There is simply a massive interest when it comes to gambling worldwide. And in Russia, there’s a massive interest when it comes to online gambling. According to a study, at least $1 billion annually are poured into offshore accounts of Russian shell companies that have been linked to online gambling.
For Russian authorities, this is a challenge considering that they are going to host the World Cup by June and July. Over the years, Russia has faced a pertinent problem involving allegations of fixing matches in its local soccer scene.
Though online gambling may not be a concern in the upcoming World Cup games in the next 100 days, it represents a problem that Russian authorities have been struggling with. According to Anton Rozhkovsky, the director of the government-sanctioned TsUPIS online betting payment system, “The total turnover volume of the legal and offshore online bookmarking market is more than $2 billion a year”.
He also added that “We do not pretend to know if the actual figure is $2.5 billion or $4 billion”. And when it comes to the portion that involves illegal, offshore businesses, Rozhkovsky said that “around 70 percent of that is illegal, offshore business”. It only means that a majority of the market comes from illegal activity.
The Rise in the Demand for Gambling
Since the collapse of the Soviet Union during the 90s, there was a pent-up demand for organized gambling. And it has led to the construction of large casinos and seedy slot machine halls in different parts of Russia.
The problem is that these establishments were able to skirt paying taxes. However, these weren’t strictly illegal. By 2009, the government, however, tried to shut them down and allow bookies to open sport betting shops that have focused mostly on soccer.
With improved access to fast internet connection as well as a legal vacuum, anonymous websites have made this as an opportunity to operate with no licenses. Russia’s Bookmakers Rating gambling analysis center estimated that the entire industry’s annual turnover was actually at $11.8 billion by May 2017 with 65% coming from illegal online bets.
As for the growth of the market, it is expected that the next five years, the gambling industry could grow up to thrice its current size given high-profile events in Russia such as the World Cup.
According to Alena Sheyanova, the spokeswoman for the legal bookmaker Leon, “We expect colossal interest in the World Cup”. She also mentioned that “The legal online betting industry is developing at phenomenal rates”
There are 15 authorized bookmakers that are under TsUPIS. One of these is the Australian brand that was able to get its license last year. According to Rozhkosky, “Most of the rest are small offshore companies registered in the Netherlands Antilles, Costa Rica, or European jurisdiction such as Malta and Gibraltar”.
Those who are registered are required to pay their taxes and submit the necessary papers to identify them in person with both the TsUPIS and each of the bookies that they use. This process takes a good number of weeks that a lot of illegal websites try to avoid.