A new bill is aiming to weed out international bookmakers from Russia’s gambling industry by blocking payments related to online wagering, yet it is a move that may present an opportunity for Bitcoin betting. The legislation, which has the strong backing of president Vladimir Putin and was unveiled by the Russian Ministry of Finance earlier this month, is targeting a growing amount of unauthorized online gambling in the country.
An estimated $3.5 billion in illegal transactions take place between online gaming operators and Russian gamblers annually. The proposed legislation would entail banning both Russian and third party sites not authorized to operate in the country, while domestic financial institutions would be ordered to block financial transactions between bettors and blacklisted operators. A limited amount of domestic online and mobile bookmakers will be allowed to continue, but international gaming sites, as well as all form of online casino and poker games, would be banned.
If the proposed legislation is approved, it will present a massive opportunity for Bitcoin betting to flourish in the Eastern European country. An increasing amount of online bookmakers allow customers to wager in the cryptocurrency, which can be purchased anonymously over the internet and subsequently exchanged for real money. Governments have no legislative power over Bitcoins, which are operated by a global computer network that is not governed by a single party.
A lack of regulation paves the way for a much more seamless exchange between bettors and bookmakers operating in Bitcoins than under the traditional account system. In the case of Russia’s proposed anti-online gaming bill, the government may be able to monitor money exchanged between a Russian bank and an online gaming site, yet it will be unable to halt the funding of accounts in Bitcoin due to these transactions being anonymous.
This is not the first time Russia’s Finance Ministry has presented anti-gaming legislation to the country’s lawmakers. A similar bill was knocked back after meeting strong opposition in 2015. On that occasion, some government ministries and banks raised concerns over costs related to monitoring transactions between customers and blacklisted bookmakers. Yet, with the government eager to keep a close eye on gambling transactions, a revised law has been drafted and reportedly received approval from government agencies.
The updated bill resembles that of UIGEA, a piece of anti-gambling legislation that was signed into law in the United States in 2006. UIGEA prohibited banks from approving transfers from a customer’s account to an online bookmaker. It was notoriously circumvented by mobile poker sites PokerStars and Full Tilt Poker, who continued to operate in the United States up until 2011, when their domains were closed down by the US Department of Justice.
Russia is sure to keep a closer eye on offenders. The Russian government and Putin have expressed scepticism about legalising most forms of gambling and implemented stringent policies to manage it. Land-based wagering is limited to four zones in the country, with casinos only permitted to opened in Azov City, Primorye, Kalinigrad and Altai. Most recently, the Sochi Casino and Resort became Russia’s newest casino, but was reportedly only approved to help Sochi manage debts from its hosting of the 2014 Winter Olympics, which at a cost of over $50 billion was the most expensive Olympic Games in history.
Conversely, online gaming, which is traditionally much more difficult to police, has flourished in the Eastern European country, leading to an increase in third-party bookmakers operating illegally there. This has stoked the ire of Putin, a long-time adversary of online gambling, and inspired the new legislation.
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