New Regulations for Betting: Main Law Provisions

On July 22, 2020, the State Duma adopted the bill at second and third reading, specifying new requirements to sportsbooks and totalizers. On July 24, the bill was approved by the Federation Council. On July 31, the bill was signed by the President of Russia Vladimir Putin.

What norms does the law contain? Read further in the article.

About restriction of events in sportsbooks and ban of double licenses

According to the law, published on the official online portal of legal information, the number of events available for players to place bets on will reduce in Russia.

After the enactment of new rules, sportsbooks will have a legal right to accept bets only for the following types of sports events:

• official sports competitions;
• competitions organized by national sports federations and professional sports leagues;
• competitions organized by international sports organizations;
• competitions hosted by foreign sports federations, confederations, leagues, or councils. They have to be added to the national universal calendar. Their results have to be highlighted on official websites of organizers.

New regulations of betting activity do not affect commercial tournaments hosted by different companies. Referring to the founder of Bookmaker Ratings portal Paruyr Shahbazyan, Kommersant newspaper reports that the decision to ban commercial tournaments can kill the national betting industry in case of the second wave of COVID-19 pandemic. He explains this position with the fact that when sports competitions were cancelled due to coronavirus pandemic, commercial contests and synthesized games “helped the market to keep the head above water”.

Besides, new regulations introduce a ban on double licenses that allowed operators to conduct sportsbook and totalizer activities basing on one permit. Now holders of one license will have the right to operate only in one of the mentioned areas. This means that sportsbooks will accept bets solely on sports events, and totalizers – solely on horseracing organized at hippodromes. The government gave operators one year to reissue licenses allowing sportsbook and totalizer betting.

Analyzing intricacies of the bill, the legal consultant and owner of Pravovaya Liniya LLC Mariya Lepschikova told Bookmaker Ratings portal that according to her assessments, new norms significantly toughen regulation of bookmaker activities. She says that the main reason is the restriction of events, on which sportsbooks can accept bets.

According to the expert, new requirements will lead to the situation when sportsbooks that legally work in Russia will become less competitive. This may cause bettors to start using services of illegal betting companies that offer customers more events to bet on.

About purpose-oriented allocations, collaboration with leagues and federations

The law introduces a norm that obliges betting operators to conclude agreements with sports federations and leagues, according to which the latter will provide sportsbooks with information about holding of sports competitions. The procedure for conclusion and terms of such agreements are approved by the federal agency of physical culture and sports – the Ministry of Sport of the Russian Federation.

Based on the mentioned documents, individuals that organize sportsbook betting will be obliged to transfer betting allocations to sports competitions that take place in Russia and abroad. Thus, now betting companies will be obliged to pay corresponding allocations absolutely from all events that they offer to customers.

Sports leagues and federations, in their turn, cannot refuse to conclude agreements with bookmakers. They have to publish the list of all concluded agreements on their websites. Besides, they have to publish data about the total amount of funds obtained per year and data about its distribution.

Funds obtained by professional sports entities will be used to finance events intended to develop children and youth sports.

About reasons for cancellation of license

Under current legislation, a betting license can be cancelled through court action if operator violates licensing requirements or conditions. Alternatively, such step can be taken when a betting company does not fulfil the order issued by the tax service. However, under the current version of the law that regulates betting, the operator that has not paid purpose-oriented allocations is obliged to pay a fine.

According to the new regulation, a betting license can be cancelled due to following reasons:

• when the bookmaker has not paid purpose-oriented allocations or has paid them not in full;
• when the operator does not conduct the licensed activity for six months.

The law thoroughly explains the procedure of license cancellation. In both cases, the final decision about the revocation of license is taken through court action.

Paruyr Shahbazyan told Kommersant that currently there are eight licenses in Russia, holders of which do not conduct betting activity. Some of them belong to big companies that needed backup licenses. The other licenses were obtained for the purpose of selling.

About arrangement of a bank guarantee

The document states that operators will have to arrange a bank guarantee for fulfilment of obligations to customers. Guarantees will be issued only by banks that meet all necessary requirements and are listed on the relevant register. Bookmakers are given one year to arrange it.

Mariya Lepschikova explained Bookmaker Ratings that the betting companies that operate in the Russian market without a bank guarantee will have to arrange it. Operators that own a guarantee issued by a bank not listed on the register of the Russian Ministry of Finance will have to rearrange it.

The expert believes the obtaining a bank guarantee will not be a problem for bookmakers that are currently providing services and have money turnover. The legal consultant supposes that such companies were ready to the fact that a guarantee will once become a compulsory attribute of activity for all participants of the betting market.

Short review of the Russian betting market

As for August 17, 2020, the Register of sportsbook and totalizer licenses, found on the official portal of the Federal Tax Service of Russia, lists 31 functional permits. Bookmakers that operate in Russia legally can organize betting at land-based outlets and on the Internet (interactive bets).

As Sport24 reports, revenue of legal Russian bookmakers reached 89.4 billion rubles in 2019. Over the last year, the number of Russians that made at least one bet grew by more than 50%.

Research findings of Bookmaker Ratings and “Responsible gaming” association as of 2019 show that the Russian audience of betting companies looked as follows: 68.8% of bettors were men, 31.2% - women. Married men aged 25 to 44 with higher education and average or above-average income were involved in betting most often.

The year 2020 turned out to be difficult for Russian betting companies. The reason is the cancellation or postponement of sports competitions throughout the world due to COVID-19 pandemic. Already in spring, when different countries started introducing restrictions, betting companies were preparing to losses in yearly revenue.

Back in April, the deputy general director for marketing at Liga Stavok betting company Igor Stolyarov told RBC Sport that the losses of the betting industry related to the cancellation of sports events equaled to around 70%.

In May, Kommersant reported that BingoBoom assessed the decline in betting during the shutdown in more than 50%, and Parimatch stated that the losses of the betting market reached 70%.

However, the betting market has been gradually reviving since the competitions resumed.