Stanislav Sokolovsky, GMT Legal: ‘Universal jurisdiction for online gambling doesn’t exist’

You will not find universal jurisdictions for online gambling – each project requires convenient and specific one. However, negligent legal compliance means fines and even criminal responsibility. That is a point of view voiced by an expert on international private and tax law, Senior Lawyer at GMT Legal Stanislav Sokolovsky. We have interviewed him about the peculiarities of legal support given to iGaming companies.

Interviewer: Russian Gaming Week (RGW).
Respondent: Stanislav Sokolovsky (S.S.).

RGW: Hello, Stanislav. How do you think, which jurisdiction is the most favorable for an online gambling company?

S.S.: In fact, there isn’t any universal jurisdiction solving all the questions related to establishing a gambling company. In any case, each new project needs to elaborate its corporate culture taking into account peculiarities of one or another jurisdiction, depending on the project’s ambitions. Mostly, it is Curaçao and Malta, including such exclusive options as a Kahnawake Gaming Commission license.

RGW: What is the difference between legal support of iGaming business and land-based one (say, casino)?

S.S.: The main difficulty lies in the necessity for a lawyer to understand technical aspects of related solutions fulfillment: they are different in online gambling and casino. The licensing procedure is tightly bound to technical requirements imposed on a gambling platform.

RGW: You have experience in working with cryptocurrency. How often do gambling and cryptocurrencies correlate in your projects? Do gambling companies show interest in working with digital assets?

S.S.: Cryptocurrency is one of 2017 main trends, which also touched upon our law firm. Payment with crypto has been widely adopted in online casinos. This state of things entailed a range of questions and problems: how to register crypto transactions on a companies’ balance in a correct way, how to check whether capital was deposited by people of legal age, etc.

On the other hand, we have faced more specific challenges including those that occurred while blockchain application during random number generation.

RGW: What is the difference in cooperation with Russian and foreign companies in gambling sphere?

S.S.: In this case, the point is the difference between gambling regulation in Russia and abroad. That is why a lawyer should carry out an expertise in tax, international private and corporate law. The main reasons are as follows: the difference in regulation and technical requirements to online gambling, taxation scheme as well as difficulties related to opening of foreign bank accounts.

RGW: Could you please share a case from your practice: which project was the most difficult and how did you cope with the difficulties?

S.S.: One of the most interesting cases occurred in the company that was leveraging bitcoin-based blockchain for random number generation. It entailed difficulties in foreign country licensing as well as getting a certificate in random number generation. We developed a scheme along with a client – as a result, both certificate and license appeared in hand.

RGW: Online gambling companies sometimes neglect legal consulting. Could you name frequent mistakes in legal compliance they make?

S.S.: The majority of companies acting without legal support face problems of different kinds: from fines to criminal responsibility. Moreover, negligent gambling compliance may serve a gateway for the underprivileged and under-aged users, which would entail sanctions against your company. That is why a strong legal framework of a project should precede the project launch in order to avoid potential risks and unexpected consequences.

RGW: As a participant of Russian Gaming Week 2018, what do you expect from the event?

S.S.: We expect to expand our partnership network and help potential clients with free-of-charge consulting on legal issues in gambling across Russia and abroad.

Register to RGW 2018 to get free consulting at GMT Legal stand!