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Expert insights: Russia's new betting legislation advances

In this exclusive interview Maria Debrincat sat down with Viktor Kuzmenko, a Senior Consultant, LL.M (Cambridge), at 4H Agency, boutique consulting firm fully dedicated to serving members of the gambling business ecosystem, to get some thorough knowledge and updates on Russia's new "unified" gambling regulator bill introduced this November

ViktorBy the end of the year, Russian state Duma will evaluate a bill regarding the proposal for the formation of a new gambling regulator. The proposed measures state that there will be one regulator for the whole gambling industry in Russia. This bill has already had its first reading in the State Duma Committee on Economic Policy, Industry, Innovative Development and Entrepreneurship

What would the passing of the bill for a new gambling regulator in Russia mean to Russia’s gaming industry?

The new draft Federal Law No. 1055657-7 (the “Draft Law”) was introduced into the Russian State Duma by two deputies on November, 13 2020 and is intended to amend the Russian Gambling Law with the following large-scale changes:

-Creation of the “Unified Gambling Regulator” (the “UGR”);
-Creation of the “Unified Payment Center” (the “UPC”);
-Changes to the mechanism of making special contributions to national sports federations;
-Creation of the online monitoring system to support the enforcement of the Russian Gambling Law and the new requirements to the interactive bets processing center are also planned, according to the current wording of the Draft Law.

As of now the Draft Law was adopted in the first reading on December 8, 2020 and the Russian State Duma has set December, 22 2020 as the deadline for the Russian authorities to file their amendments.

The adoption of the proposed Draft Law will swap the existing two sports betting SROs and TSUPIS with both the UGR and the UPC resulting in a higher control over the activity of the gambling operators.

Moreover, the mechanism of making special contributions to national sports federations is proposed to be changed as follows:

The basis for the special contribution’s assessment is the amount of the sportsbook’s quarterly income;
The amount of the special contribution is set to 1% of the basis, but not less than 5 million Rubles per one Russian sports federation or league.

In our opinion the current version of the Draft Law is underdeveloped and lacks certainty in a variety of its articles. As of now, it is rather unclear whether the Draft Law would change the situation in the gambling industry, neither for the bad nor for the good. We propose to wait until the government releases the amended version of the Draft Law.

Russia Online casinoWhat’s would you suggest as the first steps for the Russian regulator to improve Russian’s gambling legislation?

A good starting point, if we can speak about one, for the regulator would be to redraft the gambling legislation in Russia and set forth the general principles for the future development of the industry doing away with the present uncertainty in the gambling legislation.

After that, the regulator should remove the existing barriers to the market entry that hinder its development in line with other jurisdictions where gambling industry is a prominent source of entertainment and fun for the players and revenues for the government.

How is advertising for gambling in Russia, and does the current regulator intervene in the distribution of ads?

The main law that sets out the requirements for advertising in Russia is the Federal Law No 38 “On Advertising” (the “Advertising Law”) the key provision of which is that the gambling advertising is allowed only for gambling operators with the relevant licence or permit.

Furthermore, the Advertising Law sets out that gambling advertising materials should not:

-target the underaged audience;
-use images of people and/or animals (except for when advertising is set within a gambling zone);
-create an impression that gambling can be a source of income;
-create an impression of guaranteed winnings;
-use statements that may overstate the winning opportunity or understate the risks associated with g ambling; and
-use statements that create an impression that gambling plays a significant role in achieving public acknowledgement, professional, sports or personal success.

Moreover, gambling advertising is allowed:

Only on TV or radio from 10pm to 7am, in gambling premises or in designated print magazines (specialised advertising print media or special gambling zone media).
During broadcasts of sports events, if it constitutes no more than 20% of all advertising materials during such broadcasts (and, in some other cases, is related primarily to sports) as well as online. Russian law provides, however, for a closed list of cases where such types of advertising are permitted (eg, websites registered as online sports media and websites of professional sports federations and leagues).

The government authority responsible for the control and regulation of advertising in Russia is the Federal Antimonopoly Service.

If the Federal Antimonopoly Service deems the advertising as violating regulations, it may impose fines on the gambling operator and the advertisement provider as follows:

for individuals – RUB2,000–2,500 (approximately EUR 22 – 27);
for officials of legal entities – RUB4,000–20,000 (approximately EUR 44 – 220); and
for legal entities – RUB100,000–500,000 (approximately EUR 110 – 550).

The Federal Antimonopoly Service intervene in the distribution of the advertisement and impose fines both on gambling operators and advertisement providers.

russia ads-1Do you think Russia will struggle with effectively blocking access to unlicensed gambling sites? How big of a problem is illegal gambling in Russia?

According to independent sources, the Russian illegal gambling market has been growing 20% year-on-year since 2014 and reached $2billion in 2019, despite Russia’s efforts to introduce new measures in combating with illegal gambling activity.

From the very beginning the Federal Tax Service has been authorized to combat with illegal gambling companies that operate on the Russian territory without the license.

Since 2014 the Federal Service for Supervision of Communications, Information Technology, and Mass Media (Roskomnadzor) has been struggling with illegal gambling sites jointly with the Federal Tax Service.

To become more efficient in blocking of the websites of the unlicensed gambling operators, in 2018 Russian banks have also joined the struggle by blocking the money transfers from players to illegal gambling operators.

In 2019 the Federal Tax Service was authorised for "test purchase" mechanism in order to detect the legal entity which operates illegally.

Notwithstanding the above, due to the difficulties in implementation of the enforcement procedures (i.e. imposing fines on the off-shore gambling operators) out of Russia, all these measures do not seem to prove themselves efficient, because illegal gambling operators in Russia are agile and quite fervent in coming up with different ways to bypass the bans.

Despite the struggle in many countries, Russia is no exception, players can also bypass the blocking of the website via VPN.

To add to the above, on December 11, 2020 the Bank of Russia revoked the licenses from two banks due to their processing of payments for illegal online casinos.

 

About SiGMA's revamped website:

SiGMA Group is excited to announce the launch of its newly revamped website. The website is currently available in 6 languages, English, Russian, French, Mandarin, Portuguese, and Spanish with plans to add another 4 languages over the coming months - namely Thai, Korean, Japanese, and Hindi.
 

 

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