How much is the Russian bookmaking market worth?
The bookmaking business is considered to be one of the most rapidly growing branches of the Russian economy. It first started growing in the early 1990’s after a long period of gambling prohibition during the Soviet era. Now, after more than two decades since the collapse of the Soviet Union, the bookmaking business has become a fully-licensed industry that can satisfy the betting needs of more than 2.3 million Russians.
A significant factor in the development of the industry came into play in the summer of 2009 when a law banning gambling (casinos and gambling halls) was introduced in the Russian Federation; except for specially designated zones located in the border regions of Russia. One of the official reasons given for the ban was that people were becoming poorer – primarily those from middle or lower-middle class backgrounds who were addicted to gambling. At that time, according to the Public Opinion Foundation survey, 17% of the Russian population had gambled whilst 3% had visited gambling establishments at least once in their lives. Subsequently, this niche was successfully filled by bookmaking companies.
Since 2016, the Russian bookmaking industry has been undergoing a transformation with the majority of bookmaking companies now switching from illegal to legal activities. This happened thanks to new legislation introduced in 2014 which only prohibited betting on company websites which did not have licenses in the Russian Federation and were not connected to TSUPIS.
As of July 2017, 11 bookmakers now accept online bets. However, 65% of online players are still continuing to play using illegal bookmaking websites.
Market value and competition among companies
The value of the Russian bookmaking industry over the last 12 months has ranged from 650 to 700 billion rubles. Bookmaker Ratings and our partners at Romir estimate it to currently be around 677 billion rubles (or about $ 10 billion). The legal sector accounts for 403 billion rubles whilst the illegal sector (bets with overseas companies) is valued at 274 billion. Bookmakers’ annual revenue in the Russian market reached 47 billion rubles over the past year.
It is necessary to understand the difference between the two types of bookmaking markets; offline and online. The latter is the leader, both in terms of the number of players and in terms of the volume of bets. 422 billion rubles are spent on internet bets whilst just 255 billion rubles are spent in traditional betting shops.
The average bet for one player is 1000 rubles. This figure is higher in betting shops and lower on the internet due to the greater range of bets. Two thirds of all bets are valued at 1000 rubles or lower.
Let’s make it clear. The offline market is completely legal and is divided between five or six large companies and, in general, the market is growing steadily. According to the Federal Tax Service, in the beginning of 2017 there were 7000 betting shops in Russia. In 2016, this number was up by 13% (in 2015 the growth was more than 9%). However, online betting is now the main trend and, as such, no huge growth is expected in the offline betting market. Furthermore, no worldwide brands are expected to make an appearance in this market.
The online market is a different story. Around two million Russians make their bets on the internet with this number set to grow according to our forecast. Until early 2016, it was impossible to make a legal bet on the internet in Russia, however, we are now witnessing the launch of bookmaking websites with the .ru domain and a government crackdown on illegal companies. 11 legal online bookmakers appeared in Russia this year which counts for one third of the internet market share (148 billion rubles). However, we can hardly call this the ideal situation.
Firstly, in September 2017, international brand “bwin” will start its operations in Russia, which should generate interest from other worldwide brands. The arrival of bwin could significantly change the current balance and squeeze the leaders of the legal market. Secondly, the problems of the Russian online market are still there. The main issue is the time it takes to identify a new customer (before the first bet) which can sometimes be more than a day. This system stops the emergence of new customers in the legal sector. Finally, a significant number of players (about 1.5 million) continue to bet in illegal bookmaking companies. This number will decrease as the State Duma looks to place bans on illegal bookmakers and finds ways to stop people circumventing Roskomnadzor locks. However, for now, this segment of the market still exists and is valued at 274 billion rubles.
Potential Market Development
The Russian bookmaking industry is expected to grow even more. According to the bookmakers’ and our own survey, the size of the industry could grow twice as large over the next five years and reach the 1.4 trillion ruble mark whilst the value of the legal market, with the correct legislation, could increase to 1.2 trillion rubles.
The key factors behind an increase in value are these: existing clients of casino, card game and lottery companies become bookmakers’ customers (more than 13 million Russians gamble), the expansion of advertising opportunities (bookmakers are already signing advertising contracts with sports clubs and leagues) and exploitation of the e-sports’ market and the upcoming World Cup – this is guaranteed to bring in new players.
One of the most promising sports for bookmakers is e-sports (the traditional leaders are football, tennis, hockey and basketball). In 2016, the total value of bets on e-sports was estimated at $6-8 billion of which $640-800 million were traditional money bets. Experts we have interviewed estimate the value of legal bets on e-sports made by Russian citizens in 2016 to be between 800 million and 1.2 billion rubles.