Russian bookmakers groan as Duma approves stiff tax hikes, regulatory shakeup

Russian bookmakers groan as Duma approves stiff tax hikes, regulatory shakeup

Russia’s betting operators got a serious lump of coal in their Christmas stockings as legislators abruptly approved a major regulatory shakeup, including even higher taxes than originally proposed. 

On Wednesday, Russia’s Duma approved second and third readings of the controversial new legislation that aims to (a) dramatically hike Russian bookmakers’ financial contributions to local sports, (b) create a new Unified Gambling Regulator, (c) abolish two existing industry associations and (d) establish a single hub for online betting payments.

The approval – the third reading garnered 76.4% support from Duma deputies – came despite the Ministry of Finance suggesting just the day before that deputies wait until January 22 to submit further amendments to the bill. Instead, a flurry of changes was submitted at the 11th hour and legislators apparently saw no point in delaying further progress.  

One of these amendments suggested raising the proposed cut of betting turnover that would be funnelled to the appropriate sports body on whose event the bet was made from 1% to 1.5%. 

Given that Russian-licensed bookmakers previously anted up 5% of betting revenue, whereas 1.5% of betting turnover is equal to 20-25% of gross gaming revenue, and you can see why bookies are outraged by Wednesday’s developments. 

Each bookmaker will be required to contribute a minimum payment to sport of RUB30m (US$400k) per quarter. Bookmakers previously warned that such requirements would lead them to stop offering markets on all but the most popular sports, which would mean funding for some minor sports could dry up entirely.  

The tax hike (and the other changes) will take effect 270 days following passage, so roughly by the end of September 2021. That will give the authorities time to adjust their systems, while also giving bookmakers time to ponder whether there’s any point in continuing operations under such a heavy financial burden. 

Other amendments will see the new Unified Gambling Regulator report to Rosimushchestvo, the Federal Agency for State Property Management, rather than to the Ministry of Finance as originally proposed. This regulator will oversee the operation of the new centralized payment hub, which will replace the two existing payment hubs (known as TSUPIS). 

The plan is for this payments hub to automatically deduct the 1.5% cut from wagers passing through it, after which regulator will forward the sum to the appropriate sports body. There’s still no word which company will have responsibility for operating this payments hub, which will be known as the Unified Center for Accounting and Transfer of Rates (ETSUPS or ECDIS, depending on your translation tool). 

Bookmakers previously expressed unease at handling a payments monopoly to a still-to-be-identified private processor. At present, bookmakers pay 1% on deposits and 0.5% on withdrawals, and any increases above these levels will result in still more costs that bookmakers will be forced to pass on to individual bettors. 

Some Russian bookies are predicting a mass exodus of bettors from locally licensed operators to their internationally licensed counterparts, who in addition to better rates can also offer products denied to Russian-licensed sites, including online casino and poker games. 

The new legislation still requires the approval of the Federation Council (the upper legislative chamber) as well as the signature of President Vladimir Putin. But given that Putin previously stated that he ‘completely agreed’ with plans to increase bookmakers’ sports contributions, hopes for a presidential reprieve seem slim indeed.
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