New changes to Russian gambling rules signal continued development of online gambling

Recent changes in law have solidified the emerging legal framework for online betting in Russia.

Solid legal ground

Since 2006, Russian law categorically prohibited any online or distance gambling in any form. The prohibition was made without exception. In 2014, however, a curious concept was introduced – the “Interactive Bet” with regard to bookmaking and totalizators.

The description of the Interactive Bet was initially vague and poorly understood. Some understood the Interactive Bet to mean that online gambling was suddenly legalized, while others more conservatively scrutinized the letter of the law to understand the Interactive Bet in much more limited terms as a liberalization of financial transactions but not for online betting itself.

In the face of the vague language of the law, some moved forward to develop online betting while others took a more cautious wait and see approach. As time progressed, practice has shown that the Interactive Bet is, indeed, the mechanism for online betting in Russia.

One of the weaknesses in the emerging legal framework for online betting was that the law did not explicitly state that Interactive Bets were an exception to the prohibition on Internet gambling. While the system was moving forward in practice, this lack of clarity left some uncertainty that interpretation of the law might change at some point. This was clarified recently, though.

In July, the Gambling Law was amended to specifically state that the Interactive Bet is the exception to the prohibition on Internet gambling in Russia. The previous version of the law simply referred to “exceptions” made under “this law” and then further down in the law described the Interactive Bet mainly as a financial transaction model but not specifically as a way to bet online. With the new changes to the law, all doubt is removed that the Interactive Bet stands on solid legal ground as the way to organize online betting in Russia as the exception to the prohibition under law.

The amendments in July also revealed an interesting narrowing of the law. These changes provided that the Interactive Bet is the only exception to the prohibition on Internet betting. With such clear language, it would appear that the intention of the legislature is to remove the possibility that other exceptions are likely to be enacted. As Russian law changes rapidly, this situation could be adjusted, but for the time being, when it comes to online betting in Russia, the Interactive Bet is the only online game in town.

Changes to rules for identifying clients

Russian law requires any bookmaker or totalizator to gather documentation and information to identify customers. The recent changes to the law not only liberalize the identification requirements for online customers, but further develop the operation of the Interactive Bet system.

Russian law provides for two levels of identification in the context of gambling: the standard “full” identification system and a simplified system. Under the changes to the law in July, the simplified system is to be used for the majority of online betting customers using Interactive Bets. So, now, the full identification is to be used for in-person gamblers at a bookmaker or totalizator location while the simplified is applied online.

While the identification requirements are worthy of their own discussion, the importance of the development here is that providing for a special and easier requirement for online betting indicates that the Interactive Bet system is developing.

Mechanisms for increased regulatory supervision

Other amendments to law signal development of mechanisms for increased regulatory supervision over Interactive Bets. While these adjustments are not monumental in themselves, they are evidence of further development of the Interactive Bet as a legally grounded and regulated way of conducting online betting in Russia.

Specifically, recent amendments to the Gambling Law (i.e. the Russian Federal law No. 244 FZ “On the State Regulation of Activities Associated with the Organization and Conduction of Gambling and on Amending Specific Legislative Acts of the Russian Federation” of December 29, 2006) specifically empower regulatory authorities to undertake increased attention and control transactions (in particular, to participate in online betting to check whether it is performed in accordance with law) posing as gamblers to monitor and investigate improper online betting and gambling operations in Russia. Since 2013, the Federal Tax Service was designated by the Government of the Russian Federation as the appropriate authority to regulate gambling in Russia. With these developments, the Federal Tax Service is inching closer to being a genuine industry regulator. Of course, the most important consideration is that Internet betting is developing on increasingly solid legal ground in Russia.