Putin Signs Proposed Betting Industry Overhaul Bill into Law

Russia President Vladimir Putin has officially signed the controversial new gaming bill into law despite the outcry and criticisms from locally licensed gaming operators. Under this new law, the Russian gaming market will now fall under the stewardship of a new industry watchdog among other key changes as the country doubles down on re-calibrating the regulatory system.

The lawmakers made this move in a bid to curtail capital outflows to unlicensed operators, funds that are now planned to be channeled into the local sports industry. In a nutshell, the radical new law will be introducing the following changes to Russia’s gaming industry;

• Significantly increase the financial contributions that local bookies make to local sports
• Establish a new Unified Gambling Regulator
• Eliminate the two industry trade bodies that currently oversee gambling
• Launch an integrated hub for the collection of online betting payments

President Putin okayed the law yesterday, on Wednesday the 30th of December alongside a bundle of other laws that will introduce a tightened grip on local internet network regulations. For instance, Roskomnadzor, Russia’s telecom ombudsman has now been given the mandate to block internet-based resources such as social media platforms/channels that are found to be discriminatory against local media.

11th Hour Amendments Before Approval by Legislators

The approval process of the new gaming bill has been moving at a breakneck speed after it was given the green light by the legislature’s Committee on Economic Policy, Industry, Innovative Development, and Entrepreneurship sometime in mid-November. From there, on 23rd December, the Duma or Lower House of Russia’s parliament gave their approval for the bill in its second and third readings back-to-back.

Mind you, the third reading garnered approval from an overwhelming majority of over three-quarters of the Duma after last-minute amendments, regardless of the Ministry of Finance’s recommendation to wait for another month for a more deliberate look at the bill. Two days later, on Christmas Day, the upper house of the legislature aka the Federal Council of Russia gave the bill a thumbs up and President Putin’s signature was the only one left to pass the bill as law.

In the final amendments before approval, the proposed cut of the betting turnover that is to be directed to respective sports organizations whose event a wager was placed on was raised by 50%, from 1% to 1.5%. Well, as insignificant as this difference may seem on paper, it in fact has a huge impact on the amount of money licensed bookmarkers will have to part with from their proceeds. Initially, bookies in the Russian market were required to pay 5% of their gross gaming revenue (GGR), compared to 1.5% of the turnover from wagers which translates to about 20-25% of the GGR.

Besides, a quarterly payment baseline of ₽30 million (about $400k) has been introduced by the law. This implies that operators will still have to pay up in case the cut collected from the 1.5% of the betting turnover doesn’t meet the minimum quarterly threshold. The worst thing about such a rule is the fact that smaller operators in the Russian market will have a tough time paying their dues whereas the bigger, more dominant operators won’t feel that much of an impact.

Furthermore, part of the eleventh-hour amendments of the law also changed the reporting body that the new Unified Gaming Regulator is accountable to from the Ministry of Finance as lawmakers had initially proposed, to the Rosimushchestvo, the Federal Agency for State Property Management. However, the universal gambling ombudsman will still team up with Russia’s federal tax service for the detection of illegal online gaming operations.

Operators in the Russian Gaming Market Have a 9-month Grace Period

Due to the potential harm that the new law might have on the success of their business in Russia, a lot of operators have already expressed their dissatisfaction and some like Vulkanbet have even gone as far as exiting the market entirely.

Now that President Putin has signed the bill into law, licensed operators have 270 days to get their affairs in order and ensure that they are compliant by the time the new law takes effect. So, by September 2021, operators will be dealing with an overhauled system.