Everything’s Going According to Plan: How the ban changed demand for Russian bookmakers
History of blocking online bookmakers without a Russian license
The first wave of the blocking in Russia came back in March 2014. At that time, the government considered amendments to law No. 244-FZ, which regulates the gambling business. These amendments legalised online sports betting (so-called interactive bets) on a Russian bookmaking license, however, they also demanded that these bookmakers were based in the Russian Federation and were members of the Self-Regulating Organisation of Bookmakers (SRO).
On 21st March, Roskomnadzor (the Russian executive body which oversees media and mass communications) blocked the websites Betcity, Fonbet, Liga Stavok, Parimatch, Olimp, Baltbet, Favbet and several other online bookmakers. After this, the block took on a more intensive and permanent nature, at which point it became clear that this was not just a single action, but a persistent act.
As a result of the first blockages, online bookmakers such as Bet-at-home, Unibet, Betway and Ladbrokes, along with affiliate Betdaq, left Russia. Apparently, the shares that these companies had in the Russian market were not worth the difficulties that they were forced to endure.
The second wave of mass-blocking came in Autumn 2015. By that time, the law regulating interactive bets in Russia had already come into force and so the fate of offshore bookmakers became clear.
From 7-21 October, dozens of domains were blocked in Russia with the most active time of that period coming in the final three days. Victims of these sanctions were the domains of Fonbet, Liga Stavok, Marathonbet, Pinnacle Sports, Bwin and Unibet.
Finally, the third notable block on offshore bookmakers was in the summer of 2016. In the months before, it had become known that the Ministry of Communications of the Russian Federation was drafting a bill which would demand that internet providers block mirrors of these websites and also that search engine results would not contain information about alternative website addresses.
The blocking not only impacted bookmaking sites, but also their VKontakte and Facebook posts as well as their Twitter accounts. Additionally, affiliate sites that worked with unlicensed Russian bookmakers were blocked.
As Roskomnadzor noted, article 15.1 No. 149-FZ states that the basis for putting sites on the Unified register is the decision of the authorised executive bodies in regards to the information – the dissemination of which is prohibited by laws No. 244-FZ and No. 138-FZ. “You must fold before it’s too late”, – concluded the supervisory authority’s appeal.
Among other things, on 14th July it became known that Roskomnadzor had introduced payment systems QIWI and Skrill onto their register of sites which contained prohibited information. The reason for this was that, on the sites of these payments systems, there were links to illegal online bookmakers in Russia and information on how to fill up their account. QIWI and Skrill promptly adjusted themselves to the requirements and, as a result, were not blocked.
In total, in 2016, Roskomnadzor entered around 87,000 websites into the register of forbidden information with 15,900 of these being gambling websites.
In January, the Ministry of Communications of the Russian Federation prepared amendments to the law ‘On information, information technologies and information protection’, which meant that Roskomnadzor themselves would now be able to determine whether a website should be blocked.
Finally, in spring 2017, the government are due to submit a bill prohibiting crediting organisations, including banks and paying agents, from making transactions between Russians and online bookmakers prohibited in Russia. Companies operating outside of the law are to be placed onto special blacklists – these will be created by the Federal Tax Service (FNS). The blacklists will be published and brought to the attention of banks and payment agents. Additionally, the blocking of gambling transactions through MSS-code has been discussed and the Russian Parliament is planning to have the first draft read in April.
What is the demand for foreign online bookmakers among Russians
The practice of blocking online bookmakers prohibited in Russia has affected the use of search engines by Russians, as discovered by Bookmaker Ratings. Two trends are clearly visible: a decrease in the interest of Russian users towards blocked online bookmakers, along with the growth, in 2016, of interest in Russian companies as users want to place bets with legal bookmaking companies who work on the internet via ZUPIS. In our analysis, we analysed the number of requests, containing the name of the bookmaker, searched via Yandex by users in the Russian Federation.
Firstly, let’s look at how the demand for the top-12 most popular Russian brands of foreign online bookmakers changed in the last 24 months. We notice that, during the 2015/16 football season, the number of requests increased, with a slight decline due to the winter break, but then, during the 2016/17 football season, we see an almost non-stop decline. This sharp decline happens just after June 2016 – the third major wave of blockages – and cannot simply be down to the end of Euro 2016 as the transition between that and the current football season transitioned almost seamlessly.
Key: Blue = Previous 12 months 2015/16 | Red = last 12 months 2016/17
The decline in demand for online bookmakers unlicensed in Russia was especially noticeable when we compared the figures for each month. The difference between June and July 2015 and 2016, due to Euro 2016, is huge and does not show a decline in interest, however, the summer was the only period in this time-frame where the search requests were higher in 2016.
Now we turn to the second trend – closely related to the first. There is an increase in demand for Russian bookmakers after the launch of several interactive bookmakers. The chart shows the level of requests for the top-5 bookmakers in Russia over the last 24 months. As we can see from the dates, in February 2016, when it was announced that the first ZUPIS was launched and Liga Stavok became the first interactive bookmaker in Russia, the number of searches began to grow.
In the middle of June, online bookmaker 888.ru, from the company ‘Stoloto’, became an interactive bookmaker in Russia and, within a few days, Winline launched the site Winlinebet.ru. In July, 1xBet became the fourth legal bookmaker in Russia. By June 2016, the number of search requests for Russian bookmakers soared to a new level which is now stable.
Key: Blue = Previous 12 months 2015/16 | Red = last 12 months 2016/17
Again, the difference between the last 12 months and the previous 12 months becomes even more noticeable when directly compared. The indicator for the last 12 months is much higher.
The drop in the number of searches for foreign online bookmakers is clear to see in this example with William Hill – the most popular western bookmaker in Russia. In the first half of 2016, the demand remained at the same level but then grew in June and July thanks to Euro 2016. The number of searches for William Hill exceeded 41,000 in July 2016 but, after this, an obvious decline began and, in August, William Hill was searched just 27,000 times in Yandex and then just 17,500 times in December. This decline continued in 2017 and, in February, only 14,200 searches were made. That is to say, during the 2016/17 football season, Russians were looking at William Hill less frequently every month – in stark contrast to the 2015/16 season.
However, three bookmakers stand out from the general trend. bet365, which is the most popular online bookmaker in the world and is known as the flagship of online betting, shows sharp drops along with sharp increases among Russian users despite the fact that the site is blocked in Russia.
As well as this, two online bookmakers for professional players (Pinnacle and SBOBET) retained similar levels. This is most likely explained by the fact that they have a faithful user base in Russia, which has long opted for low-margin bookmakers. Additionally, some of these users will be multi-account holders who will have learned how to bypass blocks long before the average player.
As a consequence of the emergence of legal bookmakers in Russia and the latest wave of regulations against illegal sites in Russia, the demand for offshore bookmakers has begun to fall. Interest in them has reduced and Russian bookmaking companies, which one-by-one acquire a site to use for online betting, are replacing the foreign ones. It is logical to assume that the same dynamic is seen in the changes in shares of foreign and local bookmakers in the Russian market.
It is obvious that squeezing the foreign bookmaking companies out of the Russian market, as Yegor Letov sang, is ‘going to plan’ and, with the current dynamics in the industry, the observed trends will only continue.
All material/data used was compiled by Nikolai Solovev and Aleksei Morozov.
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