Russia approves law to increase bookies taxes one hundredfold
Industry confident it can absorb the blow if granted advertising and income tax concessions
The Russian Federal Assembly has approved a first reading of a law which would increase taxes for online bookmakers in the country one hundredfold.
The legislation, which was introduced by the country’s Ministry of Finance at the start of April, could require bookmakers operating online to pay between RUB2.5m and RUB3m (?30,000 to ?40,000) a month – more than one hundred times higher than existing fees for bookmakers.
Russia-facing bookmakers would also be required to pay a 13% income tax on a customer’s winnings, which the player is currently responsible for.
Having passed the first vote, legislators are now required to hold a consultation period with bookmakers before the law can be adopted.
According to bettingexpert.com’s Russian project manager Alexander Kostin, operators believe they can afford to pay the taxes, but have proposed some amendments to help deal with the revenue impact.
Foremost among these is a change to advertising restrictions allowing bookmakers to show commercials on TV during football matches. Currently they are only allowed on TV and radio from 10pm to 5am and at racetracks, casinos and offline betting shops.
Bookmakers are also calling for the income tax payments to be calculated yearly for each individual player rather than for each payout bookmakers make, presumably in the hope the longer time period will make customers less likely to show a net profit.
“Russia seems to rush with tax laws for the bookmakers and in general with legislation here because they see the betting industry as the one which can significantly help regions to increase their budgets in times of crisis,” said Kostin.
“However despite the fact it follows some international examples (the British one), the law proposals around the betting industry in Russia seem to repress rather than help the development of the gambling industry.
“That said, if bookies are allowed to advertise more widely, that will significantly reduce the financial burden on them and they should be able to operate profitably within a legal framework, which will be beneficial for all parties: players, sport betting operators and affiliates,” Kostin added.
A separate bill also seeks to introduce a quarterly tax of 5% of bookmakers’ income as a contribution to the Russian Ministry of Sport.
The new taxes are part of an effort to license and regulate online betting, as Russians authorities continue their efforts to block foreign operators who offer their products to Russian punters.
The new licensing fee structure is expected to take effect on 1 January 2017 and could pave the way for foreign operators to legally enter the market.