed over a 15-year period to allow 1XBet to operate both legally and illegally while protecting the real owners from allegations made by government agencies and law enforcement agencies in various nations.
The ultimate proprietors of this company, however, do exist. Three Russians have been at the helm of 1XBet from its inception: Roman Semiokhin, Sergey Karshkov, and Dmitry Kazorin. In Bryansk, Russia, they launched the first betting platform, 1XBet. Roman Semiokhin has a joint business in breeding rabbits with the wife of the former mayor of Bryansk, a Bryansk Regional Duma deputy, a construction tycoon, and a member of the United Russia party Nikolay Patov. Sergey Karshkov used to be the head of the Bryansk department of the Russian Ministry of Internal Affairs to combat cyber crimes.
Roman Semiokhin afterwards shifted his focus entirely to the construction industry. According to local media, he purchased the majority of the city’s commercial real estate and rose to become one of the region’s most powerful figures. And, a few years later, he was a witness in a criminal case involving 1XBet’s activities in Russia, along with his coworkers. All of the founders are currently on the international wanted list, according to reports.
This is, nonetheless, official information. In reality, Semiokhin and Karshkov live in Cyprus, are unafraid of being apprehended, and travel freely throughout Limassol without a bodyguard. They also conduct business there. And it’s not just betting that they do. They are buying up land in Cyprus and constructing homes, just like they did in Bryansk. They are, in particular, constructing a 22-story office to accommodate 1XBet developers.
They told the Russian version of Forbes about it and even invited the reporter to the construction site. They also organize the Beon1x music event in Cyprus, which attracts the top DJs from across the world. This is regarded as an essential “social contribution” to Cyprus’ growth, and it allows the 1XBet founders to work freely on the island and gain assistance from the local government.
The founders of 1XBet no longer have any issues in Russia. The benefactors of the corporation inexplicably vanished from the criminal case, leaving only the nominal owners behind bars. It can be traced back to a sponsorship agreement between 1XBet and Russian FC Dynamo. Although the contract’s market worth is less than 120 million rubles, bookmakers have paid more than 500 million rubles for it. Given that FC Dynamo is owned by the Russian security forces via VTB Bank, such a contract is a common bribe to solve 1XBet owners’ difficulties.
Another fact demonstrating that 1XBet owners have no problems and feel safe in Russia is that, despite the blocking of 1XBet websites in Russia, another group product, 1xStavka, continues to function without interference from law enforcement and state authorities.
Semikohin and Karshkov are in a good spot. On the one hand, they do not dispute that 1XBet is a part of their operation. It’s even something they brag about. They claim, on the other hand, that they do not own any 1XBet websites. They also compare their network to McDonald’s. Which distributes franchises and has “owners” who tweak it and run their businesses independently on the ground.
In fact, 1XBet’s creators keep a tight eye on each resource’s activity. This does not, however, protect the office from high-profile controversies. The most recent one was linked to the suspension of 1XBet in the UK in 2019.
The British regulator, the Gambling Commission, reacted promptly to The Sunday Times’ revelation. As a result, 1XBet’s license in the United Kingdom has been revoked. Chelsea, Liverpool, and Tottenham have all been issued official warnings that if they continue to promote the Russian bookmaker brand, they would face prosecution and multimillion-dollar fines. This was the regulator’s first big intervention in the gambling industry’s financing of clubs.
1XBet is in the sights of law enforcement in numerous countries, according to the executive director of London-based White Bullet Solutions, which works with public, legal, and private customers on intellectual property theft.
In Kenya, the 1XBet was likewise stripped of its license after being found guilty of marketing and engaging young people in gambling.
In the United States, the bookmaker has the same dilemma. With no license to operate, 1XBet attempted to entice US players to its site by offering a $100 registration bonus. Connecting to the system was made more difficult by blocking sites that offered multi-step instructions. With the help of this strategy, the Russian bookmaker has worked in many different jurisdictions for years. After then, representatives from the American Motion Picture Association took note of 1XBet. They investigate piracy threats, among other things. They used to solely report on pirated websites, mobile apps, streaming services, and hosters. Also they included a new section in 2019 called “Ad networks and internet advertising organizations.” It just had one name on it: 1XBet (russia). The brand has been accused of mass advertising on pirated resources and promoting piracy around the world.
1XBet has been a frequent contributor to the MPA report given to the US Trade Representative’s Office in Washington since then. The most recent report on this topic is from October 2021.
Following these events, Semiokhin and Karshkov’s firm began to have problems with banks and partners all over the world. 1XBet uses cryptocurrency and other financial engineering solutions instead of bank accounts because to the lack of transparency in financial transactions.
The Ukrainian regulator, the Commission for the Regulation of Gambling and Lotteries, was completely unaware of this, as were the company’s Russian founders.
How 1XBet paved the way for the Ukrainian gambling regulator
A russian corporation with such a history would never have gotten a license in Ukraine during the full-scale russian invasion if not for corruption.
Experts say the bill was drafted in the benefit of Russian betting and gambling corporations even before gambling was legalized in Ukraine. In the interests of 1XBet, in particular. Boris Baum, a Latvian citizen, advocated for it. He later became the gray cardinal of Ukraine’s gaming market, which still has a vote in licensing. Boris Baum is the First Deputy Chairman of the Advisory and Expert Council of the Commission for regulating gambling and lotteries (from now on referred to as KRAIL).
Since the 1990s, Baum has had a tight relationship with Russian “businessman” Alexander Babakov. Who is now a State Duma deputy, deputy head of the State Duma, and Putin’s special envoy. He used to be a member of the Luzhnikovskaya organized crime ring in Russia (Luzhnikovs).
The link between Baum and Babakov may be traced back to the structures of VS Energy, a Russian-Ukrainian conglomerate where Baum served as a top executive. Alexander Babakov, Evgeny Giner, and Mikhail Voevodin, three Russian businessmen, controlled it until 2021.
In Ukraine, VS Energy owns a number of energy enterprises. Zhytomyroblenerho, Zakarpattyaoblenerho, Kirovogradoblenerho, Khersonoblenerho, Rivneoblenerho, Chernivtsioblenerho, and Khmelnytskoblenerho are the names of the varieties.
But Baum and Babakov share more than one relationship. A raid on the Rus Hotel in Kyiv’s central area sparked a public outcry in 2006.
“The hotel staff’s cellphones were confiscated, and people were locked up.” Doors and computers were smashed by the intruders. “Oleg Bolotov, the general manager of the Babakov-owned Premier hotel group, oversaw the affair,” the journalists wrote at the time. Boris Baum was also listed as the chairman of the First Investment Bank’s supervisory board – reportedly, an agreement to buy the hotel with him had already been reached.
Baum was discovered to be the owner of three offshore companies: Banita Limited, Himalita Limited, and Maslav Limited, in addition to being a banker. These entities registered the Rus hotel complex in 2008. Baum’s offshore firms are also linked to a criminal prosecution for money laundering in connection with VS.
Mikhail Spektor is another bright Luzhnikov representative. Mikhail was president of VS Energy and supervised nearly all activities of the Russian group in Ukraine until 2015. He is said to as a well-known crisis manager in the media. He was also a manager for Boris Baum at one point.
Mikhail Spektor is also a gambling addict. According to market officials, he was collaborating on a project in Africa with Pari Match.
How russian business acquires licenses in Ukraine during the war
Boris Baum was instrumental in bringing Semiokhin, Karshkov, and Mikhail Spektor together. Now, the latter is in charge of 1XBet’s success in Ukraine and represents the interests of the project’s Russian creators.
To obtain a license for 1XBet, Spektor employed Serhiy Tsybin as a notional owner and manager for the legal organization Your Betting Company LLC. A lawyer, Serhiy Tarasyuk, was involved in the licensing process.
Spektor had Baum’s backing in KRAIL. And this would be sufficient to obtain permits at the start of the year. However, the documentation for applying for one license were only ready in February. The documents for applying for the second in March 2022. As a result, the conflict altered the preparations.
The Russian brand’s official entry into the Ukrainian market has become much more difficult. Boris Baum, in order to encourage the issuance of a license for 1XBet in KRAIL, stated that after acquiring the license, they will purchase 500 million hryvnias worth of military domestic government bonds. And it was successful. Your Betting Company LLC was granted bookmaking and online gaming organization licenses by the regulator on March 30.
Following the desire to purchase military bonds, one would hope that the “Ukrainian” 1XBet is truly Ukrainian and has nothing to do with the Russians Semiokhin and Karshkov. However, there is a point to consider.
Another proposal from 1XBet was to allow accepting bets from non-resident Ukrainian players and to provide advantageous taxation for such activities. The bookmaker is willing to pay the budget 3% of turnover. And buy domestic government bonds for 20% of earnings if non-residents spend their money through Ukrainian enterprises.
Another program appears to have been focused towards the country’s economic development during the war. This plan aims to alleviate Semiokhin and Karshkov’s long-standing suffering caused by actions in many markets. The Curacao license is one of the most popular gaming licenses in the world. There are two kinds of licenses: master and sublicense. The first allows you to self-issue third-party Sublicenses. For years, 1XBet has tried unsuccessfully to secure a Master license. The company’s capacity to create a network of partner brands is severely limited as a result of this.
As an alternative, 1XBet’s founders devised a plan to join new legal markets and create conditions similar to those of the Master license. A similar endeavor is also underway in Ukraine. 1XBet could expand its operations globally and launder funds from operations outside Ukraine by collaborating with non-residents. The fact that KRAIL received this proposition implies a link between the Ukrainian 1XBet and Semiokhin and Karshkov.
The Kyiv Prosecutor’s Office, unlike KRAIL researchers, identified a link between Your Betting Company LLC and “international russians.” Investigators suspect Your Betting Company LLC of fraud and financing acts aimed at changing Ukraine’s boundaries, according to our information. In April 2022, criminal charges were filed in this case.
However, this is insufficient. The Ukrainian Security Service and the Ukrainian National Security and Defense Council, in our opinion, should interfere in the situation. After all, it’s a tragedy for Ukraine, and it discredits our battle, when Russian businesses are given the green light in Ukraine just as our country and people are facing their most difficult challenges. This heinous conduct must be stopped. We will do everything we can to ensure that the Luzhniki go to Luzhniki and that the Russians, for starters, fail another scheme to develop a network of influence agents in Ukraine.
The investigation was prepared by the Economic Security Council of Ukraine together with the InformNapalm international intelligence community.
