Online Poker at Risk in Russia

“Thank God, the national leadership is good on its pledges and the gambling plague has been prohibited in Russia since July 1. I don’t want to discuss gambling areas here. What is more alarming, we have left legal loopholes. Poker clubs and Internet salons are mushrooming, and lottery machines are everywhere – what’s their difference from gambling machines, I wonder. I think we need technical regulations to specify that difference explicitly. And a ban on Internet gambling is necessary.”    14 July 2009 – Sergei Mironov, Former Chairman of the Federation Council

PutinThe latest raids on gambling establishments in Russia closed down 36 illegal casinos in Moscow. Among the other gambling paraphernalia, seven poker tables were seized. Premier Vladimir Putin has got serious about cracking down on gambling and poker players should not be complacent, poker is definitely in his sights.

Gambling was illegal in Russia until 1989. Ten years after the Russian Revolution in 1917, the People’s Commissar of the Interior declared that gambling was “an idle, bourgeois pastime incompatible with the true spirit of the working proletariat.” It took the collapse of the Berlin Wall and the end of the Soviet Union before the people regained the right to gamble.

The first casino opened in the Savoy Hotel in Moscow and thereafter, gambling boomed. Current PokerStars Pro Alexander Kravchenko came 4th in the WSOP Main Event in 2007 and Russia went poker mad. There are Russians playing at every level, in every game and they have become a major source of profit for the online operators.

PokerStars itself was founded by Russian born and Moscow University trained Isai Scheinberg. Now poker is under threat as Vladimir Putin continues an onslaught of legislation and enforcement action to control the “gambling plague”. When Segei Mironov made that comment, he was the Chairman of the Federal Council. He is now head of the “A Just Russia” party grouping which strongly supports Putin. He has several times attempted to introduce legislation that would allow Putin to serve multiple seven year terms as President. What he says about gambling reflects what Putin himself thinks.

The anti-gambling drive began with the introduction of taxation laws in 2004 and continued with a restrictive set of licensing regulations in 2007. As of 1 July 2009, under Federal Law № 244, gambling was restricted to four zones on the periphery of the country thousands of miles apart and well away from any large cities.

In January, amended laws created the power to rule gamblers “incompetent” and for them to be placed into guardianship. Their appointed guardian will be responsible for handing out their income as it is needed, and the unfortunate gambler will only be allowed discretion to spend very small sums.

The real risk to online poker comes from a recent Supreme Court Ruling that makes Internet Service Providers (ISPs) liable for blocking access to online gambling and poker sites.

Deputy State Prosecutor for the Pskov Region v. Rostelecom (case No. 91-KGPR12-3) was the critical case and it led to a somewhat convoluted ruling:

“The Supreme Court ruled that is it unlawful to disseminate information that is restricted in accordance with Russian law, including, but not limited to, on gambling. The court further concluded that provision of access to restricted information is equal to dissemination of this information. The court thus found that a telecoms company de-facto disseminates restricted information by providing access to websites containing this information.”

The bottom line is that unless Russian ISPs take technical measures to block access to “restricted information” they could well be fined and lose their telecommunications license. Note that restricted information could cover internet poker forums, training and affiliate sites as well as the game providers.

And now for the grey area:

Although online poker is almost certainly illegal under the 2009 law, there is some space in the definition of a game of chance which allows for legal argument: “an agreement concerning winnings based on risk and concluded by two or more participants among themselves or with an organizer of the game of chance according to the rules established by the organizer.”

Moreover, the law applies exclusively to Russian Federation territory and it can be argued that it doesn’t apply to games played on servers located outside the country.

Such legal niceties have been good enough for PokerStars and the other leading sites to argue that they are not breaching any law by accepting Russian players. As yet there has not been a single legal case that sets a precedent that online poker provided by offshore operators is illegal.

But the ISPs are billion dollar telecoms companies and they will not want to take any risks to their future profits, so at some point this year one or more of them could shut off access to a poker site simply to avoid the slightest risk of being in breach of the Supreme Court judgment.

That wouldn’t be the end of poker as players could simply switch to more accommodative providers. The danger is that the action could prompt Putin to tighten up the law and make it crystal clear that online poker is not welcome in Russia any more.

His own views were made plain in his response to the opening quotation:

“As far as gambling is concerned, I fully agree that it is being disguised as quite different entertainments. We must think together how to put an end to such subterfuges – poker clubs and all. The Sport Ministry is drafting a relevant decision to be made public quite soon. As for other loopholes, we will think together how to stop them. The Government is ready to take up the job, and I will give necessary instructions to involved agencies. We will work at it together.”

It is impossible to forecast accurately what Putin will do. Perhaps he now feels he has done enough and will be content to enjoy the success of his Russian poker champions on the world stage. On the other hand, he may just want to finish the job he has started: in which case, there will be some very disgruntled Russian online pro’s joining the diaspora of their US counterparts.


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