Speech at The First Betting Conference, which took place on the 26th & 27th March 2007 in Vienna, Austria.
Some information about standards of living in Russia:
The population is 145 (one hundred and forty five) million.
The cost of one square meter of apartment in Moscow is more than 3500 euros, which means that a two bedroom apartment in Moscow starts at 350 000 euros.
A cup of coffee costs 2.5 euros.
A ticket to the cinema is 5 euros.
A ticket to a concert or a football match starts at 20 euros.
The average salary in Russia is 400 euros in a month. Salaries are much higher in large cities, in Moscow, for example, the average salary is 800 euros.
Statistics suggest that Russian gaming brought in more than 1 billion dollars to betting companies in 2006. The lion’s share went to local Russian operators.
Currently there are about 400 betting companies operating in Russia. New legislation, which came into force on January 1st 2007, raised the ante necessary for operating a gaming business in Russia. Only the larger Russian companies can meet these new requirements. In fact only 8 local companies will be able to work legally after 01.07.2007.
We believe that this situation represents a great opportunity for foreign companies that are looking for new markets. The Russian market has a lot of potential and as you’ll see in my report that betting companies are taxed at the level of offshore jurisdictions and can market their services in a wide range of ways.
All Russian betting companies accept bets and deposits via shops and via the Internet. However, only a minority of players bet and deposit via the Internet. This is probably because many players don’t feel comfortable using Internet services and also because not everyone has access to the Internet.
The figures look like this. Over 70 % of players only bet in specialized shops. 30 % of players bet both in shops and via the Internet. The figures on deposits to gaming accounts are even more graphic. 95 % of deposits were made using betting shops and only 5 % were made in any other ways, including electronic payment systems, bank and postal transfers and bank cards.
The data above suggests that a successful gaming business in Russia needs to have mini offices in large cities which can accept deposits from and make payments to players. Growing confidence in your brand, in electronic payment systems and in Internet services will lead players to increase their use of electronic payment systems and placing bets via the Internet.
WebMoney is the most popular payment system among gaming portals. Popularity of this system with gaming portals is easy to explain. It is one of few payment systems that accept payments to gaming resources. Two more payment systems are currently also very popular among Russian players: Money.Yandex, OSMP.
Your players will be able to use these systems to deposit and withdraw funds if you can convince these payment systems that you have all necessary licenses and operate a legal business in Russia. If you follow our plan to start a gaming business in Russia you will be able to connect these payment systems to your gaming business.
There are 10 more electronic payment systems that would be very convenient to use for payments but they do not work with online gaming resources.
WebMoney provides a rating of internet resources that use its payment system. Please take a look at the rating of sums that were deposited in the online gambling section. The rating is given according to the sum of money transferred in the previous 30 days.
To summarize, I want to emphasize the importance of opening shops in Russia once again. There are two principal reasons to do so:
To work effectively in the territory of Russia it is enough to open just one shop in each major Russian city. There are only 20 cities in Russia with a population of more than 1 million.
The new Federal law “State regulation of the organization and conduct of gambling” (First of January, 2007) regulated the activities of betting companies. These regulations come into effect on July 1st 2007.
The basic restrictions for sport betting companies are as follows:
It is necessary to receive a sport betting license to work in the Russian market License requirements
Betting tax is paid on monthly basis and is a fixed sum of 3700 euros a month. This sum does not depend on income or turnover. You will also need to pay taxes on employee salaries. This will be approximately 400 euros per employee.
So you can see that although the requirements to receive the license are relatively high, the taxation on betting activity is still pretty attractive.
So you need to set up a Russian legal entity and to receive betting license to conduct legal betting business in Russia. In order to get accepted as a licensed betting company you are required to have at least one land-based shop where you can accept bets.
The first and most important requirement for making advertising for betting in the mass-media is Russian betting license.
Once you have a license there are a number of advertising solutions:
It is possible to sponsor sports events for marketing purposes, but the main type of advertisement during sports matches is on advertising boards and it is illegal to advertise gaming on advertising boards. If you want to become a sponsor of a sport event or a team you’ll have to contact the organizers of event or the team manager directly. There is no standard practice of the sponsorship of sports events in Russia at this moment.
If company does not have Russian gambling license you can only advertise on a number of online sites. This means that a Russian betting license is required for successful and vigorous marketing strategy.
Let’s say MyBetBrand.com, an international gaming concern has decided to expand onto the Russian market. First we register a Russian company, MyBetBrand.
Then we develop a site in Russian, preferably in the domain .ru (MyBetBrand.ru) or .com (MyBetBrand.com). The site has information about the Russian company with an address, the license and the addresses of places where players can make bets. The main page of the site has a link to a section where players can placer bets through the Internet. At the beginning of this section we point out that the Internet betting service is provided by the MyBetBrand company which is registered and licensed in Malta.
It is possible to rent office space in net shops in Russia which have offices in the major Russian cities. This office space can be uses for accepting bets and deposits.
The Russian gaming market has great potential. A company enters this market after obtaining a betting license and opening land-based shops. It is not hard to get this license.
Legal offline activity is a necessity as it allows the company to:
The main problem that foreign company may face in Russia is bureaucratic delays in the registration of the company and in getting the license. We have a great deal of experience in working with state structures, banks, payment systems and mass media.
We invite you to do business in Russia. We welcome any request for help or advice. We’ll do everything we can to help you.
For more information please contact our Sales Department.
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