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The Gambling and Betting Regulatory System in Russia

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The Gambling and Betting Regulatory System in Russia DE BERTI JACCHIA FRANCHINI FORLANI The gambling and betting regulatory system in Russia 17/02/2020 BETTING AND GAMING, RUSSIA Roberto A. Jacchia Alisa Pestryakova casinos and slot machines created his article provides an overview of the compulsive gambling problems among T the population with modest income and system and main restrictions and eventually completely changed the requirements for gambling businesses in regulation of the industry by adopting the Russia. Law in 2006, which introduced a general gambling ban, with some exceptions. 1. Historical and general overview The ban on gambling in Russia became Before the adoption of the law on State effective on 01 July 2009. The first regulation of activities in the gambling special gambling zone “Azov City” in the industry (Federal Law no.244-FZ dated Krasnodar region was established in 29 December 2006, “the Law”), gambling 2010, where two companies opened activities had no territorial limitations and three casinos and invested about 5,4 bln. could be exercised almost everywhere in Rubles during 4 years. In 2014 a new Russia, especially in large cities. A gambling zone in Sochi in the Krasnodar PricewaterhouseCoopers study region was created. The Law allows only estimated the turnover of the gambling one gambling zone within the region, so industry in Russia in 2005 in an amount the “Azov City” gambling zone was of 6 bln. $. Casinos and slot machines wound up in 2018. Investors cannot were popular and supplied huge turnout claim any reimbursement of money to the industry. However, gambling invested, since Russian laws do not businesses often reported net losses and envisage any compensation in the case in that way did not meet the expectations of winding up of a special gambling zone. of the Russian authorities as to tax revenue. The Russian authorities also considered that existing abundance of www.dejalex.com Until now, the most profitable gambling “gambling zones” and is subject to zone in Russia is considered to be the a license; one next to Vladivostok (called 2) betting, including bookmakers “Primorye”) opened in 2015, which gambling business and pari-mutuel became popular with gamblers from betting (totalizator), which is China and South Korea (about 33,000 subject to licensing but is not visitors a month). Investors plan to subject to territorial limitations. further develop the “Primorye” zone and build two casinos and more hotels. There The Law includes both general is also proposal to build a golf course in requirements and rules for all gambling the gambling zone. The Sochi gambling activities, and special rules and zone “Krasnaya polyana” created in requirements applicable to specified 2016, replaced the first gambling zone activities within the industry. “Azov City”. The advantage of Sochi is that it is a city with good infrastructures developed for Olympic winter games, 3. General requirements for which is a popular resort and tourist businesses in the industry place. “Krasnaya polyana” in Sochi has attracted 850,000 visitors from 146 The general requirements for entities countries during first two years of its engaging in gambling and betting are set existance. Professionals in the gambling out in the Law as follows: industry told the Russian press that most of the special gambling zones in Russia 1) to be a Russian legal entity; were not very successful due to lack of 2) to have net assets (net equity) in infrastructures, tourists attractions and an amount of at least large cities close to the special zones. • 600 mln. Rubles (about 8.5 Besides, it turned to be a high risk mln. euro) for companies investment for businesses in case of engaging in gambling in winding up of the zone, as it happened casinos and gambling slot with “Azov City”. machine halls; • 1 bln. Rubles (about 14.3 mln. euro) for a bookmaking and 2. Legislation totalizator operator activities; 3) to inform the State control Current Russian law regulates gambling authority (the Federal Tax Service) and betting by special provisions of the of its shareholders holding 10 per Civil Code, the Law as recalled above, cent or a larger share in the the Code on Administrative Offences, the company; Criminal Code, other laws and certain 4) to undergo the compulsory government acts. auditing of annual financial statements; The Law specifically states that lotteries 5) to be a member of a special self- and contracts relative to stock and regulatory organization of the commodity exchange trading are not gambling and/or betting industry; considered gambling or betting and are 6) to place at the premises of the excluded from the scope of the Law, as gambling operator or on Internet they are subject to separate regulations. site of the betting operator: • full name and For the purposes of regulation Russian trademark/commercial mark law splits gambling into two main used at gambling places, categories: casinos, bookmaker’s offices and totalizators; 1) gambling in strict sense, including • text of the Federal Law on all kinds of games of fortune and State regulation of gambling or chance as well as slot machines, a link to the text of the Law which is allowed only within through the official State specially assigned territories called system of legal information (www.pravo.gov.ru); 2 www.dejalex.com • rules of casino/slot machines hall/bookmaker/totalizator, in 4. Special requirements for betting particular for betting and business wagering, and for payment of winning; The Law allows bookmaker and • copy of the license of totalizator activities outside of the special casino/slot machines gambling zones and regulates its hall/bookmaker/totalizator with organization and maintenance. its attachments; • copy of the decision on The betting business outside of gambling admittance to membership of zones is subject to a special license and the relevant self-regulatory must not offer slot machines and/or organization. gambling tables. The main special requirements for Russian law features certain gambling businesses are set out by law requirements for bookmakers and and provide that gambling can be totalizator operators: organized only within specified territories (gambling zones). There are 5 gambling 1) to have a charter capital in an zones in Russia located in the Altai amount of not less than 100 mln. region (“Sibirskaya moneta”), the Rubles (about 1.43 mln. euro) paid Krasnodar region (the “Azov city” in cash; replaced with the “Krasnaya polyana” in 2) to hold a bank guarantee valid for Sochi), the Primorsky region (the at least 5 years for an amount of “Primorye”), the Kalinigrad region (the not less than 500 mln. Rubles “Yantarnaya”) and the Crimea Republic (about 7.2 mln. euro); (the “Crimea”). The exact territory of 3) to host storage facilities for the each gambling zone within these regions processing of data relative to the is specified by the Russian federal calculation and payment of bets in government. The decision of the Russia, and to be the owner of the government to create a gambling zone processors; can include additional requirements and 4) to use for online betting only one furthermore create subordinate State domain name and own or have the authorities. right to operate such domain name; All equipment used by a gambling 5) to use for online betting and operator must be owned. Gambling payment of prizes a special games may be arranged and performed account opened at a control center only by employees who are at least 18 of online bets with the participation years old. of a self-regulatory organization, of which the bookmaker or totalizator A casino and a gambling slot machine operator are members; hall must be placed in separate buildings 6) to store information and data of or be physically separated within the accepted bets, paid winnings and same building. Casinos should have at developments and results of the least 10 gambling tables and 800 sq. events that are the object of meters surface. Gambling slot machines betting on the territory of the halls should be at least 100 sq. meters in Russian Federation for 6-12 surface and operate a minimum of 50 months, depending on the type of machines. The average technical winning information and any specific rules percentage (payout) of slot machines applicable; must not be less than 90%. 7) to provide to the Ministry of Finance of the Russian Federation A casino can also include a gambling slot and the local tax authority machines zone, which should meet quarterly accounting reports and special requirements, as well have a annual financial statements. bookmaker and totalizator zone. 3 www.dejalex.com Betting companies (bookmakers and Online betting is described by the Law as totalizator operators) are furthermore a special way of payment through a obliged: specified control center of online bets for bookmakers and totalizator operators. 1) to check the age of a bettors and Making bets by way of money transfer, identify them in accordance with including bank, general electronic and Russian law on anti-money postal transfers, is prohibited. laundering (Federal Law no.115- Bookmakers and totalizator operators FZ dated 07 August 2001) before can accept online bets received only accepting bets (both offline and from the control center of online bets, by online) and before making a special electronic transfer. payment of winnings; 2) to inform the relevant Russian The Russian Federal Tax Service sport governance body, the creates and maintains a special list of professional sport league and the Russian and foreign entities engaged in gambling State control authority illegal gambling and betting (black list). (the Federal Tax Service) of Russian banks and credit institutions are winning bets presenting unlikely prohibited from accepting any order for results; money transfer in favor of blacklisted 3) to keep a register of bettors at the entities.
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