Bookmakers cry foul over proposed tax to support sports

The Russian Finance Ministry has published new amendments to the law on gambling which require bookmakers and totes to give part of their proceeds for the development of sports, Russian news outlet Vedomosti reports.

In 2015, the sports minister at the time, Vitaly Mutko first proposed that bookmakers should support the sports industry.

The bill was tabled to the parliament at the end of June 2016, proposing that gaming organizers make targeted contributions once per quarter.

According to the latest amendments, the ministry plans to charge bookmakers 3 percent of their revenue once a quarter.

In the previous version of the bill bookies were supposed to pay contributions to sports federations, professional sports leagues or “other organized” sport events under respective agreements.

But now the Finance Ministry says it wants to transfer this money to the federal budget.

The chairman of the First Self-Regulatory Organization of Betting Companies Oleg Zhuravsky has criticized the new amendments, saying that an average profitability of a bookmaker amounts to 5 – 7 percent of bets it takes. If the bill is implemented in its current form, Russian bookmakers will be forced to pay about a half of their profits.

“If they take away a significant share of it, how will the industry pay taxes?” he asked.

There is a risk that the business will retreat into the shadows, Zhuravsky says.

Chairman of the Self-Regulatory Organization Association of bookmakers Nikolai Oganezov confirms these figures. He said: “This tax may be considered burdensome, I would even call it oppressive.” “If the Finance Ministry proposals remain in their current form, many companies with low profitability will leave the market,” Oganezov said, adding that such companies, in his estimate, make up to 25 percent of all operators in the market.

There are currently 31 bookmakers and totes operating in Russia, according to the explanatory note to the draft law.