Does Favbet comply with the requirements of Ukrainian legislation?

One of the most popular bookmakers in Ukraine today, Favbet, owned by former Russian citizen Andriy Matyus, has found itself at the center of a scandal. The company has accumulated a number of reasons for opening criminal proceedings, revoking licenses, and even imposing sanctions.

Despite Russia's full-scale war against Ukraine, Favbet is not canceling its trademarks in the Russian Federation and Belarus, which is causing significant public outrage. At the same time, in Ukraine, the company is minimizing tax liabilities to the state, which gives it a competitive advantage over other market participants.

Interestingly, while Ukrainian authorities are actively prosecuting other gambling operators for similar violations, the Favbet brand remains untouchable. This raises suspicions about the company's possible connections with influential individuals who could help evade sanctions and investigations.

How the state cleared the way for Favbet to become a leader in the gambling market

Recently, information was published in the Ukrainian media that Favbet has become the new leader in the gambling market, taking this position due to the fact that the previous leaders lost their place either due to sanctions or criminal proceedings.

As is known, in the spring of 2023, the National Security and Defense Council of Ukraine imposed sanctions on the then leader of the bookmaker market, Parimatch, as well as on the Russian player 1xBet. A few months before that, the Commission for the Regulation of Gambling and Lotteries revoked the license of the bookmaker FanSport, and in 2024, problems with the law began with three more market leaders - the bookmaker Vbet and the online casinos Cosmolot and Pin-Up: the first had its accounts arrested on suspicion of money laundering and ties to the Russian Federation, the second is accused of failing to pay more than UAH 1 billion in taxes, and the nominal owner of Pin-Up was detained by the State Bureau of Investigation.

Thus, the space was cleared for the Favbet company, which today has five KRAL licenses to conduct its activities in Ukraine and, unlike most other operators, has no problems with law enforcement agencies. Which is already suspicious: has there really been a company in Ukraine that honestly works in the gambling market, pays all taxes, and has no ties to Russia, which almost every second player in this market has?

If only. We conducted a study of the activities of Favbet in recent years and came to the conclusion: someone is clearly "covering up" this gambling operator, because there are no fewer, if not more, reasons for criminal prosecution and sanctions against Favbet than for other companies that have already been deprived of licenses to operate in Ukraine.

How Favbet operated illegally for two years, avoiding paying hundreds of millions of hryvnias to the budget 

Let's start with the fact that Favbet allowed itself to operate illegally for two whole years since the state legalized the gambling market in 2020. While other companies paid tens and hundreds of millions of hryvnias to the budget for obtaining licenses and as taxes from their official activities, Favbet continued to accept sports bets without a license until the end of 2022 - the license for bookmaking activities, which is the main and most profitable for Favbet, was received by LLC "Bookmaking Company "Favbet" only on December 28, 2022.

However, to this day, the company has not been idle, but has been actively working and engaged in bookmaking activities on several of its websites - www.favbet.com, www.favorit.com.ua and others. And at the same time, it has not demonstrated any profits to the state. According to the official financial statements of LLC "Bookmaking Company "Favbet", the company ended 2021 with a loss of UAH 31 million, and in 2022 it increased and amounted to UAH 40 million. Only in 2023, when the company finally had a license for bookmaking activities, did Favbet's profit sharply become positive: revenue amounted to as much as UAH 9.8 billion, and net profit - UAH 1.7 billion.

But in 2022 and 2021, Favbet was just as active as an online casino and a bookmaker. So it can be assumed that the company had somewhere the same revenue and profit figures in these years, they just passed by the tax office. And, characteristically, no law enforcement agency noticed this, allowing Favbet to confidently move towards market leadership without such obstacles as criminal proceedings for illegal activities and tax evasion.

Only losses. How Favbet evades income taxes 

With bookmaking activities, it is clear, but other Favbet companies continue to show the state solid losses today. Favorit Casino Company LLC, which has had a license to operate a casino in Kyiv at the Mercure Kyiv Congress hotel since November 2021, also has negative profit every year: in 2022 it amounted to UAH 91 million, in 2023 the loss increased to UAH 96 million, and for 2 quarters of 2024 the casino's profit amounted to minus UAH 29 million.

Or LLC "Favbet Game Slots", which operates slot machine halls under the Favbet brand, having had a license for this since the end of 2021, is also completely losing money: the company ended 2022 with a loss of almost 31 million UAH, 2023 - 27.5 million UAH, and two quarters of 2024 the profit amounted to minus 5 million UAH. Well, this gambling business is really unprofitable, judging by the reports of Favbet companies - it is not possible to make any money. Or it is possible, but at the same time it also manages to fool the state, drawing a bunch of "left" expenses in order not to pay 18% income tax. So necessary for the state to conduct defense.

At the same time, according to Opendatabot, as of the end of 2021, Favbet was among the top three leaders in the slot machine market in terms of the area of ​​occupied gaming halls - at that time, Favbet had 2,649 square meters, which was 7.9% of the area of ​​all official slot machine halls in the country, or third place - only the Win and First brands had more.

That is, it is strange, you must agree, with such a market share, to end up with losses year after year, working in perhaps the most profitable business to date.

And another interesting nuance. According to the results of 2022, all three LLCs operating under the Favbet brand in various gambling markets showed losses in the millions. But at the same time, the Favbet Foundation charity fund, founded in 2020 by Favbet, in the first year of the Russian Federation's full-scale invasion of Ukraine, reported sending UAH 193 million to the state budget and to support the Armed Forces of Ukraine and Ukrainians affected by the war. Where does the fund get its money from, when everywhere you look there are only losses? It turns out that somewhere on the side the company still has profits of unknown origin, from which it was able to promote itself for almost UAH 200 million. What is this if not a direct sign of conducting a shadow business and confirmation that all these losses depicted in the reports are nothing more than minimizing tax liabilities? Such a "market leader" is not bad. Unless it is behind the losses.

How Andriy Matyukha learned to negotiate with the authorities 

If officially Favbet is a practically unprofitable business, except for the indicative profits of LLC "Bookmaking Company "Favbet" only since 2023, then somewhere a group of companies must be earning unofficially and illegally. As it did all 11 years of the gambling business being outlawed - from 2009 to 2020.

The owner of the Favbet group of companies is Andriy Valerievich Matyukha. He founded the bookmaker office "Favorit" (this is what the FavBet brand was called until recently) back in 1999, in 2001 he opened a website for accepting bets, and by 2005 the network covered more than 90 cities of Ukraine and had about 170 betting points. In 2013, the company began operating in Belarus, in 2016 - in Romania, in 2018 - in Croatia.

As you know, gambling has been banned in Ukraine since 2009, but this did not prevent Andriy Matyukha from continuing to develop his illegal business in Ukraine. Like most other businessmen in this field, he disguised his slot machine halls and sports betting sites as lotteries, which the state left legal.

Law enforcement officers periodically caught Matyukha's companies: in 2013, criminal proceedings were opened, within the framework of which it was established that Dnipro-Victoria LLC, Favorit Invest LLC, Fansportclub LLC, Modern Payment Systems LLC and World Payment Systems LLC, controlled by Andriy Matyukha, had been carrying out their illegal activities in organizing and conducting gambling for a long time, covering it with licenses for issuing and distributing state lottery. Later, the Kyiv prosecutor's office conducted searches in FavBet offices, seizing dozens of pieces of computer equipment.

In 2016, police investigators in criminal proceedings No. 12016100040000990 even established a chain of companies owned by Andriy Matyukha, through which he pumped money earned from the bookmaking activities of Favorit Sport. Players' funds were deposited in the accounts of Primefort LLC and Neuron Gold LLC, and then transferred to other companies controlled by Matyukha - Planeta Sport LLC, Sport Arena LLC and Sfera Max LLC. In addition, a significant part of the money was legalized through Media Scope Global LLC, supposedly for advertising services for Favorit. As stated in the materials of the proceedings, the illegal excess profits were eventually spent on the purchase of real estate and cars.

At the same time, the SBU even reported the “liquidation” of the bookmaker office “Favorit” in Ukraine because it financed terrorist activities in eastern Ukraine — apparently, by paying out winnings to residents of the occupied areas of Donbas. However, no attempt by the security services to bring Andriy Matyukha to justice reached its logical conclusion.

Why? Perhaps because Andriy Matyukha learned the rule from those times: you need to negotiate with the authorities, then the business, no matter how illegal it is, will be whole and unharmed. In 2013, hackers from the international group Anonymous hacked the mailboxes of deputies of the Party of Regions and published a lot of letters found in them. Among them was a letter from Andriy Matyukha from the address [email protected] , in which he appealed to the "regionals" with a complaint that his illegal bookmaker's office had to be subjected to constant "raids" by law enforcement officers, paying them 150 thousand US dollars per month, because of which Matyukha offered the then authorities of the Party of Regions to "cooperate."

"The volume of monthly payments across Ukraine (to law enforcement agencies) is currently about $150,000, but this does not provide any guarantee of more or less stable work. The company is ready to cooperate with the Ministry (of Internal Affairs) centrally and not cooperate locally. If all our points in all regions operate stably, we are ready to increase the volume of monthly payments to $200,000," Andriy Matyukha appealed to the authorities, asking in return for a prompt response from the Ministry of Internal Affairs in the event of another "raid" on his slot machine halls.

Apparently, the offer was accepted - Matyukha's halls continued to operate, and he has not been in the dock in all these years. As then, so, perhaps, now, the owner of Favbet manages to negotiate with the authorities in this way, because even today his business, despite a bunch of questions about its transparency, does not suffer, unlike its competitors, any attacks from law enforcement officers and the authorities in general.

How Favbet accepted unlicensed bets with impunity for two years 

And the first of these issues concerns Favbet's activities in 2021-2022. As we already noted in the public investigation above, Andriy Matyukha did not legalize his bookmaking business until the last, obtaining the appropriate license only at the end of 2022. Why? Because the bookmaking license is the most expensive of all the others and costs UAH 108 million per year, and also because sports betting is the main, and therefore the most profitable of all Matyukha's other businesses. He obviously did not want to share profits with the state after so many years of illegal work.

Only in January 2022, the Commission for the Regulation of Gambling and Lotteries sent a written request to Favbet to restrict access in Ukraine to the website www.favbet.com, from which the company continued to provide betting services without a license. Judging by the fact that in May 2022, journalists from the Delo.ua publication wrote in their investigation about the illegal work of Favbet in Ukraine, it means that at that time the site continued to operate freely in Ukraine, so Matyukha ignored the KRAIL demand.

And at the same time, he did not receive any criminal proceedings for violating the law on gambling, ignoring the requirements of the licensing authority, and failing to pay taxes. The state simply silently waited for Andriy Matyukha to "mature" to share the profits with it and finally consent to obtain a license for bookmaking activities and start working legally in his country.

And before that, everyone simply watched as the owner of one of the most popular brands in the gambling business continued to operate illegally through a number of sites and mirrors to them for actually 2 years from the moment the market was legalized. And this is at least UAH 216 million in unpaid license fees to the state budget, not counting taxes on income that was transferred offshore.

And Matyukha has more than enough offshores. In fact, half of his extensive network of companies is registered in the jurisdictions of Cyprus, Malta, Belize and the UK. The Curacao license, for example, for the website www.favbet.com, was obtained by Favorit United NV, which is the founder of the Cypriot company Bintpash Ltd, which is engaged in receiving and processing payments of Favbet players. The director of this company is Igor Sosonyuk, a business partner of Andriy Matyukha. Andriy Matyukha himself is personally the beneficiary of seven companies registered in the UK and Malta.

And while the Ukrainian authorities allowed Matyukha to work without a license in Ukraine, the money of users of the website www.favbet.com went not to the budget of the warring country, not to its economy, but to one of Andriy Matyukha's offshore companies.

How Favbet lied about their work in Russia 

The second issue regarding the transparency of Matyukha’s business is even more interesting. In May 2022, Favbet published its statement, which contained a harsh and irrefutable statement that the bookmaker does not work in the Russian Federation and Belarus. Moreover, the company stated that it has never worked on the Russian market. “In the entire history of its existence, Favbet has not worked on the territory of the Russian Federation… Favbet is not that it no longer works on the Russian market, but it did not work either. Favbet had neither offices, nor licenses, nor payment methods for customers, and moreover, did not carry out any marketing activities,” the statement said, which also noted that “registration of players from the Russian Federation is closed, the accounts of players who were once on the site during 22 years of operation are blocked.” That is, they never worked in the Russian Federation, but the accounts of players from the Russian Federation had to be blocked — an interesting contradiction, isn’t it? Let's see if what Matyukha's company said was true.

Even a cursory analysis of Russian registers and databases immediately points to a bunch of interesting questions. If Favbet never operated in the Russian Federation, then why did Favbet register its trademark in this country, the validity of which lasted until December 30, 2024 — that is, literally a month ago, almost three years since the beginning of the Russian Federation's full-scale invasion of Ukraine.

The registration of this TM was handled by the Russian LLC "Bet Invest", registered in Moscow at the height of the war in Donbas - on June 17, 2014. The director of this LLC was a citizen of the Russian Federation, Kotsiak Tatyana Anatoliyevna, who in 2015, by the way, registered an individual entrepreneurship in the Crimea annexed by Russia - the Russian analogue of our individual entrepreneur.

But the Favbet trademark with international registration, which is still valid in the territory of the Russian Federation and will be valid until March 3, 2030, because no one has revoked the certificate of rights to this TM, according to the Moscow Patent Service, was personally registered by Andriy Matyukha in March 2020.

The fact that the Favbet trademark has not been canceled in Russia is the reason for imposing sanctions on the bookmaker. Because in the spring of 2023, the National Security and Defense Council of Ukraine and the President of Ukraine Volodymyr Zelensky imposed sanctions on the bookmaker Parimatch precisely for the operation of their trademark in Russia after the start of the latter's major war against Ukraine. As the RBC-Ukraine newspaper wrote, "in fact, the license agreements for the use of the Parimatch trademarks (in Russia) were terminated in September 2022," although the Cypriot holding company Rellius Holding Limited, which owns Parimatch™, claimed that it had withdrawn the franchise from Russia on a legal and technical level back in March 2022.

It was this point that Parimatch tried to challenge in the Ukrainian courts by filing a lawsuit against RBC-Ukraine, but the Cassation Economic Court within the Supreme Court ultimately completely rejected the claim of the Parimatch group of companies against the journalists, effectively confirming that the presence of a trademark in the territory of another country is a sign of conducting business there.

At the same time, the Favbet trademark registered in Russia continued to operate in the territory of the Russian Federation, which no one revoked and which was valid until the end of 2024. And again, no one in the Ukrainian authorities paid attention to this, no one imposed sanctions on the bookmaker, although the situation is similar - the same signs of presence in Russia, for which one company was included in the sanctions list and was deprived of licenses, and the other - not. In what way, so to speak, is the Favbet trademark operating in the Russian Federation better than the Parimatch trademark?

Well, returning to Favbet's statement that they have never worked in Russia. Is that right? Without even considering the fact that the favbet.com website accepted bets from Russians and residents of the Ukrainian territories occupied by them throughout the years of Russian aggression against Ukraine, and paid them winnings, as evidenced by the numerous reviews of Russians about the work of the Favbet and Favorit bookmakers on the Internet, a simple question: if you have never worked in Russia, then why did you register trademarks there? And exactly in 2014, when Russian troops annexed Crimea and entered their troops into Donbas, starting a war there.

Then why did Andriy Matyukha decide in 2020 to register the Favbet trademark with international registration in the aggressor state, which continues to be valid there today? And why did he issue notarized powers of attorney to a Russian citizen, Tatyana Kotsyak, director of Bet Invest LLC, to represent his interests in Russia?

Andriy Matyukha - a citizen of the Russian Federation? 

And why did he need a passport of a citizen of the Russian Federation, the existence of which he constantly denies. On the Internet you can find a photo of a Russian passport in the name of Andrey Matyukha, but it is currently difficult to confirm its authenticity. However, even today some Russian registers demonstrate that for a long time Andrey Valerievich Matyukha was listed in them as a citizen of the Russian Federation right up until November 11, 2022.

Already having Russian citizenship, Andrey Matyukha received a tax identification number in Russia 770505760695, which was valid from October 11, 2001 to November 11, 2022.

Today, Matyukha has renounced Russian citizenship, but still has a new TIN 920459743181, which is currently valid. In addition, Russian registers contain Matyukha's residential address in Russia: Moscow, Velika Pionerskaya St., building 18, apt. 25.

That is, the owner of Favbet remained a Russian citizen until the end of 2022 — more than six months after the start of the full-scale war. Moreover, he now continues to have a Russian TIN, which probably allows him to pay taxes to the budget of the aggressor state.

Let us recall that the Ukrainian authorities also imposed sanctions on the bookmaker Parimatch because the structure of Parimatch Tech companies included companies created by citizens of the Russian Federation. And here the story is that the owner of the group of companies was personally a citizen of the Russian Federation. And again, for some reason, no one noticed this, and did not create any obstacles for the development of Andriy Matyukha's business in Ukraine.

How Favbet continues to be present in Belarus

In its May 2022 statement, Favbet also stated that “as of March 1, 2022, Favbet has ceased operations in Belarus and that its betting shops, website, and office in this country have been completely closed, and the license has been surrendered.” However, Favbetbel LLC is still operating in Belarus, having registered four Favbet trademarks in this country, three of which are valid until 2028 and 2029. The same company received a license for bookmaking activities in Belarus valid until February 14, 2024.

According to Belarusian registers, the founders of LLC "Favbetbel" today continue to be Andriy Matyukha personally, as well as his British company Andalidi Invest LTD, in which he was listed as the founder and director until the fall of 2022, and then transferred the company to his partner Valery Sokol. The director of LLC "Favbetbel" is Belarusian citizen Maksym Starichenko, to whom in 2021 Matyukha issued a notarized power of attorney to represent his interests in Belarus for a period until 2024.

So, is Favbet, the new "leader" of the Ukrainian gambling market, as some media call it today, really so "clean" and "transparent" that Ukrainian law enforcement agencies, the National Security and Defense Council, the executive branch, and the Commission for the Regulation of Gambling and Lotteries do not respond in any way to a number of questions to Favbet for reasons unknown to us. And this is tax evasion by a whole group of companies that show losses to the state year after year, illegal bookmaking activities for two years without a license, the presence of valid trademarks and companies in Russia and Belarus. Why does the Ukrainian state ignore all this in relation to Favbet and not in relation to a number of other gambling operators? Has the Ukrainian government really got a favorite among the gambling business, who can do what others cannot?

PS By the way, for the last three years, Andriy Matyukha has been living far from Ukraine. According to BlackBox OSINT, since January 2022 he has been permanently residing in Croatia. During this time, he has visited 25 countries around the world, including, in addition to European ones, Argentina, Israel, Saudi Arabia, the USA, Qatar, Chile, Uruguay, the UAE and the Maldives. Matyukha never visited Ukraine during the war. I wonder how he got registered in Croatia and with what passport — as a Ukrainian refugee, or does he have some other citizenship? After all, the validity of a foreign passport will expire someday, and, as you know, Ukrainian embassies and consulates no longer renew documents for evaders.