Ladbrokes Exits Russian Online Gambling Market

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Wednesday, January 7th, 2015 | Written by Shane Larson

Ladbrokes has just announced it is to follow the path of a whole host of other online gambling companies in opting to pull out of the Russian market, as the company seeks to satisfy recent changes made to UK and European online gambling legislation. Ladbrokes decision comes after a regulatory review last year led to the company pulling out of Canada last September, and a number of European countries last October, including Hungary, Norway and Switzerland. Commenting on the move, a Ladbrokes spokesman told iGamingBusiness:

“We continually review our presence in markets according to legal advice and regulatory conditions. This is an ongoing process and the markets we have withdrawn from are not material.”

In addition to Russia, the UK bookmaker has also announced its exit from Finland, Romania and Portugal. The company’s Romanian departure is probably related to a new online gambling law passed requiring operators to pay a licensing fee of €100,000 per year, while Portugal is also expected to impose a high cost of doing business soon. As for Finland, Ladbrokes has a history of troubled dealings with the country, whose domestic gambling industry continues to be controlled by a number of monopolies, despite objections by the European Commission.

Changes In EU, UK Online Legislation

Recent changes to UK gambling legislation requires that any company applying for a UK online gambling license must not have its products available in countries where gambling on the internet is illegal. Furthermore, the operator will be subject to a stringent screening process, and any company deriving more than 3% of its yearly revenues from ‘grey markets’ will not qualify for a UK license.

In order to comply with the new laws, Ladbrokes has now exited the Russian market, and last week the bookmaker sent thousands of emails to its Russian customers advising them of the situation. While its withdrawal from the Communist state will represent a significant loss for Ladbrokes, it is also possible the company’s decision was made easier by the recent tumult in the Russian economy, which has seen the ruble lose more than 40% of its value in 2014.

Russia’s Anti-gambling Stance

In addition, Ladbrokes decision may have been influenced by President Putin’s recent proactive stance against online gambling companies tapping into its market of 143 million people. At the end of 2014, for instance, the State Duma passed Bill 478806-6 prohibiting companies and citizens from gambling at online gambling sites located outside of Russia’s four allocated gambling zones, as well as Sochi and the now annexed Crimea. As an extract of the bill, states:

“Organization and (or) conducting gambling with play equipment outside the gambling area, or by using information and telecommunications networks, including the Internet, as well as means of communication, including mobile communications, or without obtaining permission in accordance with established procedure on the activity of the organization and conduct of gambling in the gambling zone is punishable by a fine up to five hundred thousand rubles or the salary or other income for a period of one to three years, or by compulsory works for a period of one hundred eighty to two hundred forty hours, or restraint of liberty for up to four years, or by deprivation sentence of up to two years.”

Ladbrokes exit from Russia mirrors that of several other big gaming operators who have already stop offering their services in the vast country, including Betfair, Unibet, and BetClic-Everest.

Poker Traffic Increases At Unregulated Sites

Following the exit of a number of big gambling operators from unregulated markets, global online poker has suffered a 17% drop in global traffic compared to this same in 2014 according to tracking site PokerScout. Interestingly, traffic to unregulated, offshore poker sites has increased over the same period, with those unlicensed operators benefiting from the situation including Bovada Poker, Merge Gaming Network, Winning Poker Network, Equity Poker Network, and Chico Network.

Apart from Russia, however, many of the countries the big brand poker companies have exited are relatively minor to their operations. More important are countries such as Australia, Brazil, China, Canada and India, all of which are “grey areas” with no online gambling legislation in place, and whose loss would represent a significant hit to many regulated iPoker sites.