The company behind the Russian launch of the Bwin betting brand nearly struck a deal with Betfair before realizing that Russia’s tax rules made that deal a non-starter.
This week saw the launch of Bwin.ru, the partnership between Russian-licensed bookmaker Digital Betting LLC and the Bwin brand of UK-listed operator GVC Holdings. The launch marks the first entry of a Western betting brand into Russia’s regulated online sports betting market.
In a wide-ranging interview with Russian affiliate Bookmaker Ratings, Digital Betting/Bwin.ru CEO Dmitry Sergeyev said his company had considered approaching the operators of the Bet365, Betfair and Sportingbet brands regarding possible tie-ups, but research determined that Bwin had “the highest rates of recognition and the degree of trust of the Russian audience,” and thus “it would be foolish of us not to use such a commercial advantage.”
Sergeyev also revealed that the Russian firm had gone as far as to conduct talks with UK-listed Paddy Power Betfair regarding the potential use of the Betfair brand in Russia. However, these plans came to naught due to what Sergeyev called the “complex tax status” of betting exchanges in Russia.
Sergeyev said Russia’s online betting regulations were complicated enough without involving the international liquidity necessary to make a betting exchange feasible. Sergeyev said he remained skeptical that betting exchanges will be allowed in Russia “in the near future.”
With Bwin.ru now operational, Sergeyev said the company had set a modest goal of capturing “1-2%” of the Russian online betting market within its first year of operation. The site pre-registered around 15k customers prior to its launch, of which around 5k have gone through the complicated online/land-based process of registering with both the site and its TSUPIS online payments hub.
The agreement with GVC calls on that company to provide Bwin.ru with betting lines and risk management, while the Russian side is responsible for “customer service, verification, identification and all issues related to accounting, taxation and relationships with the Federal Tax Service, [telecom watchdog] Roskmondadzor and other authorities.” And “most importantly,” the Russians will handle all marketing.
Sergeyev confirmed that the Russian side of the partnership had committed to spending at least €10m per year in marketing expenses. In terms of how Bwin.ru will be marketed, Sergeyev said the emphasis would be on “the recognition of our brand and the quality of the service that we provide.”
Sergeyev said Bwin.ru was unlikely to engage in any affiliate marketing until after the 2018 FIFA World Cup. He also suggested that Bwin.ru was unlikely to spend big competing for World Cup airtime, saying other Russian bookies “are ruling the Russian market. Therefore, our task will be to try to get ahead with the help of smart marketing.”
Bwin.ru’s launch also brought ‘Dear Ivan’ letters from Bwin.com, which officially closed to Russian customers as of November 20, although customers can still log on to withdraw their account balances.