Tuesday, August 16, 2022

Regulatory red tape damps bookies’ World Cup prospects

Russian bookmakers are hoping for a bonanza from the FIFA World Cup, which will be held in the country less than two months from now, but many fear regulatory hurdles and slow-moving legislation will mean that legal operators will lose out.

According to Rosturism, the Russian tourism agency, about 1.5 million tourists will flood into the country during the tournament, with many of them likely to seek a flutter. However the current laws do not facilitate bets and may even prove a deterrent. This was one of the concerns voiced at the Betting Trends Forum in Moscow in early April.

Amid the ongoing crackdown on illegal online bookmakers, with hundreds if not thousands of websites being blocked on a weekly basis, potential punters need to go to a physical betting shop, or to play with legal online bookmakers.

However, to do this they need to go through a complex identification process that is likely to be particularly daunting to foreign players.

As a result it may mean that their money goes to well recognized foreign brands, which mostly do not have any official presence in Russia.

Gambling expert Araik Tonyan, who heads the Bookmakers Rating analytical website, estimated the annual turnover of the Russian bookmaking market at 700 billion roubles ($11.4 billion) and the number of players at 2.5 million. According to special research presented by the website in December 2017, the volume of bets during the World Cup will be 80-115 percent more than the average volume of bets on football a month, but it did not give precise figures.  

Speaking at the conference, he pointed out at several major problems facing Russia’s bookmakers, starting with the size of the illegal market, which he said makes up about 65 percent of the total volume of bets. He also pointed to the complex identification procedure for players and a lack of a clear state strategy for regulating the industry. 

Under the current system to make a bet, double registration is required, both with the actual bookmaker and  with an e-bet processing centre, known as a TSUPIS. Currently, there are two TSUPISes run by two rival bookmaker self-regulating organizations. 

Tonyan welcomed a law banning money transfers to illegal bookmakers that will come into force just ahead of the World Cup, but also called for foreigners to be exempt from the requirement for offline identification. 

According to gambling lawyer Maria Lepeshchikova, the government has shown little enthusiasm for promoting regulation to benefit the industry. “It’s is obvious that in the current political background the state doesn’t want the bookmaking business to develop” and “no liberalization could be expected,” she said.

She pointed out at several inconsistencies in the law, which are working against Russian bookmakers.

For example, under Russia’s anti-money laundering law a player only needs to be identified if they bet more than than RUB15,000 ($243). However, in reality, that person needs to physically present a passport in a bookmaker’s shop before being able to make a bet. 

This makes it impossible for Russian bookmakers to operate online only, because they need to set up centres where client identification can take place.

Participants at the Betting Trends Forum said lifting of the double identification process and replacing it with single identification with a TSUPIS only was key obstacle to growth. There is a bill tabled in the Russian parliament that aims to address the issue, but it will only be considered in June, so is unlikely to be in place before the World Cup kicks off on June 14th. 

But there are also some initiatives which may help Russian bookmakers if they are properly implemented.

For example, a law which forbids banks and paying agents to process and transfer money to illegal bookmakers - both Russian and foreign - is expected to come into force just  before the World Cup in late May.

Lepeshchikova pointed out that this law may be bypassed by using a third-party websites, however this would increase the price of a transaction. 

Russia’s recent decision to double taxes on bookmakers is also having an impact on bookmakers in the country, whose numbers had been expected to rise ahead of the soccer tournament. In January there was a 1.5 percent year-on-year increase to almost 7,000 betting shops, however that slid to 6,349 in March as regions around the country began actively enforcing the tax increases. 

Currently, there are five active gambling zones in Russia: Primorye situated 50 kilometres from Vladivostok, Azov-City in Krasnodar Territory, Yantarnaya (Amber) in Kaliningrad Region, Siberian Coin in Altai Region and a zone in Sochi. The one in Crimea currently exists only on paper, with local authorities constantly delaying its opening and changing its potential location.

Out of all Russian gambling zones, the ones near Sochi, Rostov-on-Don and Kaliningrad – all situated in western Russia – are likely to benefit from the tournament as they are situated relatively close to the stadiums where games will be held. The zones in the east – Primorye and Siberian Coin – will likely be below the radar of punters as no games will be held there throughout the World Cup. 

Before the start of the World Cup, it was reported that the Russian oldest gambling zone Azov-City in Krasnodar Region proved to be less popular than its younger competitor, Krasnaya Polyana in Sochi, at the ratio 50,589 vs 39,722 visitors.

Yantarnaya is just 30 minutes away from Kaliningrad, where four games will be played. It is said to have attracted 15,000 punters monthly as of the end of 2017.

The zone in Sochi has demonstrated steady growth despite initial pessimistic forecasts, having received 340,000 clients in 2017, and deputy manager of its only casino Dmitry Anfinogenov expecting this figure to rise by 25 percent in the coming years.

None of the zones observed appears to be offering special events dedicated to the World Cup.




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