Moscow Court to Rule if Foreign Sportsbooks Also Need Russian License

On January 19, the Presidium of the Supreme Arbitration Court (IAC) will begin hearing a case to determine if overseas sportsbooks are allowed to operate in Russia without a local license under Russian gambling laws. The case revolves around Goal-Paz Inc., a sportsbook operating out of the country of Kazakhstan. Prosecutors argue that Goal-Paz has assets of over 6 million rubles ($201,140 US), as required by Kazakhstan sportsbooks licensing laws, while Russian law requires licensed sportsbooks to have assets of at least 1.6 billion rubles ($53,637,278 US), thus making Goal-Paz ineligible to conduct business under Russian law.

Prosecutors state that Goal-Paz was illegally collecting payments in Russia through local ‘entrepreneurs’; that the owner of Goal-Paz is a suspected crime boss; that foreign countries do not screen applicants for sportsbook licenses with the same vigilance as does Russia, thus it is easy for foreign criminals to receive a license, unlike Russia; and that such a loophole may also be used to operate an online casino in Russian Federation, banned in most parts of Russia, by companies licensed in foreign countries under different laws and regulations.

So far two lower courts ruled in favor of ‘entrepreneurs’ who accepted money from gamblers on behalf of Goal-Paz. The lower courts ruled that “by law sportsbooks can only be legal entities, and the entrepreneurs do not conduct their own private business for the organization of gambling and betting.” A third appeal by prosecutors caused a panel of three judges to reverse the lower courts last September, and to forward the case to the Presidium of the Supreme Arbitration Court.

In Russia, to become a licensed sportsbook is very difficult. According to Oleg Zhuravski, the president of National Association of Bookmakers (NAB), “You need to meet a number of serious requirements: in particular, have 1.6 billion rubles, assets, costly certified software, large office, background checks and much more.” The ruling of IAC may affect the status of dozens of foreign based online sportsbooks in Russia who currently operate by using ‘entrepreneurs’ to accept and award money to gamblers.