Russian Bill Passed Criminalizing Online Gambling

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Thursday, December 18th, 2014 | Written by Shane Larson

After five years of blocking online poker legislation inside Russia, in June the country’s lawmakers signaled a potential U-turn in their policies following an announcement that opening its market of 143 million people to Western online gambling companies was in the country’s best interests. However, all bets are now off after the State Duma passed Bill 478806-6 forbidding anyone from playing internet poker outside of Russia’s four designated areas, or the other two safe zones of Sochi and the recently annexed Crimea.

While Bill 478806-6 has cleared the State Duma (lower house), it must now go to the Federation Council (upper house), where a rubber-stamp will mean the piece of proposed legislation becoming effective immediately.

Geopolitics Dampens iGaming Development Plan

In 2009, the Russian Federation shut down its live gambling operations outside of a number of remote gambling zones, but online poker has always remained a grey area with no specific legislation in place explicitly banning internet poker. Nevertheless, the Russian supreme court has often forced the country’s ISPs to block gambling sites and currently there are more than 50 gambling-related sites blocked in Russia, including Pokerstars, SportingBet, Betway, Ladbrokes, TitanPoker, and UniBet.

In June, hopes were subsequently raised that the country was ready to embrace online gambling as a means of diversifying its economy away from the energy industry, which last year accounted for 68% of total export revenues. It was even estimated that online poker alone had the potential to contribute $146 million each year to the country’s economy, but now deteriorating relations between Russia and The West following the Ukraine Crisis which started in February seems to have derailed the whole idea.

Online Poker Now Face Heavy Penalties

Bill 478806-6 which passed last week now effectively makes playing online poker inside Russia a criminal offense outside of the designated areas already mentioned. As the amendment to the Criminal Code of the Russian Federation now reads:

“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.”

Therefore, not only do players face a 500,000 ruble ($7,625) fine if caught, but they also face the prospect of spending up to two years behind bars.

Illegal Operators Beware

However, the main aim of Bill 478806-6 is to target the operations of illegal gambling sites, although the bill does not actually distinguish between the action of operators “conducting gambling” and those of an individual. Nevertheless, operators could now find themselves saddled with fines running into million of rubles, and four years jail time if caught, while corrupt officials aiding the sites could also face the prospect of seven years in prison.

Crusade Against Gambling

Whilst Russia has come under heavy international pressure for its aggressive stance on Ukraine and Crimea, and sanctions take a toll on the Russian economy, President Putin has faced mounting domestic accusations of corruption which has lead to billions of illicit funds being funneled into the pockets of his top aides, as well as an alleged estimated $28 billion into the Russian leader’s own personal account. As a report produced in 2011 by Russian opposition figures, revealed:

“Corruption has ceased being a problem in Russia; it has become a system. Its metastases have paralyzed the country’s social and economic life. The annual turnover of corruption in Russia now stands at $300 billion.”

However, maintaining a moralistic appearances is important for the country’s leaders, and so it has even been suggested Putin’s anti-gambling drive is a way by which Putin can appear spotless in the face of the international medias’ relentless printing of stories related to rampant corruption inside Russia. Whether the country’s new draconian measures to curb online gambling proves effective in scaring off illegal gambling and illegal gambling outfits, however, remains to be seen.