Russian Online Gambling in Legal Limbo

Gambling in the Russian Federation has a long and bumpy history. Tsar Peter the Great organized Russia's first lottery in 1698. For much of the last century, however, gambling has been illegal. Even a friendly game of cards was against the law. This changed during the late 1980s, then gambling went unchecked, and without regulation, and it grew into a massive and profitable industry. In October of 2006 Vladimir Putin removed the dozens of large-scale casinos and thousands of smaller gambling halls from Moscow and other cities to four remote regions in the federation. The public accepted the changes without protest and the changes were not applied to bookmakers, who were still allowed to operate wherever they had a valid license. Online gambling in Russia found that it remains in the middle, and is currently neither legal nor illegal. The government does not give licenses to Russian companies to operate gambling sites on the internet, so the only place where Russians can gamble online are at offshore web locations.
There are a number of internet gambling websites that do offer services in Russian. These online web casinos are now generating big income for the operators. According to PricewaterhouseCoopers, gambling was a $3.6 billion industry in Russia in 2008. The same company expects that figure to drop to $1.5 billion in 2010, due to the legal changes. Loopholes have been found, one being the legislation Putin signed in 2003. A law on lotteries which allows any private company to open either traditional or electronic lotteries. The only obligations that such companies face are that the companies must be licensed by tax authorities, and no less than 10% of the profits made must be passed on to charity funds each quarter.

Recently, electronic “lotto” machines have emerged all over Russia. Unlike traditional lotteries, players insert money into the machine and the player is told instantly whether they have won or not. The Finance Ministry is currently working on amendments to the lottery law but as before the freedom of the internet allows for online gambling, and will probably continue to grow as the land based casinos rapidly disappear.