Russia, officially known as the Russian Federation, is a land of superlatives, starting with the fact it is by far the world’s largest country. It stretches over 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 highest population in Europe. Over 146 million people call 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 a prerogative of the Russian nobility until the communist government outlawed them completely in 1928. The prohibition continued until 1989 when the first landbased casino opened 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 started to become problematic, even more so for the younger population. High-school students skipped school to visit slot machine parlors in hopes of winning some 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 landbased and online form. 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 and sports betting.
Laws That Govern Gambling in Russia
The main legislation that governs the gambling industry in Russia is Federal Law № 244-FZ of December 2006. It established the legal foundations for the allocation of the special gambling zones, the licensing process, and the regulatory framework in the country. The legislation regulates all remote and brick-and-mortar forms of gambling except for lotteries, which are under the scope of Federal Law № 138-FZ.
Other supplementary pieces of legislation that also pertain to gambling include Federal Law № 152-FZ on Personal Data and Federal Law № 38-FZ on Advertisements. The Criminal Code of the Russian Federation outlines the sanctions imposed on violators who offer gambling services illicitly.
According to the primary legislation, operators can conduct gambling only on the territory of five specially designated zones. Each operator must first receive a license from the local regulatory authority before they can legally operate in a given gambling zone. There are two main requirements licensed gambling operators must meet.
3Designated Gambling Zones
The companies must be incorporated on the territory of the country and their owners should have a clean criminal record. The five gambling zones include Krasnaya Polyana, Sibirskaya Moneta, Primorye, Yantarnaya, and most recently, Zolotoy Bereg in Crimea. Online gambling is largely illegal in the Russian jurisdiction, sports betting and totalizators (totes) being the only exceptions.
Each type of allowed gambling activity requires a separate license. The permits for tote and sports betting enable licensees to offer their services in both terrestrial and digital form. Russian law disallows online casino gaming and slots for the time being. Another thing worth mentioning is that each designated gambling zone has an individual regional authority as follows:
- The Crimean Ministry of Finance for Zolotoy Bereg
- The Ministries of Regional Supervision and Economy for Yantarnaya
- The Altai Department of Tourism and Resorts Development for Sibirskaya Moneta
- The Krasnodar Department of Property Management for Krasnaya Polyana
- The Primorsky Krai Department of International Cooperation and Development of Tourism
In December 2020, the Russian President Vladimir Putin approved Federal Law № 493-FZ. It aims to create a unified regulatory authority in the country, ensure higher levels of transparency, and strengthen the stance against illegal offshore operators who service the local market without the necessary authorization.
Some of the amendments have already come into effect, while others are still pending. Under the new legislation, the Federal Tax Services and the Unified Gambling Regulator have the mandate to oversee the gambling sector, along with the above-mentioned regional bodies.
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, but the country’s regulatory framework does not include public tenders or bidding. All businesses can apply as long as they meet the regulatory requirements. Only business-to-consumer (B2C) permits are available in Russia.
Social Responsibility and Advertising Policies in Russia
Similarly to other jurisdictions, authorized gambling operators in Russia can only offer their services 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 for the funding of local youth 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, the marketing materials should never target individuals under the legal gambling age. The 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 an income source. The ads should not leave their targeted audience with the impression winning is a sure thing or downplay the level of financial risk involved. Apart from this, there are also restrictions on gambling-related advertisements broadcast on television or radio.
Such marketing content can air only from 22:00 to 7:00 on the territory of the designated zones. Last but not least, operators can advertise during the broadcasts of sporting events, but only on condition their ads comprise 20% or less of all other marketing materials shown during the broadcasts.
Those who violate the advertising restrictions will suffer 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 individual persons.
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, observes for compliance with the anti-money laundering (AML) policies in the country. The operators must report all suspicious transactions and payments in excess of ₽600,000 to the body. 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. Respectively, the operators must regularly screen all customers to ensure they are not on the list. Regular rescreening of the patrons should also be in place.
Provided that a customer is indeed on the list, the gambling companies must reject their betting action and immediately report them to the monitoring agency. All players must undergo obligatory verifications to confirm their identities. The 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 only accept 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 services providers, local and foreign offshore banks. The fines for providing landbased 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 with 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 their 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 obligatory verification. Operators who fail to verify customers’ identity risk penalization of up to ₽700,000. In the worst-case scenario, the 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 based 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, the payment service processors that facilitate financial transactions to unauthorized offshore operators also risk getting blocked.
The Russian Federation is probably not the best place for gambling mavens who insist on diversity in terms of landbased and online gambling options, at least not legal ones. The Russian legislation severely restricts such activities, leaving locals with a bit limited choice of legal betting options.
Unsurprisingly, this causes many Russian nationals to take their action 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 keeps on shrinking as Russian authorities continue to diligently block their domains.