PokerStars Casino saw a threat to its business in Russia

The owners of one of the biggest and the most famous poker and gambling operator (sports betting and casino) – PokerStars – are getting ready to possible problems and hardships due to the unfavorable changes in the legislation of the Russian Federation. Russia is considered the key market for the company even though its operation (just like the operation of the similar online poker and gambling web sites) has been banned since 2009.

Stars Group – a Canadian company, which owns the biggest online resource for the game at PokerStars, is expecting the situation on the Russian gambling market for the operators to get much worse in May 2018. This was stated in companies report as a follow-up to 2017.

Such shift in the conditions on the Russian gambling market is connected to the new legislation, which will sufficiently restrict the co-operation of payment systems and online gambling operators – this is according to Rafi Ashkenazi, the Chief Executive Officer of the company, on his conference call to investors. According to Mr. Ashkenazi, PokerStars is working hard to develop “an effective strategy against possible negative effects”, yet it does take “the financial lock down of the Russian online gambling market” into consideration and recognizes it in 2018 projected revenue. In its annual report, Stars Group claims that the projected revenue for the following year is estimates at approx. $1,39-1,47 billion.

PokerStars online casino – is the asset base for Stars Group. In 2017 the company, according to its statuary reporting, earned $877 million for its poker activity, whereas the total revenue runs at $1,3 billion. If you take a look at the geographical spread of revenues, the biggest contribution was made by the Isle of Man – more than $349 million. As for the operation in Russia, PokerStars uses the license issued by the Man Gambling Authority.

The adjusted EBITDA 2017 for the whole company overtopped the limit of $600 million, net profit – $259 million. Share capitalization of Stars Group at NASDAQ as for Friday, March 16 – more than $4,2 billion.

Basically the issue is with the amendments to the “Lotteries Act” and the Act “On State regulation of organizing and promoting gambling”, which was adopted at the end of 2017, explained – Alexei Tkachuk, the Strategic Development Director of the “Bookmaker ratings” web site, to RBK. According to Alexei, from now own the government introduces the record of all illegal gambling operators and forbids banks and payment systems to process any transactions between these operators and Russian residents. It means, that your deposits/withdrawals to/from the web site might become much more complicated – that is what the expert says. “Of course, there’ll always be a bypass, however, those online bookmaker’s, poker rooms and operators, which are not regulated by the Federal Service for Taxes, are risking to lose their bulk users,”- mentioned Mr. Tkachuk. According to the document, the provisions of the law concerning online-gamblers will enter force in May.

All online casinos, including Internet poker operators, have been banned in Russia since 2009. Starting from 2014, the Federal Supervision Agency for Information Technologies, Communications and Mass Media includes online casinos into the record of prohibited web sites, which is when the communications service providers were bound to block access to those resources.

Ashkenazi sees Russia as one of the biggest markets for Stars group. It’s said in the company’s official papers that the Russian-based services are operating according to license issued by the The Gambling Supervision Commission of the Isle of Man. PokerStars admits that the new legislation will restrict the operation on the Russian gambling market. However, “it’s still uncertain, whether the operation of non-residential servers and providers will be viewed as “on the Russian territory”, e.g. illegal,” – hopes the company. In 2017, PokerStars is known to have sponsored the same-named championship within the gambling area in Sochi with a guaranteed prize pool of 150 million rubles (=$2,6 million).

The only thing online casinos can do to get past the lockout is to change IP-addressed for their web sites, using so called mirrors and other technological tricks. Besides, gamblers themselves can lift the lock-down by using anonymizers, proxy-servers or Tor – the anonymous darknet. Sometimes, the Federal Supervision Agency for Information Technologies, Communications and Mass Media manages to delete the mobile versions of the casino apps from App Store and Google Play apart from just forcing communications operators to block these services. For example, according to “Izvestiya” – popular Russian newspaper – in 2016 the authority managed to delete about 50 mobile apps of different internet casinos from the online stores. However, profound smartphone users manage to cope with this situation quite easily – you can download the app after you change the country in your smartphone settings to access App Store or Google Play from another place.

According to Ashkenazi, Stars Group is already considering the possibility to get licensed in Russia: apart from PokerStars, the grand holding is also promoting BetStars – bookmaker’s office. Only bookmaker’s offices in Russia are allowed to accept bets online. However, to become an authorized bookmaker you need to get the license in Russia and connect to TSUPIS – the Center for online betting reporting. If you take a look at the list of licenses issued to bookmaker’s operators on the official web site for Federal Tax Service of Russia, there’re no companies, which could be anyhow connected to BetStars.

As for today, the number of Russian gamblers registered on the illegal bookmaker’s web sites exceeds the number of “legal” players: according to the estimates of the analytical service “Bookmaker ratings”, the market share of the illegal online bets in Russia is about 65%. After the amendments to the “Gambling Act” enter force in May, the market shares will probably become balanced, forecasts “Bookmaker ratings”. All in all, the bookmaker’s market has the full potential to double in size within the next 5 years and reach whopping 1,4 trillion rubles with the legal assets to increase three times and reach 1,2 trillion rubles.

Gambling Arena