Bill Seeks to Establish New Gambling Regulator in Russia

Russia is seeking to establish a new regulatory body for the entire gambling industry in the country, after a bill from the governing party was introduced to the legislature last week.

Bill Set for First Reading

Bill No. 1055657-7 was introduced by Viktor Deryabkin and Igor Stankevich, both representatives of the United Russia governing party. The first reading of the bill in the State Duma should take place before the year end, after the Committee on Economic Policy, Industry, Innovative Development and Entrepreneurship within the Duma approved it, November 17.

According to the bill, a new gaming industry regulator should be established and tasked to improve the level of control and supervision in the industry and increase the tax proceeds from gambling which would go to the Ministry of Culture and Sport.

Monitoring the industry and detecting illegal operations would be within the legal remits of the new regulator, which would also engage in cooperation with other regulators whenever necessary, as well as contribute to the Russian gambling legislation by proposing industry changes.

Sports Betting Turnover Tax Hike

The bill also proposes a tax rate hike of 1% of betting turnover, placing each sports book operator liable to a minimum payment of RUB 5 million ($65,650) per sports league, and to ensure compliance with the new tax, the bill is seeking to scrap the current system of two online payment hubs utilized by the bookmaker associations in the country.

A single payment hub is set to replace the existing system to ensure real-time monitoring of all betting transactions and deduct the new sports betting tax. Under the new tax, wagers on international sports will also be subjected to the deduction.

The new regulatory body will be within the control of the Ministry of Finance and will be managed by a supervisory board of five, a chairman and 4 members, each one of them appointed with a 3-year mandate by the state government. A general director who would also be appointed by the government, for a period of 5 years, would lead the regulator.

Concerns for the Industry

The proposed bill was already heavily criticized by licensed sports betting operators, claiming that the government would only manage to destroy a well-functioning system, instead of boosting funds for sports. As a direct effect, sports betting companies would significantly reduce the amount of sponsorships. Further, sports association officials stated that the two party representatives have no industry experience whatsoever and the proposal is more likely seeking to boost federal funds rather than help sports.

The first reading of the bill would follow the analysis from the Legal Department of the Office of the State Duma, which is expected to be submitted by December 1.