Olympic Entertainment Group (OEG) filed a lawsuit against the Ukrainian government this week in response to its ban of gambling and closure of OEG’s casinos in the country. Olympic Entertainment, which is listed on the NASDAQ Baltic Market, is based in Estonia and has offices in Latvia and Lithuania.

In 2009, the government of Ukraine announced a comprehensive ban on gambling. Gaming establishments in the eastern European country were severely restricted, with foreign casino operators forced to close.

Ten years later, OEG opening arbitration proceedings in accordance with the UN Commission on International Trade. The Ukraine’s Ministry of Justice received notification this week of the arbitration proceedings.

Observers might think OEG waited a long time to sue the Ukraine government, but a buyout in March 2018 and a new CEO in November 2018 explains the decisions by Casino Olympic’s parent company to sue years after the fact. New international arbitration courts also explain a lawsuit in 2019.

OEG Sues over Discriminatory Measures

Olympic Entertainment claims Ukraine took “discriminatory measures” in its 2009 actions. According to OEG’s lawyers, those actions violated international rules that protect foreign investments.

The case will be argued in an international ad hoc arbitration. No formal arbitration tribunal exists, but there are procedures for the formation of an arbitration tribunal and ad hoc principles suggested for that tribunal will be in place.

Ukraine plans to argue on its behalf in the ad hoc arbitration court. The Ukraine government hired a foreign legal advisor to participate in the trial.

OEG under New Management

Readers might wonder why a gaming company would wait a decade to sue a national government over its casino ban. Less than a year ago, OEG was bought out by a UK-based private equity group, Novalpina Capital, for €288 million.

Novalpina Capital therefore has been in charge of decision making only 10 months. New chief executive Corey Plummer was appointed only in November 2018, so Mr. Plummer may have reviewed the company’s past and decided the Ukraine closures were illegal.

The group plans a variety of changes, including delisting Olympic Entertainment from the NASDAQ Tallinn stock exchange. Once this happens, OEG and Odyssey Europe AS, a company already owned by Novalpina, will merge into one gaming company.

Armin Karu Accepted Buyout

OEG’s two largest shareholders, Jaan Korpusov and Armin Karu, agreed in March 2018 to the takeover bid from Novalpina. Karu and Korpusov owned 64% of the company, so they had control of the decision.

At the time, Armin Karu, the founder and chairman of OEG, told shareholders that he considered the €1.90 per share offer “to be fair.” Karu also stated “I recommend other shareholders to take up the offer.” The company founder added Novalpina’s team “has significant experience in investing in companies and helping them expand both geographically and digitally.”

Olympic Entertainment Left Poland, Belarus

The takeover came after OEG was pushed out of two gaming markets: Belarus and Poland. Those countries generated €13.8 million in revenues for OEG in 2016, so the pullout from Poland and Belarus were significant blows to the company.

The decision to leave both markets came after various regulatory and financial stresses, which leave Olympic Entertainment ripe for a buyout. Latvia remains the key market for Olympic, as it generated €69 million in 2016. Estonia generated €56.7 million in the same year.

Given the buyout and OEG’s troubles with other eastern European markets, it makes sense for the new ownership to seek legal redress from the Ukrainian government. With greater financial resources, a suit against Ukraine based on its lost investments could net the company financial gain — though it is hard to see whether it could win the right to re-open its Ukraine casino.

Ukrainian Leaders vs. Casino Gambling

At the time of the 2009 gambling ban, Ukraine was in the late stages of the administration of pro-western Pres. Viktor Yushchenko (2005-2010). Mr. Yushchenko was the politician who allegedly was poisoned with Polonium by Russian agents for his pro-western stance. The poisoning scarred Viktor Yushchenko’s face for life.

The next year, pro-Russian politician Viktor Yanukovych became Ukraine’s president. During the administrations of Yanukovych (2010-2014), OIeksandr Turchynov (2014), and Petro Poroshenko (2014-present), Ukraine has maintained a ban on certain foreign casino operators.

About the Author
April Bergman avatar
April Bergman

April Bergman was a longtime news blogger for BOC. She wrote gaming news posts from January 2013 until September 2018. April also wrote slot reviews, strategy articles, and online casino reviews for the site.

April Bergman began in the online gaming industry in August 2010. From 2010 to 2013, she managed evergreen content for several top online casino. Her duties included developing and maintaining multiple websites in the gaming space. When not writing about online gambling, April loves horse racing, travel, photography, and gardening. She's began in the business as a devoted poker players and spent several years as a card game editor on the now-defunct DMOZ. These days, she lives with her husband and two children in the Toronto metropolitan area.

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April Bergman was a longtime news blogger for BOC. She wrote gaming news posts from January 2013 until September 2018. April also wrote slot reviews, strategy articles, and online casino reviews for the site.

April Bergman began in the online gaming industry in August 2010. From 2010 to 2013, she managed evergreen content for several top online casino. Her duties included developing and maintaining multiple websites in the gaming space. When not writing about online gambling, April loves horse racing, travel, photography, and gardening. She's began in the business as a devoted poker players and spent several years as a card game editor on the now-defunct DMOZ. These days, she lives with her husband and two children in the Toronto metropolitan area.

READ MORE
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