Gambling in Russia
Gambling in Russia is 350 years old. Since 1667 Russian authorities have been regulating the organisation and operation of gambling. These types of activities are one of the first ones to be licensed by the government agencies of the Russian Federation. Since 2009 operations of casinos and gambling halls on the nation's territory have been banned. Illegal opening of such facilities is strictly punishable by law. The exception are sports betting points of sale, bookmakers and organisers of gambling games located within authorised gaming zones. Four of these zones are operating and rapidly developing in Russia today. These are the territories where gambling is legal via legislation and licensing: Yantarnaya, Kaliningrad Region, Sibirskaya Moneta, Altai Region, Primorye, Primorsky Territory, Azov City, the borderline between Krasnodar Region and Rostov Province.
Four more zones are getting ready to be opened very soon. All gaming zones have been updating the list of their services on a regular basis, while paying special attention to gambling entertainment. Gambling machines and slots are the most popular among Russians. Online gambling in Russia is officially banned. The exception is virtual entertainment that is represented by interactive bets (simulators of slot machines, casinos and card games). As far as the profits flowing into the State Treasury from gaming zones are concerned, the situation may look differently. Azov City, for example, replenished the budget of Krasnodar Region with its tax deductions in the amount of 229.6 million RUB in the year 2015. And in 2016 this zone brought 236.5 million RUB into the local budget. The Far Eastern zone called Primorye, has so far not met the expectations of the government. While the profit from its operations was estimated to bring 165 million RUB into the budget, the amount in fact was only 128.5 million RUB. At the same time, according to the statistics, about 1,000 players visit Primorye each day, a third of which are tourists from China and Korea.
Pursuant to the acting legislation in Russia, virtually all types of gambling are allowed in the gaming zones. They include: games of chance - casino games, slot machines and lotteries and betting - bookmakers and sports betting points of sale. The legislative basis that regulates interaction within Russia's gambling industry contains legislative acts that are adopted at the federal level and regional regulatory acts that apply to the territories of the gambling zones. Federal regulatory acts include:
- The Civil Code
- The Tax Code
- The Customs Code
- Federal Law On the State Regulation of the Activities Involving the Organisation of and Carrying On Gambling and On Introduction of Amendments to Certain Legislative Instruments of the Russian Federation, dated 29.12.06
- Federal Law about Lotteries, dated 11.11.03
- Federal Law On Licensing Specific Types of Activity, dated 04.05.11
- Federal Law On Self-Regulatory Organisations, dated 01.12.07
- Federal Law on Combating Legalisation (Laundering) of Proceeds from Crime and Financing of Terrorism, dated 07.08.01
- Government Resolution On Organization of Licensing of Certain Types of Activity, dated 21.11.11
- Federal Law On Licensing of Organisation and Conduct of Gambling Activities in Betting Offices and Totalisators, dated 26.12.11
- Technical regulations that establish the requirements for admitting various types of equipment
Regional regulatory acts regulate the organisers of gambling entertainment in authorised areas and deal with specific infrastructural issues such as renting of land for organisers of games, regional supervision, etc. Pursuant to the legislation, payback threshold on all gaming machines must be 90%. And payouts of large prizes will only be made once a player's identity is verified with an appropriate document. The Russian Federation has a general ban on online gambling. Yet at the same time the legislation allows interactive bets with a player's personal funds as an exception. These bets are handed over to the organiser of gambling games using electronic payment systems that were specifically set up by the Centre of Tracking the Interactive Bet Transactions. Legal regulation of the gambling industry is conventionally subdivided into two groups of standards that relate to: organisation of gambling games among bookmakers and sports betting concession operations on organising and providing gambling entertainment in a gaming zone (casinos, arcade halls, gambling establishments, etc.) Any gaming facility can be opened in the territory of the gaming zone exclusively. Yet the activities on organising and running gambling games among bookmakers or sports betting offices can be conducted outside of the gaming zone.
The overall regulation of gambling in Russia is carried out by the State. The Ministry of Finance is the authorised government body that develops the policies and regulatory acts in the area of gambling. Federal Tax Service is the overseeing authority that issues licenses to bookmakers. State supervision in the area of gambling entertainment is carried out by the authorised federal executive body (Federal State Supervision) and executive authorities of the subjects of the Russian Federation.Permits for organising and conducting all types of gambling in a gaming zone are issued by the government body of the zone, such as: in the Primorskaya gaming zone - by the Promorsky Regional Department of Tourism, Yantarnaya - by the Ministry of Economy of Kaliningrad Region, Sibirskaya Moneta - by Regional Department of Tourism, Resorts and Interregional and International Relations of Altai Region and Azov City - by the Department of Property Relations of Krasnodar Territory. Permits for running lotteries are issued by the Government of the Russian Federation, and the organisers are: Ministry of Sports of the Russian Federation and the Ministry of Finance of the Russian Federation. The Federal Tax Service is the supervisory authority of lotteries. This service is authorised to press administrative charges against any inappropriate games and organisers of lotteries. Administrative violations can also be prosecuted by the district attorney's office or the police. In cases when organisation of gambling entertainment or lotteries is a criminal offence, the Investigative Committee of the Russian Federation takes over the investigation. Gambling and lotteries that are provided on the Internet illegally are blocked by the Russian Federal Service for Supervision of Communications, Information Technology and Mass Media. This is done by an order of an authorised supervisory agency or by a court order.
These are the types of licenses available in Russia: betting - organising and running a bookmaking business (except for the ones opened within a gaming zone) can be carried out only in compliance with the license issued by the Federal Tax Service. This license will cover both bookmaking and sports betting and gambling games conducted in gaming zones - games and wagers in the territories of gaming zones in the Russian Federation can only be conducted with the permission from the regional authority that monitors the operations within that zone. There is only one permit issued for each legal entity to conduct the events related to organising or running gambling games in the gaming zone. Bookmaking can only be organised by legal entities registered on the territory of the Russian Federation. Neither the State nor the Government can act as founders or organisers of gambling games. The exception is the joint-stock company created from a Presidential Order that unites all horse racetracks in Russia. These are the requirements to an organiser of a bookmaking business:
- The organiser has to be a member of Self-Regulatory Organisation of Bookmakers
- To have an authorized capital of at least 100 million RUB
- To have the value of net assets of no less than 1 billion RUB throughout the entire period of bookmaking operations
- To insure its liability to players with a bank guarantee (no less than 500 million RUB, with the term of validity of no less than five years)
- To have all equipment necessary to record bets, receive and process interactive bets and settle up with the suppliers of prizes
- No people with a track record of financial crimes of medium gravity or serious crimes must be allowed among the organiser's stockholders
To obtain a license to organise bookmaking outside of gaming zones, an appropriate application and a number of documents must be submitted to Federal Tax Service:
- The document that lists all the information about the applicant's employees with copies of their passports and workbooks attached
- Calculation of values of the applicant's net assets done as indicated by the Ministry of Finance
- Local plans (for each address of a gaming establishment) with mandatory indication of the service area, placement of the processing centre and the bookmaker's ticket office
- Copies of documents that verify that the applicant's business has the staff that would provide personal security for players, fellow employees and other visitors to the establishment during their stay inside the gaming facility. Or a copy of a contract with a private security company must be attached
- A statement concerning the amount and the origin of funds that were used as the authorised capital
The decision on issuing the license will be made by the authorities within 45 working days since the day the application and all supportive documents were submitted. The term of validity of the license is unlimited. State fee is 30 RUB. On the whole, the same requirements apply to the organiser of gambling games (casinos and gambling halls) as to bookmakers and sports betting offices. The law, however, has certain provisions. For example, the value of net assets in this particular case must be no less that 600 million RUB.
Permit for gambling entertainment in gaming zones
Permit to organise and conduct gambling games in a gaming zone is issued by a governing body of this zone through an auction or a contest. This permit is usually issued for an indefinite period of time, i.e. until the gaming zone is liquidated. The decision, however, may be overruled by a governing body in the following cases:
- Liquidation of a legal entity that is the organiser of gambling entertainment
- Failure to comply with the requirements set by law
- Repeated violations of the order to submit information or revealed facts about the inauthenticity of this information
- Violation of the procedures of organising and conducting gambling games
- If the organiser personally applied for the annulment
- If no organising or conducting of gambling games were carried out for the period of 3 years since the permit was issued
Licensed varieties of gambling
Each gaming zone in the Russian Federation contains several casinos and halls with slot machines. Each of them features a wide selection of gambling entertainment. Virtually all kinds of gambling is allowed in Russian casinos, such as: American and European roulette, poker, Blackjack, baccarat, bingo, slot machines, gaming terminals, sports betting, including betting on horse races and lotteries, etc Slot machines have been most popular among the Russians. Any Russian casino has at least 100 slot machines, and some establishments have more than 750 (like Shambala casino in Azov City).
Gambling tax is one of the varieties of regional tax. Proceeds from this tax is a crucial source of income for the budgets of the appropriate subjects of the Russian Federation. Basic provisions concerning the taxation of the gambling industry are recorded in the Tax Code of the Russian Federation. The tax rate is set by local laws of the subjects of the Russian Federation within the boundaries outlined by the Tax Code:
- 1 gaming table - 25 to 125 thousand RUB
- 1 slot machine - 1.5 to 7.5 thousand RUB
- 1 totalisator processing centre - 25 to 125 thousand RUB
- 1 bookmaking processing centre - 25 to 125 thousand RUB
- 1 totalisator point of sale - 5 to 7 thousand RUB
- 1 bookmaking point of sale - 5 to 7 thousand RUB
Gambling tax, or rather the amount that has to be paid into the budget of the Russian Federation, is determined by the payer in accordance with the bet size. The total number of registered facilities will also be taken into account. The payer must provide the tax authority with the exact amount of the deduction no later than the 20th day of each month. Once the government learned that the gambling industry did not bring as much profit as was expected, it decided to make small changes to the tactics of regulating the gambling industry. In January 2017 the Ministry of Finance already submitted a draft amendment to the Tax Code and proposed to double the tax rates for this area of business.
Online gambling in Russia
Online gambling is outlawed in Russia. But its forms that imply interactive bets (such as emulators of slot machines, casinos, card games, betting and bookmaking online) are allowed. Ban on online versions of classical slots does not get in the way of the Russian citizens to play in various online casinos, poker rooms, etc. Sure, Russian Federal Service for Supervision of Communications blocks banned websites regularly, and yet new ones spring up in their place immediately. Today there are 259 Russian websites that have both a Russian and English interface. Bets can be placed in Russian Rubles, Euros or US Dollars.
Slot machines frequently played in Russia
Just like in many other European countries, products by Novomatic, Igrosoft, NetEnt etc. are popular in Russia as well. Top ranking slot games in many online casinos visited by Russians are: Book of Ra by Novomatic, Wild Witches by NetEnt, Steam Tower by NetEnt, Aztec Gold by Igrosoft and Secret Elixir by Novomatic.
Development of the Gambling Market in Russia
Russia has several developers of gaming software products that are known worldwide. They include: GloboTech - the company that has about 700 different games. All of the games are aimed at Russian speakers. Graphics could use some improvement, but this is offset by the captivating storylines and frequent payouts. These are the most significant slots: Fruits of Ra, Lucky Pirates and SkyWay and Igrosoft is a company that produces slot machines that feature interesting themes aimed at the Russian mentality, which also pay frequent bonuses. Crazy Monkey is the developer's most popular slot. These are some slots that are popular as well: Rock Climber, Island 2, Fruit Cocktail and Garage.
Prospects for future development of gambling in Russia
The gambling industry in Russia is strictly regulated by legislation, which serves as an excuse for many representatives of this business to claim that the industry is factually illegal. This, however, is not the case. Despite multiple bans and restrictions, the gambling industry in the Russian Federation has been developing quite rapidly. Plans are being made to open new gaming zones and build new casinos in existing zones. Russian developers of gaming software products have been undergoing a rapid development as well. But judging from the latest news on gambling, no legalisation of casinos or gambling halls outside of the gaming zones is being planned. Currently there are several legislative initiatives to regulate lotteries, but they have not gained much support from the experts or entrepreneurs.