Russian Betting: The Kremlin to use online gambling as cash cow for their budget

It’s not Hollywood, Baby – it’s Russia

Gambling in Russia has already been under the full control of officials for the last six years. In 2009, the country’s gambling industry was thriving in all forms, including illegal gambling. However, a lot has changed and men in expensive suits have decided, in militaristic fashion, that all financial flows into the Motherland should be put under control. Naturally, their control.

Since then the country has passed a law banning all casinos and slot-machine halls and designated a few remote territorial zones  for gambling in regions outside the densely populated center of the country (the Far East, Sochi, etc.)

Only the bookmaking business stayed fully legal in the gambling sector but in Russia it still looks more like a performance acted out by highly paid clowns. Online betting was banned in Russia until 2016 and only shop betting was allowed.

However, not one betting company with a Russian license wanted to lose a huge portion of their income that is brought in by online betting. Therefore, it is not surprising that in the .com domain zone you can find betting sites which, are identical in name to the well-known Russian bookmaker brands: ‘Liga Stavok’, ‘Marathonbet’, Betcity and others.

Marathonbet betting shop

Officially, bookmakers repudiated that they took bets on the internet.

“They have a similar name to our site but are a completely different company operating under an offshore license. We honor the law of the country and do not work on the internet,” would be a guaranteed response (until recently) from the head of any licensed Russian bookmaker.

Is this an open secret for all Russian professionals in the betting industry? Without a doubt, but these are and certainly were, until recently, the rules of the game. Officially commenting on operations is not the practice of Russian bookmakers. “This super-profit, which numbers in the hundreds of millions of dollars, for many years was money earned in silence. Nobody wants such innovation in this field,”  said the manager of one of the top Russian betting companies under anonymity.

Everybody for themselves

In 2016 came the arrival of the legalisation of previously illegal interactive, online betting. This occurred with the formation of the so-called TSUPIS or Center, which accounts the transfers of interactive betting and is provided by federal government legislation in this area. TSUPIS was launched as the first self-regulatory organization of specialists bookmakers ‘SRO’ (one of the two existing industry betting structures in Russia). By law, all local licensed bookmakers are obliged to enter into SRO, otherwise their work is illegal.

According to Oleg Zhuravsky, the president of ‘First SRO’, the launch of TSUPIS, the online platform intermediary between the players and bookmaker, took more than a year to prepare because of “numerous technological difficulties.”

Apparently, the problem is still not solved. At the moment, two months after the start of TSUPIS and the formal legalization in the country of online betting, only one bookmaker accept bets through this platform – ‘Liga Stavok’, whose honorary president is the previously mentioned Mr. Zhuravsky. Until now, all other companies have not started doing business through this system.

In the Russian bookmaking community, Oleg Zhuravsky is considered to be as close as possible to the higher echelons of power. Without directly mentioning his name, many of his competitors say that his main desire is to monopolize the betting industry. Mr. Zhuravsky is thought to have familiarity with a number of officials from Russian President Vladimir Putin’s administration.

Oleg Zhuravsky

Nikolai Oganezov, the Chairman of the board of SRO bookmakers (the second branch organization which unites licensed bookmakers),  regrets the fact that he is unable to find any common ground with the leadership and that there is even a rival structure, ‘First SRO’. He says that it is now more than ever that Russian bookmakers need to be united in order to protect their business interests. According to him, the authorities are preparing amendments to the tax laws, which cannot be considered adequate.

“They are completely repressive for the betting business,” says Mr. Oganezov about the announcement by the government to change the federal tax code and the law on sport.

Nikolai Oganezov

Apparently the government intends to increase the tax on online bookmakers by 100 times its current amount in 2017. “The online segment has not even begun to function, and it is already subject to tax,”  states a frustrated Mr. Oganezov. Additionally, he is unhappy with the government initiative according to which the law on sport will be amended. Each licensed bookmaker will be obliged to transfer at least 60 million rubles a year in exchange for the financial support of the state sports federations for various sports.

“Financial and economic feasibility and market analysis are virtually non-existent. I believe that these figures should be discussed, and not simply decided by a bureaucrat,”  he said.

The president of bookmaker ‘Bingo Boom’, Konstantin Makarov, agreed with his colleague. He is also unsure why Russian lawmakers determined such a large minimum payment. “To establish such a high bar is a completely unreasonable burden,” he says.

Ordinary bettors from Russia are almost oblivious to the corporate wars between their local bookmakers and the government. For players, the main thing  is convenience. Previously, most of them did not even consider betting on the internet with  (“yes, of course offshore companies have absolutely nothing to do with us”) Russian companies who have a prestigious brand. What is the amount of bribes behind this or in the lobby for change in Russian legislation regarding the field of gambling?

Text by Pavel Glumin, translated by Thomas Giles