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Gambling in Russia: development of gambling zones, restrictions and prospects for 2022

The gambling market in Russia is officially legalised: there are special gambling zones in the country, and bookmakers can obtain a licence and work online as well. The current legislation on gambling and betting regulation is periodically changing, while casinos and betting offices are learning to operate in the new environment. 

The most important initiative to facilitate the development of gambling business can be considered the unification of all Russian casinos in AIRIS (Association of entertainment industry operators and sports and entertainment events). Thanks to this, the activities of market operators have become more transparent and regulated.

Legal casinos in Russia: what happens in gaming zones

Of particular interest is exactly how the existing and new facilities in Russian official gambling zones are being developed and built.

New gambling zone in Crimea

In 2022-2023 there are plans not only to build a gambling zone, but also to construct a gambling and entertainment cluster on the Crimean Peninsula, as part of the Golden Coast project. It was decided to locate the zone in the village of Katsiveli, which used to be the location of the Fortuna Sanatorium. Preparatory work on the territory of the Golden Coast cluster started back in spring 2021, but was suspended due to the pandemic. Resumption of construction will begin in 2022 with the dismantling of the unfinished building.

The Crimean authorities are extremely interested in making sure that “Golden Coast” starts working as soon as possible, as it is estimated that it will be able to replenish the budget by 250 million roubles annually. Some experts believe these expectations are exaggerated, citing the high potential of the Sochi gambling zone, which is a direct competitor with a powerful brand, and therefore will not give the Golden Coast its customers. But on the whole, on a national scale, everyone will benefit from such competition: clients, the state budget and the zones themselves, which have received a stimulus for development.

Kaliningrad Las Vegas in “Yantarnaya”

At the very end of 2021, on December 22, at the meeting of architectural and urban planning council of Kaliningrad region, a project of casino-hotel in the village of Kulikovo was presented. In fact, it is a question of expanding the Yantarnaya gambling zone by constructing another facility.

The role model for the new project is one of the Las Vegas gambling establishments. The project uses a lot of tinted bronze glass and has a total height of eight floors, two of which will be used for the casino. The owner is Nikita, who has not yet been named. The unknown investor stressed that he already has experience in setting up casinos in the gambling zones of Azov-City and Primorye.

It is noteworthy that the casino will start operating while it is still under construction. The project provides for the erection of tent structures, within which customers can be served.

Generally speaking, up to two dozen casinos may appear in Yantarnaya on the area of 100 hectares. The implementation of such plans is considered in the long term.

 “Primorye” is under threat

“Primorye” is a strategically important gambling zone for the entire industry. According to the World Casino Awards 2021, a respected international award, one of the operators of the gambling zone has been awarded in the category “Best casino with a hotel in Russia 2021”. It is the Tigre de Cristal hotel located in the Muravinaya Bay. The investment in construction was about 8 billion.

New information appeared in late January 2022, which may dramatically change the situation in the Primorye Gaming Zone. Recall that in November 2021 the authorities of the north-eastern provinces of Jilin and Heilongjiang of China announced the results of a high-profile investigation. It concerned the activities of a network which, through Chinese travel agencies, attracted Chinese citizens to gamble in foreign casinos, in particular in the Primorskiy region of Russia. As a result, 4 banks and 18 companies were closed, 142 people were arrested. The damage amounted to 1.6 billion yuan of gambling funds or almost 19 billion roubles.

  • According to the laws governing the gambling market in China, the organisation of gambling tours is strictly prohibited and foreign casinos cannot advertise or attract players from China.

One of the possible consequences of the criminal case (i.e., stopping the flow of gambling tourists from China and reducing casinos’ profits) was a drop in stocks of American and Chinese investors who had invested in the Primorye zone.  In particular, shares in the Hong Kong investment fund Summit Ascent Holdings Ltd, which is associated with the Tigre de Cristal gambling establishment in Muravinaya Bay, fell to HKD 0.13* (in early 2021 they were worth HKD 1.10)

*1 Hong Kong dollar (HKD) is equal to 10 Russian roubles.

The Russian authorities remain loyal: in December 2021, the cluster received an extension of preferential tax treatment (almost 2.5-fold reduction of fees from equipment in land-based casinos). In addition, a general plan, which will include a master plan, a marketing plan and a development concept, is being worked on. This is being worked on jointly by the project developer and representatives of AIRIS. There are plans to strengthen the brand, to position the zone on the world stage, to popularise it among foreign tourists. Special emphasis is being placed on attracting federal funding.

“Krasnaya Polyana” in Sochi

The original concept followed by the creators of Krasnaya Polyana is to integrate and embody the best international experience. The gaming cluster has already managed to contribute a total of 4.5 billion roubles to the state treasury.

The various facilities of this gaming zone are developing coherently, offering guests a high level of comfort. It houses not only a hotel and restaurants, but also a sports arena and a theatre.

It is noteworthy that Krasnaya Polyana has created conditions not only for fans of gambling, but also for comfortable recreation without direct play.

Sochi also clearly aspires to become the Russian poker capital. Sochi Poker Club attracts players of the federal and world level. Especially in this gambling zone the most significant poker festival for the Russian Federation and nearby countries EPT Sochi – European Poker Tour and its budget format EPT Open Sochi are held on a regular basis. Traditionally, Sochi Poker Club sums up the results and presents the top 10 players of the season at the end of the year. Garik Tamasyan was named the best player of Sochi in 2021 for the second time, he won 39 tournaments at Casino Sochi and won over 22 million roubles in prize money.

What is going on in the illegal gambling market in Russia?

The fight against the illegal gambling market in Russia is conducted at the state level. Due to the work of Roskomnadzor in 2021 more than 64 thousand online casinos and betting offices were blocked and access to 320 links redirecting to illegal materials was terminated. This exceeds last year’s figures by 12%.

At the end of 2021, the State Duma began drafting a bill on a list of droppers who will only be able to transfer money with a passport at a bank branch. The new register will be part of the Central Bank’s anti-money laundering platform called Know Your Customer (KYC). From July 1, 2022, all credit institutions can join the platform.

On 25 January 2022, the State Duma in its second reading approved the introduction of fines for banks, postal and telecom operators, as well as payment agents for transferring money in favour of illegal lotteries and casinos.

  • The operation of online casinos has been banned in Russia since 2007. Transfers in favour of illegal gambling organisers were banned in Russia back in 2018.

If the bill is adopted, the number of fines for making transfers to illegal gambling operators, will be:

  • from 100 to 500 thousand roubles for officials, communication service providers, payment agents, credit institutions; 
  • from 25 to 40% of the payment amount, but not less than 5 million roubles for legal entities. 

Nevertheless, cryptocurrencies provide new opportunities for financial interactions with customers to operators of illegal casinos. According to SoftSwiss research, the volume of betting in online gambling using cryptocurrency increased from 15.7% in the third quarter of 2020 to 43.3% in the third quarter of 2021.

What does the Russian gambling market have in store for 2022?

Casinos in Russian gambling zones are not having the best of times. With all the desire of the authorities to develop gambling tourism and replenish the budget at the expense of the pandemic brings its limitations in the activities of offline segment. Only casinos in Sochi have a stable income, and the zone in the Primorye Territory, due to the “Chinese scandal”, is under question altogether.  However, the gambling enthusiasts in both 2021 and 2022 express their willingness to spend money and gamble online. On the part of illegal online casinos, we can expect new funding schemes to emerge and attract players. And gamblers, in turn, will shift some interest from illegal casinos – to the legal betting market in Russia. This trend is supported by the impressive growth figures demonstrated by betting shops at the end of 2021.

Russia is losing billions of roubles which legal casinos could have paid to the budget.  This is a consequence of the ban on gambling throughout the state, said Dmitry Slobodkin, one of the founders of the Russian gambling business. 

According to him, in 2006 (before the law on gambling zones was passed), the state received 305 billion dollars in taxes from casinos and gambling halls. In 2021 the budget received only 1.5 billion roubles which remained in the regions where the gambling zones are located. The expert asserts that, taking into account inflation, rising rates and other indicators, the state budget is currently losing about 600 billion roubles in unpaid taxes every year.  This state of affairs, according to Slobodkin, only leads to the flourishing of the illegal segment.

 

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