From Russia with hope
Doug Mishkin, Metric Gaming's senior VP for legal affairs, highlights the opportunities on offer in Russia for services providers
Russia has long been considered hostile territory when it comes to gambling â likely originating with its 60-year nationwide gambling ban from 1928-1988. Although that ban was thereafter lifted in its entirety for nearly 20 years (from 1989 to 2006), the extended period of deregulation yielded an intense proliferation of slot machines, gambling websites, casinos and other gaming establishments that were reportedly linked to organised crime and other social ills.
The government responded in 2006 by banning all forms of online gambling, and eventually implementing a complete ban of casinos in 2009 in all but four remote regions – culminating in a government shutdown of casinos throughout the country overnight.
History lesson
Brick-and-mortar sports betting establishments, however, were spared. By order dated 17 July 2007, a licensing regime was established whereby Russia’s Federal Tax Service would license and regulate betting shops pursuant to enumerated licensing standards and a comprehensive set of pending government regulations. The first such betting licence was eventually issued on 6 April 2009 (to Moscow-based Sportbet JSC).
Whereas land-based sports betting largely escaped the government’s crosshairs, online gambling of all types in Russia has historically elicited the most government intervention. Notably, in 2010, Russia sought to close a loophole in the 2006 ban (which rendered it illegal for domestic operators to offer gambling within Russia, but little to prevent foreign online operators from doing the same) by targeting the gamblers themselves â i.e., criminalising the mere act of placing an online bet.
Yet perhaps in recognition of the difficulty enforcing such a measure, two years later the government embraced a new approach. In a lawsuit that ultimately reached the Russian Supreme Court, prosecutors from Pskov City sued internet service providers (ISPs) for refusing to block access to gambling websites. Although the trial court ruled in favor of the ISPs (finding that the mere provision of access to gambling sites was not prohibited under Russian law), the Russian Supreme Court disagreed.
In fact, the Supreme Court held that providing access to information was the equivalent of disseminating that information, and therefore, because the dissemination of restricted material is unlawful, the ISPs were legally required to block access to unauthorised sites. In the aftermath of that ruling, thousands of gambling websites (and even websites simply related to gambling) have been black-listed by Roskomnadzor (Russia’s federal agency responsible for the control and supervision of the country’s media).
Legislative changes afoot
Against this backdrop, in July 2014 President Vladimir Putin signed into law amendments to the country’s existing gambling legislation laying the groundwork for legalisation and regulation of online betting. This framework entailed the implementation of Russia’s first Payment Processing Center for Interactive Betting (known as TSUPIS), whereby all online bettors must hold TSUPIS accounts and all online gambling transactions must be processed via TSUPIS (ensuring 100% government visibility into player winnings). The launch of TSUPIS and the first legal Russian website for online betting (Liga Stavok) were formally announced in February 2016.
Since then, Russia has continued its staunch crackdown on unauthorised gambling websites via its media watchdog Roskomnadzor, which reportedly disconnected Amazon’s cloud hosting service recently for running an ad for 888poker (thereby cutting off Russia’s population of 143 million from accessing everything that relied on that service, including Netflix and Twitter).
While Russia’s anti-gambling reputation is thus well-earned, its position is far more protectionist than prohibitionist. Short of establishing a presence in Russia and successfully completing Russia’s licensing process, it appears foreign operators can safely abandon near-term hope of accessing Russian players. For business-to-business providers who can partner with a licensed Russian operator, however, Russia’s new regulatory regime presents an interesting opportunity to tap into a lucrative but otherwise impenetrable market.