Russia bookies panic as government proposes 100x rise in online betting duty

russia-online-betting-taxRussia’s bookmakers have learned to their horror that taking their action online will cost them 100x more than they’d previously been paying.

On Tuesday, Russian gambling media sources revealed that the Ministry of Finance had okayed amendments to the tax code, under which Russian-licensed online bookmakers will pay a minimum monthly tax of RUB 2.5m to 3m (US $36,600 to $43,900) effective Jan. 1, 2017. Bookies with land-based operations will continue to pay a monthly fee of between RUB 5k and 7k per month for each retail point of sale.

The new tax will reportedly apply for each region in which an online bookmaker does business. For the record, Russia has 12 economic regions, meaning bookies will likely be making some hard choices as to whether it’s economically feasible to maintain a regional presence.

The previous monthly minimum per region had been as low as RUB 25k ($366), making the new rate up to 100x higher. The news came as a shock to Russian bookies, who had previously expressed their dismay at last month’s reports that the government was planning a mere tenfold increase in gambling taxes.

Nikolai Oganezov, chairman of the Bookmakers Self-Regulatory Organization, told that government officials appeared intent on cutting open the betting industry goose in order to get all the golden eggs at once. Oganezov also expressed regret at the government’s lack of openness in imposing the new tax without any dialogue with the industry.

Oleg Zhuravsky, president of rival betting association First SRO, took an altogether different stance, saying local governments needed the income and the new tax wouldn’t deter any serious betting operator from pursuing online operations.

Oganezov criticized Zhuravsky’s comments, saying they would only encourage Russian politicians to push for an online tax 200x higher next time. Oganezov said he’d reached out to Zhuravsky’s group in the hope of presenting a united front to the government, but had received no answer.

The new online tax comes just one week after Russia confirmed that bookies would be required to remit 5% of their betting revenue to individual Russian sports federations, with minimum quarterly payments of RUB 3m to each federation, with a minimum total contribution of RUB 60m ($880k) per year.