Russia’s Gambling Changes to Rock the Online Poker Sector
The global landscape for online gambling is constantly changing. Online poker is no exception and Russia can be the next possible hurdle for one of the gambling giants, PokerStars.
The Stars Group INC. that is located in Toronto runs the world’s largest online poker site PokerStars. Their earnings guidance for 2018 assumes that new Russia rules will have a negative effect on their business if they block payments to some offshore gambling services.
Their online poker and casino products are available in Russia even though gambling is restricted by law. This market is a “grey zone” since it is not clear whether websites established outside Russia offering online gaming are considered taking illegal activity “in Russia” or not.
The new law is expected to stop country’s banks to conduct business with blacklisted offshore payments processors and gambling companies according to Stars Group documents. The company is preparing for every type of scenario that may happen in the market.
According to the CEO Rafi Ashkenazi, the company has a strategy to mitigate the potential impact. They have been working on preparing plan A, plan B and even plan C for anything that may happen when the new law comes to life on 25 May.
In late November, Russian president signed a bill into law that doubles the gambling tax rates local governments are allowed to levy. There is more to come since the Finance Minister announced to boost gambling taxes tenfold by 2020. Should this happen, the entire business will be killed.
Unlike in other jurisdictions, Russia doesn’t levy tax on a percentage of gaming revenue but charges a fee on each gaming table and machine in operation.
The company reported 16% revenue increase in the last quarter and they are closely following the situation. The exiting Russian market exit would be a huge blow for the company since they have already left the Australian online poker market after the law change last year.
In the meantime, Stars Group has worked hard to reduce its reliance on poker and to invest in other segments like sports-betting.
