Russia mulls tenfold increase on gaming tax, issues first online betting license

russia-liga-stavokRussia‘s gambling operators are up in arms after the government proposed a dramatic rise in gaming taxes.

On Friday, Russian media quoted Ministry of Finance sources saying the government was mulling a tenfold rise in the current tax on gambling activity, as well as a new 10% tax on online sports betting revenue. The Ministry reportedly expects to finalize the necessary legislation by the end of the year.

At present, Russian bookmakers pay a monthly fee of RUB 7k (US $89) for each retail point of sale they operate. Russia’s legal casino operators pay RUB 7.5k per month for each of their slot machines and RUB 125k for each gaming table.

Not surprisingly, Russian bookmakers and casino operators have greeted the news with alarm, predicting everything from staff layoffs to the complete collapse of the country’s legal gaming industry.

Oleg Zhuravsky, head of the First Self-Regulatory Organization of Russian Bookmakers (First SRO), told that between 30% and 40% of the country’s estimated 6k betting shops had closed since the global oil glut and Western sanctions did a number of Russia’s economy. Zhuravsky claimed betting turnover has fallen by nearly one-third since the economy went south.

Dmirty Malkov, head of marketing at leading Russian betting operator Fonbet, told that the new tax plan would cut Russian bookmakers’ profits by 70%. Malkov believes this would drive consolidation in the domestic marketplace, as weaker operators were forced out of business.

Other industry stakeholders are arguing that, while their pain will be great, the government’s gains will be a drop in the bucket, at least, in terms of plugging the budget gap. But the government has taken an increasingly punitive attitude towards the betting industry, including new fees (estimated at 5% of revenue) for offering wagers on domestic sporting events and new taxes on bettors’ winnings.

Kommersant’s government sources had nothing to say regarding the country’s oft-suggested but never confirmed plans to regulate online poker. In October, Russian authorities instituted IP-blocking of dozens of domestic and international online gambling sites for operating without official consent.

One operator is reportedly preparing to announce its receipt of official consent at a press conference scheduled for Monday (15). Liga Stavok, which was among the sites that had its domains blocked last October, says it will be given the honor of receiving Russia’s first official online betting license.

Meanwhile, details on the government’s plans to institute a central payment processing hub for online betting – dubbed TSUPIS – will reportedly also be unveiled at Monday’s press conference. The TSUPIS system, which will enable the government to ensure that all online wagers are processed (and taxed) via Russian-licensed sites, is expected to launch in a few weeks.