Russia Mulling Over a Bill to Establish a Unified Gambling Regulator

Lawmakers in Russia are considering the establishment of a new regulatory body for the oversight of the gambling industry across the country. Representative Igor Stankevich and Viktor Deryabkin, both from United Russia, the country’s ruling party, introduced Bill No. 1055657 – 7 which proposes the formation of a new regulator with jurisdiction over the entire gambling industry in Russia.

The bill in question should be undergoing its first reading before the end of 2020 in the country’s legislature which is referred to as the State Duma. It’s worth noting that before being sent over to the State Duma, Bill No. 1055657 – 7 was okayed by the legislature’s Committee on Economic Policy, Industry, Innovative Development and Entrepreneurship on the 17th of November.

What Reforms Will Russia’s Draft Bill Bring to the Industry?

The new gaming ombudsman will primarily be the enforcer of a range of extensive regulations, some of which include keeping a close eye on the industry and flagging any operations that are running outside the law. Moreover, Russia’s countrywide oversight body will be tasked with working hand in hand with other regulators whenever the need arises, and the watchdog will also be contributing to the country’s gambling laws by suggesting any necessary changes for the industry.

Bill No. 1055657 – 7 also recommends the introduction of a 1% tax rate of betting turnover, where each sports betting operator will part with at least ₽5 million ($65,650) for each sports league. The collected tax funds will be directed to the country’s Ministry of Culture and Sports.

In a bid to ensure bookmaker compliance with this new taxation, the proposed bill also seeks to repeal the existing system of two online payment hubs known as TSUPIS that are used by Russia’s two competing bookie associations (SROs). In its place, the proposed law will set up a single payment hub that will effectively monitor all betting transactions in real-time and then deduct the new taxation imposed on sports betting. All sports wagers including those on international sports will also be subject to the new tax deductions.

Russia’s new gaming ombudsman will be answerable to the Ministry of Finance and will be steered by a board of five supervisors; 4 members and one chairperson. Each of the members of this supervisory board and the chairman will be appointed by the state government and will have a 3-year mandate to manage the gaming supervisory board. There will also be another general director of the regulatory body to be appointed by the government as well to lead the gaming watchdog for a 5-year term.

Proposed Changes Met with Heavy Concerns for the Industry

The sweeping proposals to the gambling industry have sparked outrage and criticisms from leaders in Russia’s gaming industry. Nikolai Oganezov, the president of the First SRO of Russian Bookmarkers, for example, came forward to issue a statement saying that the draft law would be destroying a well-functioning system that’s already in place. Organezov also added that there haven’t been any complaints so far about the TSUPIS payment systems which have been operating for nearly for years, and complained that the authors of the bill do not remotely understand how the industry works as they have no experience in the field.

Yuri Krasovsky, the president of Liga Stavok one of the leading gambling companies in the country also released a statement warning that increased taxation would push bookies to either reduce or completely cut off their local sports sponsorship deals. Furthermore, according to Krasovsky, the Ministry of Finance is more concerned about funding the federal budget rather than local sports bodies. Similarly, Dimitry Sergeev, the CEO of Parimatch Russia, another leading sport betting brand in the country expressed his worries about the crushing of smaller bookmakers into ceasing operations due to the tax hikes.

Currently, the State Tax Service is the general watchdog of gambling in Russia, but the governance of sports betting operators is carried out by SROs, self-regulating organizations, which draw the betting regulation frameworks and run payment hubs. Before the draft bill reading, the legislature is awaiting an analysis report from the Legal Department of the Office of the State Duma, to be delivered by 1st December.