In a short while, the RF should fully enact the law prohibiting payments between private network users and online gambling sites. How will gambling industry in Russia react to that? What do the industry experts and the Internet community think? Slotegrator has delved into the most critical aspects of the legislative developments.

Objective behind the Ban

The main purpose of the new law is to combat the laundering of illegally obtained funds. According to the RBC business newspaper, experts estimate the shadow market turnover of Russia's online casinos as at least $3 billion. In addition, the regulation of e-Commerce is another crucial task been under discussion in Russian Government for many years now. 
As far back as in August 2015, the Russian President, Vladimir Putin, appointed the Government to pursue the passage of the bill to address those issues. Thus, the amendments were approved in short manner.  

Background 

Since 2009, gambling in Russia has been forbidden, other than for licensed bookmakers and State lotteries, as well as for five permitted land based gambling zones. Liability under the Federal law No. 244-FZ of December 20, 2006, "On the State Regulation of Activities Involving the Organisation of and Carrying on Gambling" applies to the organisers of gambling only.  Therefore, the country's inhabitants have been safely gambling on the websites with servers registered outside Russia. 

All the attempts made by the RF authorities to block gambling websites have never succeeded though. Despite the fact that Roskomnadzor is blocking tens of thousands of domains, IP addresses and individual pages, the online casino operators easily circumvent the prohibitions and thus, Russian users carry on gambling. 

Course of Events

According to the Ministry of Finance of the Russian Federation, the new bill was first introduced by the Government in late 2015, but had received a negative response from the Central Bank and Ministry of Economic Development. Therefore, in the middle of 2016, the draft law was returned for improvement in cooperation with the Central Bank, the Federal Tax Service, the Ministry of Economic Development and the Ministry of Internal Affairs.

The Federal Tax Service - Slotegrator

Once amended, the Law No. 358-FZ "On Amendments to the Federal Law "On Lotteries"' and the Federal law "On the State Regulation of Organization and Conducting Gambling, and on Making Changes to Certain Legislative Acts of the Russian Federation" of November, 15, 2017, was enacted by the State Duma, and on 22 November 2017, approved by the Federation Council. It has already entered into force, except of some of its provisions, from 1 January 2018.

What Changed

The main development is the ban on money transfers between individuals and illegal gambling operators. Starting from 26 May 2018, Russian banks and payment agents will have to deny such transactions addressing people and companies from the special black list. Otherwise, infringement of the Law entails severe penalties. 

The Federal Tax Service is fully to maintain this black list and to bring its contents to credit organisations and payment systems. It is noteworthy that all the dubious companies suspected by tax authorities will be blacklisted without a court order.

Some Will Be Affected, while the Rest Won't

The registry will include all Russian and foreign legal entities and individuals involved in organization of poker rooms, online casinos, bookmakers unlicensed in the RF and international lotteries without the relevant international treaties with Russia's government. The Law will not affect the officially operating bookmakers and State lotteries operators.

The Russian market of online betting was legalized in 2016. The first licensed bookmakers were "Liga stavok", "Winline", "1хStavka" and "888.ru", and later, they were joined by "Fonbet" together with a number of other companies.

Permitted in Russia bookmakers conduct financial transactions via TSUPIS, the centralised payment processing systems established by Russian Government to handle all online gambling money transfers, as well as to levy a tax of 13% on the winnings. 

Matters under Discussion

It will be impossible to transfer money to companies and individuals from the black list, nor through bankcards or e-wallets. Each payment system (Central Bank counts approximately 43) is obliged to encode such transactions, defining that one of the parties runs illegal gambling activities. This will affect such payment systems as Visa, MasterCard, Western Union and so on, as well as e-wallets Qiwi, Yandex Money, PayPal, Skrill etc.

The Central Bank of the Russian Federation has already said that such blanket restrictions lead to additional pressure on transactions supervision conducted by banks. Nevertheless, it concerns only direct bank transfers processed manually, when the operator of the bank can compare the details of one of the parties with the registry introduced by FTS.

The Central Bank of the Russian Federation has already said - Slotegrator

But it is not so easy with the bank cards. The Mir bank cardholders will be definitely limited. However, many believe that to ban such payments through Visa and MasterCard will be troublesome. Transactions are carried out in automatic mode on 7995 and 9754 MCC codes. Moreover, most bookmakers and online casinos prohibited in Russia have the official licenses of foreign jurisdictions, so for these payment systems, they operate within the legal framework.

There is no doubt that, according to the law, transactions conducted through the Russian virtual wallets Qiwi and Yandex Money will be prohibited. But, for example, WebMoney from the point of view of Russian legislation is not a payment system and, theoretically, should not be subject to this bill. The ban will probably affect RUB wallets of WMR, but the law does not cover other wallets of this system.

Finally, cryptocurrencies cannot be regulated at all. That is why, in recent years, Russian gaming market has been actively taking advantage of the anonymity of bitcoins, litecoins, and other cryptocurrencies.

Bypass Path

The Russian gamblers have already learned how to bypass the direct blocking of the gambling sites and their mirrors with the help of Internet plugins, turbo modes, DNS settings, VPN, and Tor browser. Roskomnadzor has no power to fight against the technical progress. 

Previously, the banks have already attempted to freeze gambling transactions on the territory of Russia. It mainly concerned winning withdrawals, but the players always managed to cash out. However, even a new law leaves many ways to withdraw money from the casino.

In addition to a guaranteed anonymous method of money transfer in cryptocurrency, the operators may adopt already tested standard schemes. The best-known scheme: the casino opens a new company that is officially not related to gambling; the players buy a trifle via online shop and thus make a deposit on the gaming site, bypassing the restrictions.

Moreover, Slotegrator company that for many years has been working on the gambling market as an aggregator of games for online casinos has recently introduced a new solution – Moneygrator. It can easily help you solve all the problems connected with the bank operations. Moneygrator is an aggregator of payment systems with many payment options for fast transactions in online gambling. 

Thanks to Moneygrator, online casino operators will be able to offer their gamblers more than 100 payment methods including the popular payment services Skrill, Neteller, BitGo, RoyalPay, Cubits, and more than 15 famous cryptocurrencies (Bitcoin, Ethereum, Ripple, Monero, etc.).

Public Response

The law was quite expected and didn't cause any serious reactions among the Runet users. The Russian people already got used to various restrictions and prohibitions. They have long resigned to the fact that Russian banks suspect something illegal in transactions of more than $100, and a number of difficulties always accompanies money withdrawal from the casino. Those gamblers who were not satisfied with such situation have long crossed over to the foreign payment systems or cryptocurrency.

What Operators Think

Looks like gambling market in Russia was ready to such turn of events. The operators keep calm in anticipation of the new law implementation. There are still many questions concerning the blocking of payments through the most popular international payment systems. Therefore, payment operators and online casinos refrain from commenting.

Despite the fact that a number of experts predict a serious outflow of random players who will not be able to make direct deposits and withdraw money from poker rooms and online casinos, any large companies in the Russian market, as PokerStars, etc., have not yet reported that they plan to use some means to bypass the ban. It is because Russia has no right to block the transactions of foreign payment systems and banks between their citizens and poker rooms, and vice versa, so experienced players will continue playing and transferring money. 

Conclusion: What Will Happen to Russian Online Gambling

Despite the fact that the organization of online gambling in Russia was banned by the Federal law in 2006, and that since 2014 the first Executive body, Roskomnadzor, have been actively blocking the sites of online casinos, it is impossible to bring players to justice. Moreover, attempts to do it may cause great social tension in the country, which is already large enough. 

 Roskomnadzor is blocking tens of thousands of domains - Slotegrator

The previous experience proved that it is impossible to close gambling platforms as well as to stop gambling since everyone is familiar with the ways to bypass the blocking. 

A new idea about the ban on transactions with gambling establishments, apparently, will also come to be ineffective. Any computer literate online player, experienced in making deposits and withdrawals from the casino by various methods, won't suffer from a new law, which can only reduce the number of payment options, but not deprive them of the opportunity to gamble, even if the operators don't take any actions to bypass the bans.

Experts of Slotegrator believe that there is only one way out for the Russian authorities — to legalize online casinos, create a regulatory framework, develop regulatory rules, as well as licensing requirements, and finally, to move from bans to civilized governance.