Russian President Vladimir Putin has signed an executive order naming Mobilnaya Karta as the Unified Interactive Bets Accounting Centre (ETSUP), thus making it the country's single operator of online betting.
Two centres for processing betting payments competed for this status, one backed by the First Bookmakers Self-Regulatory Organization, using the payments infrastructure of Mobilnaya Karta; and a second one backed by the Association of Russian Bookmakers with Qiwi’s payments system, reports bne IntelliNews.
As e-payment system Qiwi will lose its betting revenue stream starting September 1, once the order goes in into effect, shares of the company dropped by 8%. This follows capitalization dropping last year, when the Central Bank of Russia (CBR) limited the foreign operations of Qiwi Bank as part of a crackdown on online gambling.
Gambling is currently illegal in the country: casinos are only allowed to operate in special zones within the Altai, Krasnodar, Primorsk and Kaliningrad regions. The share of online gambling was targeted by the state last year, the same one in which a draft bill on creating a single gambling regulator was approved.
Online gambling reform is believed to have been suggested by the head of the Russian boxing federation, Umar Kremlev, which counts high-power figures allied to the presidential administration. Mobilnaya Karta shareholders and executives are also believed to be affiliated with Kremlev and state-controlled bank VTB, which will finance the ETSUP, further reports the cited news source.
According to multinational investment banking and asset management firm Sberbank CIB, the news indicate that niche businesses can fall victim to changes in regulation. However, it must be noted that Qiwi had braced for the impact, expecting decrease in net revenues in 2021.
“This was the most probable outcome, and it is to large extent accounted for in our model. Yet the news might still be negative for sentiment, as it confirms the loss of a significant share of Qiwi revenue,” commented financial service group BCS Global Markets, in a Hold call on Qiwi’s shares on August 26.
The company is allegedly looking into developing products, including B2B payment solutions, and niche market opportunities for self-employed individuals including scrap pickers and web masters to compensate the lost market, although these smaller segments “are yet to prove their potential and are quite hard to estimate at their potential mature-stage scale,” according to an analyst cited by bne IntelliNews.