Being a sports betting operator in Russia these days just doesn’t seem like a very profitable proposition, unless you’re one of the larger players. And being one of the operators that can make margin based on volume isn’t a guarantee with the Russian Ministry of Finance constantly looking for more ways to squeeze the golden goose.
As reported on Online.Gambling.org in April, Russian Finance Minister Anton Siluanov noted that a very substantial amount of grey market revenue in the sports betting industry was not being taxed. He asserted that the government would consider more taxes in order to capture this lost income. Well, consider it, they did and the Ministry came up with a new tax rate of 10 % for online betting sales, which would become effective in December, 2016. In addition, every licensed bookie would be on the hook for 5% of their sports betting revenue with a minimum quarterly payment of $232,000, payable to Russian sports federations. Of course, this is all in addition to licensing fees as well.
The Ministry of Finance obviously decided that unless they were trying to actually destroy sports betting in Russia, this was not a sustainable option for the industry. This past October, before the 5% tax rate was to be enforced, the Ministry dialed back the rate to 3%. Now, in November, they have reduced the mandatory contribution to 1%. This comes after widespread appeals from sports betting operators who were struggling with the new taxes and regulatory fees.
Russian bookmakers were pleased to some extent with the reduction, but also noted that the 1% sports tax is still a significant sum when looking at the overall amount of taxes bookies are being hit with. The president of the Bookmakers Self-Regulatory Organization (SRO), Darina Denisov, said that the reduction was welcome but stressed that the government needs to take a different approach to legislative changes for sports betting. Rather than just throwing out extreme tax proposals, the bookmaking industry should at least be consulted on whether or not such a large jump in the tax rate is sustainable for the health of the industry.
The former president of the Bookmakers SRO, Nikolai Oganezov, said that “you can, of course, to some extent, be happy that the Ministry of Finance took the side of reality, but the 1% tax must be viewed in the totality of all taxes.”
The Russian Duma approved the first reading of the new sports betting legislation in early November, before the mandatory contribution of 5% was reduced to 1%. It is expected though, that Ministry of Finance’s new rate will be incorporated into a future draft before the legislation becomes law.