Russia, officially known as the Russian Federation, is a land of superlatives, starting with the fact that it is by far the world’s largest country. It stretches across 17.1 million square kilometers and eleven time zones, covering one-eighth of the planet’s landmass. It has more international borders than any other country on Earth and boasts the largest population in Europe. Over 146 million people called it home as of 2021.
To top it all off, Russia has the eleventh-largest economy in the world, with a gross domestic product of US$1.48 trillion in 2020. The country has a rich but turbulent history when it comes to gambling. Such activities were the prerogative of the Russian nobility until the communist government outlawed them completely in 1928. The prohibition continued until 1989, when the first land-based casino opened its doors to patrons in Moscow’s Savoy Hotel.
Over the following decades, the country witnessed a rapid increase in the number of gaming houses and slot parlors, so much so that the situation became problematic, especially for the younger population. High school students skipped classes to visit slot machine parlors in the hope of winning money. Excessive gambling started to spread throughout Russia.
Corruption, tax evasion, and organized crime became rampant in the gambling sector. The Russian government eventually decided to prohibit slots and table games across the entire country, with the exception of five designated gambling zones. Such activities remain illegal to this day in both land-based and online formats. However, the ban does little to prevent Russians from betting at unlicensed offshore casino sites. The only legal forms of online gambling in the country are tote betting and sports betting.
Licensing Process, Fees, and Tax Rates in Russia
Business entities incorporated in the Russian Federation can apply for tote, betting, and zone-based casino gaming licenses. However, the country’s regulatory framework does not include public tenders or bidding. Any business may apply as long as it meets the regulatory requirements. Only business-to-consumer (B2C) permits are available in Russia.
Fees for tote and sports wagering licenses
Fees for casino gaming licenses
Gambling Taxes Imposed on Operators
Taxes on Players’ WinningsSocial Responsibility and Advertising Policies in Russia
Similar to other jurisdictions, authorized gambling operators in Russia can offer their services only to consumers who have reached the age of majority. The legal gambling age in Russia is 18 years old. Operators who organize sports wagering must pay special contributions that go toward the development of professional sports. A portion of these proceeds is also used to fund local youth initiatives and various educational programs.
Gambling marketing falls within the scope of Federal Law № 38-FZ on Advertisements. Operators can market their services and products in the country, but with certain restrictions. For instance, marketing materials should never target individuals under the legal gambling age. Ads shown outside the designated gambling zones cannot feature any images of people or animals.
Additionally, the marketing materials must not portray betting activities as a source of income. Ads should not leave their audience with the impression that winning is guaranteed or downplay the financial risk involved. Apart from this, there are also restrictions on gambling-related advertisements broadcast on television and radio.
Such marketing content can air only from 22:00 to 7:00 within the designated zones. Last but not least, operators can advertise during broadcasts of sporting events, but only if their ads make up 20% or less of all marketing materials shown during the broadcast.
Those who violate the advertising restrictions will face sanctions imposed by the Federal Anti-Monopoly Service. The penalties usually come in the form of fines as follows: ₽100,000 to ₽500,000 for a legal entity, ₽4,000 to ₽20,000 for the executives of a legal entity, and ₽2,000 to ₽2,500 for individuals.
Anti-Money Laundering Policies and Payment Restrictions
Gambling operators in Russia must comply with the provisions of Federal Law № 115-FZ on Counteracting Money Laundering and Terrorist Financing. Rosfinmonitoring, the Federal Financial Monitoring Service, monitors compliance with the anti-money laundering (AML) policies in the country. Operators must report all suspicious transactions and payments in excess of ₽600,000 to the agency. This applies to both deposits and payouts.
Additionally, Rosfinmonitoring maintains a list of individuals and businesses that engage in illegal activities like terrorism, arms trafficking, and money laundering. Accordingly, operators must regularly screen all customers to ensure they are not on the list. Operators should also perform regular rescreening of their patrons.
If a customer is indeed on the list, gambling companies must reject their wagers and immediately report them to the monitoring agency. All players must undergo mandatory verification to confirm their identities. Operators carry out the verification procedure based on the customers’ identification documents.
All gambling-related transactions should be conducted in the local currency, the Russian Ruble (RUB). Gambling companies in Russia can accept only bank cards as a form of payment. The use of decentralized cryptocurrencies is strictly prohibited under the provisions of Federal Law № 259-FZ on Digital Financial Assets. Russian law prohibits gambling on credit and does not enforce gambling-related debts.
Sanctions for Violations of Russian Gambling Laws
Offshore gambling companies that service the local market without authorization are committing a criminal offense. Other liable parties that may suffer sanctions include the owners of the establishments where illicit gambling takes place, payment service providers, and local or foreign offshore banks. The fines for providing land-based premises to illegal gambling operators range from ₽800,000 to ₽1.5 million. In cases of repeated offenses, the fiscal penalties might jump to ₽2 million.
Running gambling services without a license is punishable by up to four years in prison and administrative fines from ₽800,000 to ₽1.5 million. The authorities will also confiscate all gaming equipment the illegal operations have used.
Various administrative fines are in place for authorized operators who violate their licensing conditions. These range from ₽300,000 to ₽500,000 in the designated gambling zones. Tote and sports betting companies might suffer fines of up to ₽1 million, depending on the severity of the violation. Those who allow underage individuals on their gaming premises risk fiscal sanctions from ₽300,000 to ₽500,000.
As we already explained, all patrons must undergo mandatory verification. Operators who fail to verify customers’ identities risk penalties of up to ₽700,000. In the worst-case scenario, violators will have their operating permits revoked or suspended for a maximum of ninety days. Russian law does not prosecute or sanction nationals who engage in unauthorized gambling activities.
Foreign-based online gambling operators might suffer sanctions despite being located in offshore jurisdictions. However, the most widespread form of legal enforcement in Russia is blocking the domains of illegal offshore betting sites. The Federal Tax Office maintains a blacklist of all blocked websites and updates it regularly. After the latest legislative amendments, payment service processors that facilitate financial transactions to unauthorized offshore operators also risk getting blocked.
Conclusion
The Russian Federation is probably not the best place for gambling mavens who insist on diversity in land-based and online gambling options, at least not legal ones. Russian legislation severely restricts such activities, leaving locals with a limited choice of legal betting options.
Unsurprisingly, this causes many Russian nationals to take their business to remote offshore sites where they can enjoy a broader range of gambling products and services. Nonetheless, the number of offshore operators on the local market continues to shrink as Russian authorities diligently block their domains.