Publication date: 18 May 2021
Bookmaking as a business, of course, requires attention and fine regulation. In the autumn of 2021, a United Gambling Regulator (ERAI – ЕРАИ) will be created in the Russian Federation, and already now bookmakers are required to install the necessary equipment. What shall we expect considering the betting market in the near future? Let’s look at what the ERAI and the United Betting Transfer Accounting Center (TSUPIS – ЦУПИС) are, and how their creation will affect the organizers and ordinary players.
How will the unified gambling regulator work in Russia and why is it needed?
From September 27, 2021, the Russian Federation will start a United Gambling Regulator with its own system for monitoring illegal gambling and lottery activities. The Company will operate on the basis of the charter approved by the Government of the Russian Federation. The functions and powers of the founder fall on the Federal Property Management Agency.
- Federal Law No. 493-FZ of December 30, 2020 “On the Public Law Company” United Gambling Regulator “ and on Amendments to Certain Legislative Acts of the Russian Federation” was adopted by the State Duma and approved by the Federation Council.
According to the charter, the ERAI is designed to simplify the state control of gambling legislation and provide extra-budgetary funding for sports in Russia. Some other features of the new law:
- ERAI and will transfer funds from bookmakers (BC) to the development of all-Russian sports federations and professional sports leagues. In addition, the regulator will retain target deductions from all bets made by players.
- ERAI will interact with the Federal Tax Service (FTS). Monitoring will be carried out automatically. Bookmakers will need to install additional equipment in their processing centers in order to broadcast all data on accepted and returned bets, paid and unpaid winnings, and the form of settlements.
- Financial investments of bookmakers in favor of the state will increase. Bookmakers will retain 1.5% of quarterly income, and the minimum amount of quarterly deductions will be increased to 30 million rubles.
- The company will participate in the development of legislation for the gambling industry, can create new companies, invest, issue bonds and carry out other activities that bring profit.
Who will lead ERAI? The company’s CEO must be assigned by the government for a five-year term. In addition to the General Director, two more people will be appointed to the ERAI Board. A Supervisory Board will also be established its role suggests overseeing the work of the ERAI. It will consist of 4 people, who may also be appointed by the government only. The Supervisory Board will include the CEO, as well as representatives of the Ministry of Finance and sports organizations. What will happen to TSUPIS and SRO? Find out what Online Rate Transfer Accounting Centers (I-TSUPIS) are and how they used to work. For financial monitoring of settlements between players and bookmakers, a single center for accounting for transfers of bets from bookmakers and sweepstakes will be created. This structure will replace the existing TSUPIS and unite all legal bookmakers under it. The self-regulatory organization (SRO) as a mandatory element of the market will actually be abolished. Bookmakers no longer need to be SRO members. The compensation fund, created by contributions from gambling organizers to ensure their obligations, will now also be formed by the ERAI, and not by the SRO. How will the new law affect market participants? What do bookmakers think of ERAI? According to experts, the creation of the regulator will be another powerful tool of state influence on the legal betting market. The law on a United gambling regulator will deal a blow to low-income companies. Such companies are likely to close. The profitability of the business will also decrease. It is assumed that the deductions of bookmakers will increase to 20-25% of the revenue in favor of the state. For example, after the introduction of new legislative initiatives, bookmakers VulkanBet and bwin officially announced the termination of their activities in Russia. In addition, bookmakers ‘ sponsorship agreements with sports clubs, federations and TV channels can now be significantly reduced — under the new law, bookmakers simply cannot spend such an amount on it. Now there are two SROs on the market, which ensures that there is competition. Market participants often move from one SRO to another. They are fighting for more favorable conditions. Market participants believe that one important regulatory body will have no incentive to operate transparently and that it will be easier for most companies to enter the “gray zone” than to negotiate with one, in fact, private regulatory body. How will this affect regular players?
- Betters are waiting for new registrations, now in a Single center for accounting for transfers of bookmakers and bets.
- Bookmakers can start to increase the margin when betting on sports. As a result, the bets will be reduced, and it will be even more difficult for players to beat the bookmaker.
- Bookmakers may charge a separate commission for depositing / withdrawing funds, interest on accepting each bet, etc.
- The law may alienate players from legal bookmakers. Due to the active interest of bookmakers to their customers, players start to place bets with illegal companies and look for different ways to get around the block.
I-TSUPIS should start working in the autumn, all betting companies should be connected and work through the ERAI information system. The licenses of bookmakers who do not participate in the ERAI will be revoked. Such bookmakers will not be able to conduct legal activities on the territory of the Russian Federation.
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