Commercial lotteries under scrutiny in Russia

It is expected that an embargo will become valid on the 1st of July, 2014. Since then, only two kinds of lottery drawings will be legitimate in Russia: international and state (the latter would be organized by the Ministry of Finance and Ministry of Sport of the Russian Federation). The embargo will affect not only private, but regional and state municipal lotteries as well.
Law draftsmen think that new suggestions will allow to “implement a real ban for gambling under the guise of lotteries.” However, not everybody agrees with this idea. Acting lottery companies have published an open letter on the web encouraging people to support lottery operators.
Among other things, the law regulates lottery realization routine and control of the lottery operation through implementing additional requirements for operators. Legal bodies, in particular, will not be able to act as operator, whose director, chief accountant or board members have had previous convictions for economic crimes.
The bill has been improved “in order to avoid fake lotteries covering gambling,” states the document’s clarification note. Those carrying out a lottery without the government’s approval will be punished and fined.
Depending on the implementation, lotteries can be split into printed and non-printed, by the territory of implementation – Russian national and international, i.e. organized on the territory of two or more countries, including Russia.
The bill states that lottery tickets shall not be spread and lottery terminals shall not be installed in the buildings and facilities of educational and medical institutions, organizations for children, as well as ceremonial and religious organizations.
Previously, Alexey Moiseev, Minister of Finance’s deputy, has informed that the amendments have been authorized to execution by the Russian Federation President. “President has entrusted us to exclude the possibility of using lotteries for gambling and organize series of events developed to not only ban gambling outside the allowed areas, but also to achieve definitive control over the implementing of this regulation,” said Mr. Moiseev.
State lotteries will be organized by the Ministry of Finance and Ministry of Sports who will conduct tender to choose lottery operators.
According to Moiseev, three state lotteries operate at the moment: “Pobeda”, “Sportloto” and “Olimpiyskaya”.
Accounts Chamber of the Russian Federation has previously announced that most of the national investment into the JSC Rossiyskie Loterei equity capital has been irreversibly lost and operation of the venue’s subsidiaries leads to reduction of income, maintaining the non-core activities, absence of real estate assets and reduction of net worth value.
New legislative initiative has caused rumbles of many acting lottery companies. An open letter has appeared on the Internet calling to support honest lottery operators.
The open letter states that Russian Duma shall reconsider the amendments to the lottery law. As an alternative way to market monopolization, it says that the requirements of the minimum lottery operators’ equity capitals shall be increased and regulatory agencies shall introduce new additional inspections.
Meanwhile, experts say that after the private lotteries will be banned, hundreds of hospitals and orphan asylums may lose their funding support. The fact is that commercial lottery operators must transfer 10 per cent of their income to socially important objects and enterprises, but the state lotteries are not obligated to do that.