Reasoning About Popularity of Online and Offline Betting Shops like Disputes over Better Car. Interview with Nikolay Khomchenko, CEO at 1xStavka

“Online operations are becoming increasingly popular. The future belongs to this trend,” according to Nikolay Khomchenko, CEO at Bukmeker Pub LLC (1xStavka betting shop). In an interview with Russian Gaming Week, the expert shares his opinion about the impact of FIFA Football Cup 2018 on Russian betting, market changes and trends, as well as approaches to customer loyalty increase in 2019.

Interviewer: Russian Gaming Week (RGW)
Respondent: Nikolay Khomchenko (N.K.)

RGW: How has the FIFA World Cup 2018 affected the Russian betting market? Are these changes apparent in 2019?  

N.K.: The FIFA World Cup 2018 had a positive effect on the Russian betting sector, in particular, significantly improving its reputation among foreign participants.  

We could prove that we have an advanced betting institute with modern tools. Key betting market players, including 1xStavka, managed to strengthen their positions, conduct unusual advertising campaigns, and introduce themselves as reliable and innovative partners.    

The amount of bets grew, as well as payoffs to players. Obviously, all these aspects resulted in some profit, but not as huge as frequently described.

RGW: How has the tightening of rules for betting shops entering the market affected the activity of betting companies? Is this sector more transparent now? 

N.K.: With 1xStavka being one of the youngest companies, its operations have been initially subject to strict licensing requirements, assets, bank guarantees, and so on. Thus, we have not seen any difference.      

We cannot fairly define whether the new rules will make the market more transparent and regulated. However, one thing is for sure, such rules have to be unified for all participants. In our opinion, the following conditions can improve the betting transparency:       

• clear game rules; 
• fair competition;
• stable legal framework.  

RGW: Can we expect any betting market changes in 2019?

N.K.: It is the player taxation procedure that will be primarily transformed. We believe that it is a quite significant and meaningful change relating to both betting providers and the state. All of us saw Russian President’s attitude towards the gambling market development in the country. It clearly shows what kind of changes we will face first off.

2019 was the first year for bookmakers to submit reporting in accordance with the new income tax rules. Besides, the authorities took on some obligations of tax deduction from betting shops’ users. It is interesting how this fact will affect the market in general.

We are glad to see the measures aimed at improving the gambling market and are preparing for the implementation of steps specified in the instruction of the President. Whatever the regulations, we will definitely comply with them.

RGW: The government is elaborating the bill on simplifying the process of gambler identification. What do you think can give rise for MPs to adopt amendments to this decree?

N.K.: We think that this bill is crucial and necessary, particularly to the state. Currently, major legal players engaged in the online service industry lose to illegal betting providers because of the absence of any formalities.

As the result, people trust illegal betting operators, and their deductions leave the state aside without taxes, payoffs in favor of Russian sports, etc.

In our view, this is the main reason for MPs to introduce the urgent changes of simplifying the identification procedure. Interests of businesses and authorities in this issue do not just walk alongside, but complement each other.

RGW: Legislative amendments are predominantly adopted in order to protect users. Has this matter changed players’ attitudes?

N.K.: We encourage the established legislative trend in protecting players. We have not experienced any changes in players’ attitude due to the new initiatives. Perhaps, that’s because we have never had any troubles with players’ protection.

RGW: Which betting shops are more popular today: online or offline ones? Why?

N.K.: This question is similar to the dispute over what is better: ICE vehicles or electric cars. The only thing we can say exactly is that online operations are becoming more and more popular and noticeable.   

The future belongs to this trend. It is obvious that land-based betting shops are losing their grounds. Nevertheless, it is difficult to find out how soon users will entirely shift to the online environment and whether it will happen at all, as this process depends on many factors, such as territory, technical capabilities of regions, and so on.