On Amending the Federal Law "On Lotteries"

10.02.2014

Legal Update No. 450, 10 February 2014

Goltsblat BLP advises that Federal Law No. 416-FZ of 28 December 2013 "On Amending the Federal Law "On Lotteries" and Certain Legislative Acts of the Russian Federation" (the “Law”) comes into force on 30 January 2014.

The key amendments made by the Law include the following:

  1. No incentive lotteries may be held from 30 January 2014 to 1 July 2014. The lawmakers’ intention in instituting this ban is to put an end to gambling practices in the guise of incentive lotteries permitted through a simplified procedure (i.e., by notification).
  2. The procedure for organising and conducting lotteries has been amended. For instance, from 30 January 2014, only bodies duly authorised by the Russian Government to organise lottery tenders, sign lottery contracts with lottery operators and approve lottery rules may act as lottery organisers. Lottery operators are legal entities registered under the Russian legislation that have concluded lottery operation contracts with lottery organisers. The Law sets out the tender rules for awarding lottery operation contracts, requirements on bidders, tender admission terms, etc.
  3. Lottery operation terms are developed by lottery operators at the tender stage for lottery operation contracts. Lottery organisers approve the lottery terms on the basis of those provided by the winners of tenders for lottery operation contracts.
  4. Lotteries are to be conducted within 15 years but this term may be extended by the Russian Government on the lottery organiser’s initiative.
  5. The procedure for conclusion of contracts between lottery operators and players has been specified. Such contracts may only be made by issuing a lottery ticket, quittance or electronic lottery ticket specifying the game combination chosen by the player.
  6. The Law lists the specific mandatory details for lottery and, now also, electronic lottery tickets, as well as the information that must be published on the Internet by operators conducting lotteries using electronic lottery tickets.
  7. The Law imposes a new obligation on lottery operators, i.e., to provide an irrevocable bank guarantee securing their obligations to make purpose payments. The bank guarantee must be valid for at least five years and must be issued by any of the banks included on the list of complying banks whose guarantees may be accepted for taxation purposes (article 74.1 of the Tax Code of the Russian Federation).
  8. Internet lotteries (other than international and all-Russia state ones) are now prohibited, as is gambling in the guise of lotteries or lotteries using gaming equipment, including game machines.
  9. Sale of lottery tickets and electronic lottery tickets and installation of lottery terminals in buildings accommodating children's, educational, religious and certain other organisations are now banned.
  10. The liability for violating the lottery legislation has been changed. Under the new version of article 14.27 of the Code of Administrative Offences of the Russian Federation, lotteries conducted without permission from the Russian Government entail an administrative fine on individuals, officials and legal entities of from 2000 to 2500 roubles, from 8000 to 20000 roubles, and from 200000 to 300000 roubles, respectively. The article has been supplemented by new administrative offences: failure i) to publish annual lottery reports or ii) to comply with the lottery ticket requirements (punishable by an administrative fine on officials and companies of from 8000 to 20000 roubles and from 40000 to 60000 roubles, respectively).

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