Gambling activities in Russia, with some exceptions, have been prohibited since 2009, according to the federal laws for gaming. Regions like Kaliningrad, Primorsky, Sochi, and Altai are considered legal gambling zones in Russia where foreign investors can set up their casinos for gaming purposes. Knowing the specific requirements for opening a company in the gaming sector in Russia can help entrepreneurs start their activities in legal terms. Our company formation specialists in Russia are at your service with support and assistance in this matter.
Who can open a company for gaming activities in Russia?
A company for gaming activities in Russia must be a legal entity permitted in the special gaming zones in this country and can be established by at least one shareholder who must have a clear criminal record, and particularly no financial crimes. It is good to know that each gaming zone is subject to specific rules and regulations like the Regional Administration Decrees for Altai, Kaliningrad, Sochi, and Primorsky respectively. A business in the gaming sector in Russia is identified through a tax number in this sense.
For more details about how to open a company for gaming activities please feel free to address our consultants at any time.
What types of gaming activities can I set up in Russia?
According to the federal law in Russia, the following gaming activities are allowed in the above-mentioned regions in Russia:
- betting activities like sports betting or any other interactive bets;
- casino games which are controlled by the general rules for gaming;
- slot machines which need to be owned by the gaming organizer in Russia;
- bingo and lottery games can be met in Russian casinos;
- poker games and varied card games of chance.
Regulations of gambling in Russia
Federal Law No. 244-FZ, enacted on December 29, 2006, serves as the cornerstone of the regulations of gambling operations in Russia. This law was introduced to address the proliferation of illegal Russian gambling establishments and tax evasion within the country. Under this legislation, all gambling activities are strictly regulated, with specific provisions outlined in individual legislative acts. The 2007 Gambling Law, a significant component of Federal Law No. 244-FZ, effectively banned casinos and electronic gaming machine (EGM) operations throughout Russia, except within officially designated gambling zones, which were formally recognized by the government in 2009.
The law empowers the state to exert control over gambling operations through various measures, including the establishment of geographical restrictions limiting where gambling activities are permitted, the issuance of licenses and permits by authorized government institutions, and the enforcement of penalties against businesses found to violate the law.
Amendments made in 2009 extended the scope of the law to encompass the prohibition of casinos outside designated zones and the regulation of bookmakers and betting activities. Furthermore, private lotteries were also banned under these legislative changes. The overarching objective of Federal Law No. 244-FZ is to effectively manage the gambling industry and its operations, primarily to address taxation issues that arose from illegal gambling activities in Russia.
Effective from March 28, 2020, the most recent amendment to the law, Federal Law No. 495-FZ dated December 27, 2019, introduces a new form of gambling in Russia. This form involves wagers dependent on various factors, including fluctuations in prices for goods, securities, currency exchange rates, and other events with uncertain outcomes. The law also addresses sequential bets on multiple events, connected betting, and bets placed on subsequent events before the outcome of the preceding event is known, provided the earlier bet was successful.
To prevent illegal betting disguised as professional equity market operations, the legislation outlines permissible data types and imposes limits on betting activities, casinos, and slot machine halls within designated gambling zones in Russia. Conditional bets in bookmakers’ and totalizators’ establishments are prohibited. Additionally, the amendment mandates that bookmakers and totalizator operators must inform the regulatory authority about obtained and expired bank guarantees.
Taxation on gambling in Russia
Under the legislation, gambling services in Russia are exempt from value-added tax (VAT). Instead, a specific tax is imposed on gambling activities, which encompasses various items such as gambling tables, slot machines, and betting stations, among others. The Tax Code stipulates ranges for tax rates applicable to each item, with the exact rate determined by regional laws. For Russian tax residents, the tax rate on gambling winnings is 13%, consistent with the rate applied to all other sources of income for individuals. Notably, winnings below 4,000 Rubles are not subject to taxation.
Additionally, the amount wagered is exempt from income tax and is subtracted from the taxable base. Individuals are responsible for paying the tax on winnings below 15,000 Rubles themselves. However, for winnings exceeding 15,000 Rubles, the gambling establishment acts as a tax agent, deducting the tax amount from the winnings and remitting it to the State tax authority. If you are interested in setting up a company in Russia, it is recommended to have in-depth knowledge of taxation. This information can help you stay compliant with the regulations. Learn about Russian taxation from our tax agents.
Licenses for gambling activities in Russia
If you want to start a company in Russia, particularly in the gambling sector, you should observe the licensing requirements in this sense. The Federal Tax Service issues the necessary licenses for betting activities. An authorization issued by the regional authorities is mandatory for gambling activities in a casino in Russia.
Licensing requirements for gambling businesses in Russia
Please find below some of the requirements that you need to fulfill to acquire a gambling license in Russia:
- Prospective license holders must submit applications to the Federal Tax Service.
- Obtaining a license entails demonstrating significant financial capacity, which poses a primary challenge.
- For casinos or slot machine halls, the required free cash assets must be at least 600 million rubles.
- For bookmakers’ offices or totalizators, the minimum free cash assets must amount minimum 100 million rubles.
- The minimum area of the premises is also stipulated, with specific requirements for different types of gambling establishments in Russia. A casino must have a minimum area of 800 square meters.
- Gaming halls housing at least 50 slot machines, owned by the Russian gambling business organizer, must have a minimum area of 100 square meters.
While meeting these requirements may not be overly difficult for some, challenges arise due to several factors. Most types of gambling businesses are permitted only within designated gambling zones in Russia, such as Crimea, Sochi, or Primorye. Competition in these regions is formidable, with established companies already operating, making entry into the market a significant hurdle. If you are interested in applying for a gambling license, our company formation agents in Russia can guide you. With their comprehensive assistance, you can open a company in Russia without wasting any unnecessary time.
Moreover, if you are seeking the services of a Russian accountant for your company, do not hesitate to get in touch with us. Contact our Russian company incorporation specialists to learn more details about our services in this country.