An Estonian-based company whose major business is online crypto currency gambling got a mention in the recent Pandora Papers leak, daily Eesti Päevaleht (EPL) reports, while related subsidiaries and individuals have moved large amounts of money between different jurisdictions.
The company, known now as Yolo Group, formerly the Coingaming Group, is in actuality part of a network of many firms which have proliferated in recent years, and has what EPL (link in Estonian) calls a very healthy slice of the world's online casino market – valued by some experts at US$60-70 million, even forecast to rise to US$93 billion by 2023 – with one of the firms, Heathmont OÜ, named on business daily Äripäev's Top tech firms of the year in 2020 (link in Estonian).
While this on its own may hardly be news over a year later, EPL says that some of these companies ended up on the Pandora Papers leak in October this year, with documentation revealing a set-up across several well-known tax havens, including the British Virgin Islands, Malta and Curacao.
At the heart of the business is crypto currency gaming, EPL says, a phenomenon which has, particularly with the advent of the lightning network, had the effect of speeding up the traditional "house always has the edge" principle, following the company's conception at a meeting with business partners in Christmas of 2013.
Founder of the group, Australian Tim Heath, rarely talks to the media, EPL says – in part due to the inability of many journalists to grasp the nuances of an industry they don't share Heath's passion for, though he did give this pretty jovial interview to an i-gaming industry-focused podcast in July this year.
EPL also reported that the Estonian media has tended to overlook the overall story of the company, only leaping into action when major events such as the inking of multi-million-euro sponsorship deals with English Premier League sides Watford, Southampton and Arsenal happen.
Heath, 43, is well-known in the expat community for his support for Estonian cricket – which nowadays, or at least in summer, enjoys the use of a purpose-built pitch at Tiskre, west of Tallinn, while the company itself relocated to louche offices purpose-built in Kalamaja (it has around eight other offices in other countries worldwide - ed.), and, while Heath is not involved in the day-to-day at Yolo any more, he has reportedly been known to drop in on customer services calls on occasion.
Notwithstanding EPL's enquiries and the appearance of the company and its activities in the Pandora Papers leak, a spokesperson for Yolo Group told EPL that there was transparency surrounding the company's activities, saying that: "There is exactly as much information about every aspect of the company to be found from public sources as we deemed it necessary to publish," adding that this constituted sensitive company information.
In any case, Heath and his associates' trail in managing assets derived mainly from crypto gambling and channeled via tax havens appeared in Pandora's papers, EPL says, though while Heath himself – 68 percent owner of Yolo Tech OÜ – says he remembers founding various subsidiaries which were intended to manage investments, these never went beyond planning stage.
The EPL piece contained a pretty byzantine spider chart of both Yolo Tech OÜ and its sister firms, one registered in the U.K., along with multiple companies registered in Malta, Gibraltar, Curacao, the British Virgin Islands – and, again, Estonia, with stakeholders in some for the firms named as Maarja Pärt (Yolo CEO), Taruri Tiitsaar, Raido Purga, Reio Piller and Mikk Kard.
Most of the newer outfits have been operating in Malta, nicknamed "blockchain island", and the first EU state to equate crypto-currency with regular currency, while at the same time exempting residents from many of the taxes citizens are liable for (the standard tax in Malta of 35 percent on profits can be mitigated almost to zero, EPL reported, by legally exploiting tax loopholes and the like).
Gambling online in many countries is nonetheless still subject to domestic laws – for instance a lift on a ban on gambling online in the Netherlands was followed by the emergence of a sector worth around €500 million annually – though doing so with cypto-currency in particular is one channel which money launderers use and which can be hard for authorities to differentiate from legitimate gambling – for instance, by crediting a casino and then taking the funds out unused, or even deliberately losing to an associate at poker or another table game and having the money returned later by same.
Other issues the company has faced include the availability of games made by the Stockholm-based Evolution in jurisdictions where they are barred – easy workarounds for this include the use of a VPN – and of links between video gaming marketed to children and the likelihood of them later being susceptible to online gaming, as reported by the BBC, while the company says it complies with all operating license, know your customer (KYC) and anti-money laundering (AML) regulations and best practices.
The Pandora Papers consist of close to 12 million leaked documents (or close to 3 terabytes of data) listing over 100 billionaires from around the world, along with several dozen current and former world leaders, celebrities and others, and relating to nearly 30,000 offshore accounts.
The Pandora Papers follow the earlier Panama Papers, and were published by the International Consortium of Investigative Journalists (ICIJ) starting October this year.
Famous names on the list include Ukrainian president Volodymyr Zelensky, who visited Estonia just over two years ago, Czech prime minister Andrej Babiš, former British prime minister Tony Blair, barrister and wife of the former, Cherie Blair, former IMF chief Dominique Strauss-Kahn, and other figures as diverse as 1997 Formula One World Champion Jacques Villeneuve, singer songwriter Elton John and his partner David Furnish, Beatles drummer Ringo Starr, actress Monica Bellucci, football managers Pep Guardiola, Roberto Mancini and Carlo Ancelotti, and the U.K.'s Crown Estate.
Russian president Vladimir Putin's name does not appear, though individuals identified as his close associates do.
EPL participated with the ICIJ in the publishing of the Pandora Papers, as did Latvian investigative non-profit Re:Baltica, and Finnish public broadcaster Yle. Estonian public broadcaster ERR did not participate.
Latvian journalist with Re:Baltica Inga Springe, and the Organized Crime and Corruption Reporting Project's (OCCRP) Investigative Dashboard, also contributed to EPL's recent article.
Editor's up-sum: Ultimately, Estonia has long billed itself as a haven both in tech and tax terms. One of its flagship unicorns, Wise, is expressly aimed at making cross-border payments, regardless of purpose, easy – while another, Playtech, develops gambling software. Presumably if the shoe fits on the one foot (with Estonians) it should do fit on the other (with the dreaded foreigners) also.
Editor: Andrew Whyte