Russia set to implement new quarterly sports betting tax

The Russian State Duma has adopted a bill which requires Russia-licensed sports betting operators to pay a new tax of 5% GGR on a quarterly basis to Russian sports federations.

The bill, which has passed through a second and third reading in the Duma, requires all licensed operators that process bets on non-Russian sports events to pay the contribution. This 5% quarterly tax previously only applied to operators offering betting on Russia-based sports events.

In addition, the bill places limits on the types of events which can be offered by Russia-licensed betting operators.

According to the bill, bets can only be accepted on official sports events or sports events held by Russian national sports federations and professional sports leagues. Sports events held by foreign sports federations, confederations, leagues or councils are also included within the scope of the new limits.

However, these events must be included in the unified national calendar for the corresponding sport in the relevant country, and the results of the events should be posted on the official websites of event organisers.

These limits also include sports events held by international sports organisations, however the interpretation of which international sports organisations are included is currently unclear.

Under the bill, operators will now be barred from having licences allowing both sports betting and tote betting activities and must apply for separate licences for each vertical.

It gives Russian regulators special new grounds to suspend or cancel operator licences, firstly if the firm does not pay the new 5% GGR tax and secondly if there is no activity by the operator for six consecutive months.

The adopted bill provides that all existing licensees must have a RUB500m bank guarantee and RUB1bn in net assets in place.

Before this bill, the first 14 Russian sports betting licensees were exempt from this requirement because they had obtained their licences before 2010 (when the above-mentioned financial requirements were adopted).

This measure aims to level the playing field between existing market participants and new entrants.

Giving his assessment of the new bill, Dentons head of Russian and CIS gambling market practice Ilya Machavariani assessed a potential dual impact on Russia-facing operators.

“On the one hand, all changes are relatively negative from the standpoint of any regulated market (it is indeed hard to conclude that an increase in financial obligations of the operators or any limitations of wagering events is a good thing),” said Machavariani.

“However, on the other hand, if we are to take a look at the big picture, I believe it is possible that these changes might lead to the creation of a more interconnected market in Russia as everyone will operate under the same tight rules contrary to the past,” he added.

The bill will enter into force 60 days after its publication in the official Russian Gazette, estimated to occur in the middle of autumn 2020.