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New law pressures online gambling in Russia

Offline gambling has exploded in Russia in the last three years, particularly in Moscow. It is an estimated $5 billion annual business and draws players to both high-class casinos and the one-rouble slots in small arcades. Russia, the world’s second-largest country by population with an all-cash culture that favours spending over saving may soon rival Asia as one of the world’s fastest-growing gambling markets.

However this rapid growth has increased calls on the government to legislate this sector, traditionally seen as a wide-open market to internal and foreign companies. One such law was passed last month (and will be extended in July this year) to target advertising by the industry.

Section 16.1 Advertising gambling and / or betting business

1. To advertise organization and realization of gambling and / or betting, including advertising gambling companies is allowed only:

– from 10pm till 7am local time in radio and TV programs; inside buildings and constructions, where such gambling games and bets are held (these exclude railway, bus, underground and other stations, where such advertising is prohibited); in periodical press of advertising character, as well as in special periodical press assigned to those who work within gambling business and / or for persons, who play gambling games and / or take part in bets.

2. Advertising activity, associated with holding gambling games and/or bets, including advertising gambling companies must not:

give an impression that taking part in gambling games and/or bets matters for reaching social and personal success or can help solve material (money) problems; discredit persons, who do not take part in gambling and/or betting; give an impression that a win is guaranteed or that the chances to win are very high; conceal information about special terms and conditions or about restrictions to participation in such gambling games and/or bets, or about conditions of prizes pay-out, if such conditions or restrictions are established; to apply directly to non-adults, use images of people and animals, as well as to distribute advertising information in periodicals, radio- and TV programs for non-adults.

Controversially for the online gaming industry here in Russia; the internet is not listed as a permitted advertising location within the bill. This has resulted in the leading Russian search engine, Yandex, removing direct gaming adverts from their pay-per-click (PPC) and banner advertising channels. They have no plans to remove organic listings, which they do not view as advertising.

However this is not the first time that the internet has been overlooked within Russian legislation, as the law makers struggle to catch up with online technology. This ambiguity has led to others in the Russian market, notably Yandex’s rival, Rambler to continue accepting direct gaming PPC. On the telephone yesterday a representative at Begun.ru, who provide the advertising streams for Rambler, confirmed they had, “no plans to limit their PPC program or restrict gaming clients”.

They may well have legal grounds to continue in this course. Henry Karpov, who works as an attorney for the legal firm Sovetnik also doubts this law can be applied to online advertising

I definitely think there is room for doubt in this law. It has not mentioned the internet as a medium which suggests that area remains unlegislated for and unaffected by this bill. Russia law does not usually work in such a way as to include all unwritten scenarios by default.

So maybe the prospects are less severe for the gaming industry than other reports would suggest. It would certainly seem that the only outcome from an internet wide ban on this advertising would be to to move the hosting of such sites outside the country. The internet is notoriously hard or controversial to legislate for across national borders.

Considering Yandex’s close ties with Google it may not be all that surprising that they choose to follow a similar line on the issue. It will be interesting to see if Rambler and the other Russian search engines follow suit over time. Casino payouts can be tempting for all Russians, not only the small arcade players.

Sources: Henry Karpov | Sovietnik can be contacted on +7 4932 346315 (www.counsellor.ru)

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Nick Wilsdon

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