New rules seen killing Russia’s online market

Wednesday 18th of May 2016

New regulations designed to regulate online gaming in Russia would kill the market if they are introduced in their current form, but the government may relax some aspects of the bill following lobbying from the industry.

Russia in April announced plans for regulations for the online gaming industry in a bid to gather tax revenue. Moscow wants operators to pay a fee in each of Russia’s 12 territories if they plan to acquire new clients in the zone as well as an annual national fee. It also wants a 10 percent tax on turnover.

“If that happens the market will be more or less dead as no one will be able to pay that and bring in a profit,” said Christian Melin, head of gaming R&D at Marathon Bet during the opening session of the iGaming Conference at G2E Asia in Macau.

However, he said recent talk in the market is that the government may be willing to place the tax on profit rather than revenue, which would be an improvement.

“If they do go ahead, no one will be able to operate, so they can’t get their income from taxes,” he added.

Giving an outlook for the online industry in the region, other leading experts spoke of huge potential if governments move forward to regulate online gaming.

The Philippines, which is the only jurisdiction in Asia with a regulated market, is already showing huge growth, measured by its e-gaming cafes.

Chris Tio, executive vice president, DFNN said in 2015, the electronic machine count grew by 23 percent, while e-Bingo showed explosive growth of 278 percent. The market also has plenty of room for expansion if you look at machine counts per head, with one machine for every 10,106 people in the Philippines, compared with 1 for 28 in Japan.