Version: 19072004
Editor: Franka Pals
Publisher: Novamedia
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Russia, spanning an enormous 17,075,200 square kilometers, is located in Northern Asia (the part west of the Urals is sometimes included with Europe), bordering the Arctic Ocean, between Europe and the North Pacific Ocean. The land boundaries of total 19,961 km are with Azerbaijan, Belarus, China, Estonia, Finland, Georgia, Kazakhstan, North Korea, Latvia, Lithuania, Mongolia, Norway, Poland and Ukraine.
The defeat of the Russian Empire in World War I led to the seizure of power by the communists and the formation of the USSR. The brutal rule of Josef Stalin (1924-53) strengthened Russian dominance of the Soviet Union at a cost of tens of millions of lives.
The Soviet economy and society stagnated in the following decades until General Secretary Mikhail Gorbachev (1985-91) introduced glasnost (openness) and perestroika (restructuring) in an attempt to modernize communism, but his initiatives inadvertently released forces that by December 1991 splintered the USSR into 15 independent republics.
Since then, Russia has struggled in its efforts to build a democratic political system and market economy to replace the strict social, political, and economic controls of the communist period.
A decade after the implosion of the Soviet Union in 1991, Russia is still struggling to establish a modern market economy and achieve strong economic growth. In contrast to its trading partners in Central Europe - which were able to overcome the initial production declines that accompanied the launch of market reforms within three to five years - Russia saw its economy contract for five years, as the executive and legislature dithered over the implementation of many of the basic foundations of a market economy.
Russia achieved a slight recovery in 1997, but the government's stubborn budget deficits and the country's poor business climate made it vulnerable when the global financial crisis swept through in 1998. The crisis culminated in the August depreciation of the ruble, a debt default by the government, and a sharp deterioration in living standards for most of the population. The economy rebounded in 1999 and 2000, buoyed by the competitive boost from the weak ruble and a surging trade surplus fueled by rising world oil prices. This recovery, along with a renewed government effort in 2000 to advance lagging structural reforms, have raised business and investor confidence over Russia's prospects in its second decade of transition.
Yet serious problems persist. Russia remains heavily dependent on exports of commodities. This particularly true for oil, natural gas, metals, and timber, which account for over 80% of the exports, leaving the country vulnerable to swings in world prices.
Russia's agricultural sector remains beset by uncertainty over land ownership rights, which has discouraged much needed investment and restructuring.
Another threat is negative demographic trends, fueled by low birth rates and a deteriorating health situation - including an alarming rise in AIDS cases - that have contributed to a nearly 2% drop in the population since 1992. Russia's industrial base is increasingly dilapidated and must be replaced or modernized if the country is to achieve sustainable economic growth. Other problems include widespread corruption, capital flight, and brain drain.
| Population: | 144,526,278 (July 2003 est.) |
|---|---|
| Age structure: | 0-14 years: 16% (male 11,815,360; female 11,335,715) |
| Currency: | Leu (ROL) |
| GPD | purchasing power parity $1.409 trillion |
| Mobile | 24.921 million mobile subscripers in 2003 This means a mobilea penetration of little over 17% Source: The Research Room The telephone system has undergone significant changes in the 1990s; there are more than 1,000 companies licensed to offer communication services; access to digital lines has improved, particularly in urban centers; Internet and e-mail services are improving; Russia has made progress toward building the telecommunications infrastructure necessary for a market economy; however, a large demand for main line service remains unsatisfied. |
| Internet: | 6,000,000 million internet users as of December 2002 |
| Total lottery sales | per capita in Russia - 3 US dollar in 2003 |
Kazakhstan is a member of the commonwealth of Independent States (CIS). It consists of 12 of the 15 states of the former Soviet Union, excluded are the 3 Baltic States whom along with Georgia (it did later join in 1993) refused to join. They proclaimed to be wrongfully and illegally incorporated into the Soviet Union.
During the collapse of the Soviet Union in the fall of 1991 leaders of Belarus, Ukraine and Russia signed an agreement establishing the CIS.
On December 21, 1991, all the 11 leaders of the 15 Soviet Republics met in Alma-Ata, Kazakhstan to sign the charter.
It stated that all members were sovereign equal and thereby effectively abolishes the USSR with effect from December 31, 1991.
The headquarters of the CIS are in Minsk, Belarus. At present the CIS unites: Azerbaijan, Armenia, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Uzbekistan and Ukraine.
Although the CIS has few supranational powers, it is more than a purely symbolic organization and possesses coordinating powers in the realm of trade, finance, lawmaking and security.
In September 1993 the Heads of the CIS States signed an Agreement on the creation of Economic Union to form common economic space grounded on free movement of goods, services, labor force, capital; to elaborate coordinated monetary, tax, price, customs, external economic policy; to bring together methods of regulating economic activity and create favorable conditions for the development of direct production relations.
The most significant issue for the CIS is the establishment of a free trade zone, economic union between the member states, planned to become a reality in 2005. It has also promoted cooperation on democratization and cross-border crime.
Tsar Peter the Great organized Russia's first lottery in 1698. Throughout the 20th century lotteries were organized before as well as after the revolution of 1917 but they were all episodically.
In the Soviet Union during the years 1970 -1990 lotteries became very popular. The money collected from the lotteries went to the financial improvement of the population, their living conditions and for the financing of different social-cultural programs of the government and the entire estate budget.
Besides the usual lotteries for money or valuable commodities, the population took a big interest in sport lotteries which financed the sport sector and its development in Russia.
The first drawing of the lottery 'Sportlotto 6 out of 49' took place in October 1970. It was very similar to the ones played in Europe. In 1980 the sport lotteries played a big role in financing the preparation and organization of the Olympic Games in Moscow.
The number lotteries 'Sportlotto 5 out of 36', 'Sportlotto 6 out of 45', 'Sportprognoz' and the scratch lottery Sprint were the most popular lotteries in the Soviet Union and Russia of the last 25 years.
In the 1990's the first private lotteries appeared and the lottery market structure changed. The absence of active lottery legislation and the growth of cheating made the state lotteries extremely unpopular and the profits declined dramatically.
In order to organize the lottery industry, and to protect the players, the following legislation acts came into force in 1992-2001:
While the Federal Lottery Law is not approved at all levels (the current draft of the law was only accepted in the first reading of the Russian Duma), the main legislation act that regulates the lotteries in Russia is the Temporary Regulation of the lotteries in the Russian Federation (further referred to as the 'regulation') approved by the Presidential Act from 18.2.2002 # 184.
'The Lottery' is understood as following:
The prize fund of the Lottery is the whole sum of all valuables formed by the participants or lottery sponsors and distributed between the lottery participants by means of the drawing according to the conditions of the lottery. The Prize fund of the Lottery can contain various amounts and types of properties including money and goods and also services - in accordance with the conditions of the lottery.
The lotteries vary in accordance with:
The current regulation does not limit the nationalities of the subjects in the lottery process. Thus, the question about the participation of the companies-non-residents is determined by the curren-cycustoms (import/export of the capital), tax (the taxing of the foreign companies) and civil (JV creation) legislation.
All lotteries that sell on the territory of the Russian Federation, no matter what type, size or regional status, should all be registered
In accordance with the Government Act from 13.8.97 #1004 'About the improvements in the state regulation of the lottery and gaming business in Russia' the issue of the licenses for the Russian and international lotteries as well as their registration is done by the Ministry of Finance of Russia with the agreement from the Founding Authority of the lottery (state committees, ministries, social organizations) .
Every lottery should register the following:
The following documents should be presented to the Authority in order to register the right to conduct the lottery:
Within 30 working days the State Authorities conduct all necessary research and analyses the presented documentation and issues the right to conduct the lottery or issues the written refusal.
The following requirements are presented to the lotteries:
The founder of the lottery is responsible for all its liquidity, its obligations of the lottery except for its prize fund. And for every other obligation carried in accordance with its charter.
The founder can transfer the right to organize and conduct the lottery to another company or organization.
The prize fund of the lottery is not part of the property of the founder or lottery operator and cannot be used for any other purposes than pay-off of the prizes to the winners of the lottery.
The prize fund for the instant lottery is kept by the organizer until prizes are claimed.
The prize fund of the lottery with the periodical drawing is kept on the bank account of the lottery (money prizes) or kept by the third trusted party (material things). This third trusted party bears all responsibility for the security of the fund.
The prize fund is determined by the acting lottery Regulation depending on the goal of this lottery:
In accordance with the Law from 11.8.95 #135-F3 'About charities' the charities include 'support and help in education, science, culture, art, moral development of the personalities'. Thus, the founder can determine himself the type of the lottery - charities or special causes. In the case of a 'special cause' lottery the founder decides himself which part of the turnover should be given to those special causes since it is determined by the legislation. In the case of the charities lotteries the founder is required to transfer not less than 25 % of its turnover for the good causes.
The regional and municipal lottery legislation is not much different from the federal Russian legislation, except for how the lottery should be organized there.
The main legislation act that regulates the lottery activities in Moscow is the Moscow Act from 28.4.1999 #18 'About the lottery realization and their regulation in Moscow'.
The organization of the lotteries in Moscow is determined by the Moscow Government Act from 27.11.2001 'About the registration and control of the lotteries and similar to them games, conducted in Moscow'.
According to this Government Act the registration and control of the lotteries should be carried out by the Committee of the Lottery development in Moscow. The registration, the issue of the licenses and the possession of the Unique Register of the Lotteries are carried out by the Department of the Budget planning of the Government Order at the Moscow Government.
The official distribution of the sales revenues in accordance with the law 'About lotteries':
Of the lottery founder:
Of the commercial lottery operator:
The 'special causes' lottery operator:
Of the charity lottery operator:
Of the tickets distributors
President Putin has signed the law "On Lotteries" adopted by the State Duma on October 17 after its third reading and, passed by the Federation Council on October 29 2003.
The law stipulates the kinds of lotteries allowed on the territory of the Russian Federation, as well as rules for conducting lotteries. The law envisages deductions from lottery revenues for purposes of financing socially important facilities, events and charities.
At least 10% of the lottery revenues will be used to finance social projects such as the development of sport and physical education, health care, tourism, science, culture and art, as well as environmental and charity programs.
The new law was adopted because the previous 'normative act' adopted in 1995, and an article of the Civil Code that regulated lotteries and other gambling activities, did not meet presentday demands of state regulation in this field of "entrepreneurship."
The law regulates the lottery industry in Russia by specifying types and standards of lotteries, rules for organizing lotteries, the system for exercising control over the organization of lotteries, the liability of lottery operators, as well as setting other requirements.
It clearly defines the order of control over the activities of individuals who take part in the organization of lotteries and outlines their responsibilities.
Lotteries are divided into single, multi-game and combined lotteries, international, national, regional and local, as well as state and non-state draws. The law also stipulates the introduction of a unified state register of lottery operators and a mandatory annual audit of their accounting systems.
Estimates vary, but it is believed that Russians spend up to US$400 million per year on various types of lotteries run by between 150,000 and 250,000 companies throughout the nation.
The law strictly specifies all kinds of lotteries, including an all-Russia national lottery that is authorised by the Russian government. Lottery permissions are issued to federal bodies of the executive power and executive bodies of the Russian Federation for a term no longer than five years.
The bill also envisages the introduction of lottery standards under which the allocation for prizes should account for no less than 50% and no more than 80% of the revenues from the lottery.
The law envisages responsibility for violation of the order of a lottery organization. An unauthorized lottery entails a fine worth '25 minimal wages' administered to a physical entity. A senior official is charged between '40 and 200 minimal wages' for offences, and a juridical entity is charged from '500 to 5,000 minimal wages' for violation of lottery rules.
The Federation Council, however, noted that the bill does not clearly identify which government bodies will exercise control over the organization of lotteries, which may cause disagreements over organizational and regulatory issues.
Source: Tass News Agency.
For more information see the attachment on our website; A new draft on Lotteries. This is an interview with I.Y. Deness about the lottery situation in Russia.
At present around 80 up to 200 different lotteries are played in Russia. There are no exact statistics about this industry. However, according to the unofficial reports the market value is around $400-500 mln. According to KOMKON the lottery business grows approx. 15 % annually.
The most part of the lottery market turnover stays 'in shadow' (illegal) because does not pay any taxes. The practice of cheating with prizes is well known, as is the sale of unregistered additional circulations. The lottery legislation does not correspond to the present reality and does not cover the taxation and proper regulation of the industry. As a result the state does not get even at the same share of the money from the lotteries that they got in 1985 (when Russia was the 5th in the world in terms of the volumes of the advertising market controlled by the state).
The biggest regional market in Russia is located in Moscow where up to 70% of the Russian lotteries are played. The potential volume of Moscow market is evaluated for $ 1 billion and the total of the Russian market around $5 billion.
There are several foreign lottery companies active on the Russian market: the Greek company 'Lotto' which organizes the lottery 'Lotto-Million' in the joint–venture with Sportloto.
In 2001 OOO 'Teletot' (the co-owner of OAO 'Moscow Lotteries') together with the financial partner British Company 'Merri-more ltd.' has launched in Moscow and St. Petersburg the global online lottery project. The project includes the installation of 2750 lottery terminals all over these two cities the information from which will be processed by the main computer. The principle of 6 different number lotteries is used - 6 out of 49, etc. The drawings will be held weekly on one of the main TV channels, the prize fund is up to $2 million. The annual turnover is estimated at $500 million.
There are talks about another new online project of 'G-Tech' company which organizes lotteries in US, UK, Eastern Europe and Baltic states. According to some information they own a significant part of the world lottery and totalisator market and their turnover is $100 billion.
All lotteries in Russia can be divided in two groups: with drawing and instant lotteries. The lotteries with drawing are played periodically; with instant lotteries the result is known immediately after the purchase of the ticket.
The market of the 'drawing' lotteries in 2001 was evaluated for $200 mln the biggest part of which was for TV lotteries. The turnover of all TV lotteries is calculated at around $150 mln and the profit is around $15 mln.
'Ruskoe loto' (Russian lotto). The most popular lottery in Russia was created in 1993 with the participation of the famous businessman and former politician of GosDuma Artem Tarasov. TV show 'Russian Lotto' was launched in October 1994, the annual turnover was $8-9 million. For the last 9 months (from November 2001 till June 2002) the turnover reached up to $45 million.
The founder and operator of the lottery is 'Milan concern' whose owner is the famous politician and businessman Malik Sai-dulaev. According to KOMKON (June 2000) the participants of this lottery are calculated at 53% of all players in Moscow (including the casino and Video Lottery Terminal players).
If the numbers of the purchased lottery ticket corresponds with the number sequence of the lottotron, the ticket wins. The tickets are sold in different shops and locations, the drawing takes place every Sunday at 8:50 on RTR TV channel, the prize fund (50% from the tickets sold) - the money prizes, audio/video equipment, cars, apartments, jack-pot. The prizes are paid out during the next 4 months after the drawing.
Televizionnaya zshilizhnaya lotereya 'Zolo-toi kluch' (TV real-estate lottery 'Golden key'). The Founder and operator - JV 'Interlot', the manufacturer of the lottery equipment in Russia, supported (according to some information) by the Government of Moscow. The first drawing - December 1997 on TV-Centre channel. Since March 1999 the show takes place on RTR TV channel.
According to KOMKON (June 2000) the participants of this lottery are calculated for 40% of all players in Moscow (including casino and VLT's players).
If the numbers of the purchased lottery ticket corresponds with the number sequence of the lottotron, the ticket wins. The tickets are sold in 74 towns, the drawing takes place every Saturday at 9:30 on RTR TV channel. The prize fund - money, audio/video equipment, cars, apartments, and jackpot. The prizes are paid out during the next 3 months after the drawing.
The Russian TV Lottery 'TV-Bingo-Show'. Created in August 1998 and based on the idea of Money Bingo lottery of Artem Tarasov. The Founder is The Ministry of Special Situations of Russia, the operator - 'Media-Lot'. The turnover of the company in 2001 was $50 mln.
If the numbers of the purchased lottery ticket corresponds with the number sequence of the lottotron, the ticket wins. The tickets are sold via the sell outlets of JV 'Russian Lotteries' (2600 outlets in 66 towns), the drawing takes place every Sunday at 9:40 on RTV channel. The prize fund (50% of all tickets sold) - different material prizes from audioplayer to the car, jack-pot (the biggest - 7,2 mln rubl.). The prizes are paid out during the next three months after the drawing.
The typical lotteries with drawings, wellknown from Soviet times. The biggest founders of this lottery are the Olympic Committee of the Russian Federation, The State Committee of Sport education and 'Sport-lotto' (the lotteries 'Sportloto 6 out of 45', 'Sportloto 5 out of 36', 'Lotto-Million', 'Sportprognose').
The main principle - numeral. The exclusive operator of these games is JV 'Rossies-kie loterei' (Russian Lotteries).
There is no exact statistical information about the volume of this market but the approximate numbers are estimated for $30-50 million.
At present there are dozens of Internet lotteries on the web. Most of the operators of such lotteries are in US or Europe, and only some of them permit the people from Russia and CIS countries to participate.
The idea of such a lottery does not differ greatly from usual sport lotteries: after being registered, you have to guess the row of numbers from the given on the site sequences of numbers. The drawings of such lotteries can take place even a couple of times per day letting the participants play all day round increasing the chances to win.
The prize fund of the net lotteries is calculated from $ 1,000,000 or more or equivalent of this amount in various material prizes. In order to get the prize the winner has to open a bank account. In some cases the winner gets a bank cheque that can be cashed in a local bank.
The most famous lottery Internet-resources are 'Luck Surf Lotto' (7 out of 50, prize up to $1 mln), 'WebMillion' (6 out of 45, prize up to $3 mln), 'Money Balls Lotto' (7 out of 50, prize up to $1 mln.) and also the site of 'Sportlotto' and the gaming portal 'loto.ru'.
The typical street lotteries have the advantage of the fast result, where the winner gets the prize instantly. The small prizes are given on spot at the selling outlet; the bigger ones should be received at the offices of the lottery operators. The market for instant lotteries is characterized by a high level of crime and cheating since the owners can easily move from place to place and the players cannot always check the existence and validity of the license.
The official and unofficial (criminal) turnover of instant lotteries is calculated for minimum $200 mln.
The instant lotteries are also organized by the state and social organizations in order to financing of special social and cultural programs and the state budget.
This type of lotteries can be played both with and without drawings and is organized by the companies-manufactures in order to promote their own sales. In order to participate, the player has to purchase the announced product in the shop of the organizer for the fixed amount. The prizes are given in the form of the products of the lottery organizer.
Founded in 1995 in accordance with the President Act, on a base of 27 state sport lotteries. 100% shares belong to the state.
At the present 'Russian Lotteries' is the biggest and strongest player on the lottery market that has the best developed distribution network in most regions of Russia (2600 selling outlets). In other regions of Russia the distribution is carried out in accordance with cooperation agreements with local partners. Part of the lottery tickets is sold via bank branches, post offices, shops and newspaper kiosks.
Russian Lotteries is the exclusive operator of sport/number lotteries such as 17'Lotto-Million', 'Totto-Million', 'Lucky five', 'Keno', 'Sportloto 6 out of 45', 'Sportloto 5 out of 36', 'Sportprognose-Match' and 37 types of instant lotteries 'Sprint' and 'Lotax.'
The main part of the lottery tickets are distributed via the lottery shops and kiosks. Moreover, Russian Lotteries works on preparations to conduct the number lotteries on-line.
Russian Lotteries is the exclusive operator of all lotteries conducted by the Olympic Committee of Russia and the National Sport Fund, as well as the distributor of other lotteries organized by other operators.
More than half of all lottery tickets in Russia are sold via the distribution network of Russian Lotteries.
The biggest operator in Moscow is 'Loteri Moskvi' (Moscow Lotteries) founded in accordance with the Moscow Government Act from 8.6.99 #518. The main founder is Moscow Government (51%) and JV 'Loto-T.' The company is the lottery operator and the lottery tickets distributor via its own distribution net of 298 kiosks situated close to the metro station and in the exhibition and trade centres. According to the Legislation Act 5% of the turnover if Moscow Lotteries goes to the social development programmes of the Moscow city.