Poker's Killing the Russian Chess Star

Russia may legalize online poker to raise tax revenue.

Poker's lure.

Photographer: Ron Antonelli/Bloomberg

Among the many weighty questions that Russia's government has struggled with in recent months -- of war and peace, budget cuts and sanctions -- is this one: Is poker a game of skill or chance?

The answer is far from trivial. It will go a long way to determining whether Russia can legalize online poker, and so bring the craze for the game which has swept the nation in recent years within reach of the nation's tax collectors. It's a debate that's closely bound up with the fate of Russia's proud traditions in chess.

During the Soviet era, chess tables could be seen in every Russian or eastern European park, with dozens of players lost in concentration. Cheap and egalitarian, chess became the Soviet Union’s leading "sport" of the mind, producing more champions than any other nation on earth. Celebrities at home, they traveled the world.

And yet, just 25 years later, chess has been nudged almost into the margins of ex-Soviet society -- by nakedly mercenary poker.

For many chess players, the card game of American folklore and gangster movies has become a life changer. Their composure and intelligence, their ability to quickly evaluate a situation and calculate options, to absorb theory and concentrate for hours at a time make them outstanding poker players, too. The big difference is that when they play cards, they stand to win substantial amounts of money.

Although online poker is illegal in Russia, the game has spread rapidly. A poll in 2013 found that 16 percent of Russians (or 20 million people) played poker, up five percentage points from just two years earlier. That proportion is probably higher again today, three years on. Pokerstars – the world’s largest online operator - reports that Russians account for 8.4 percent of all users of its on sites, second only to the U.S. Dmitry Andreikin, born in the Russia Soviet Federative Socialist Republic in 1990, and currently fifth in the World Chess Federation's ranking for Russia, is among the converts. So is Almira Skripchenko, born in the Moldovan Soviet Socialist Republic in 1976. She takes part in the World Series of Poker, among other tournaments.

That so much economic activity is happening on foreign websites represents a loss to Russia in terms of potential tax revenue. The opportunity cost seems to have dawned on Russian officials as the state slides into financial distress, caused by a mixture of falling oil prices and Western retaliation against its foreign military interventions. Now the government is considering whether to build a legal, regulated online gaming system to boost the tax revenues. 

First Deputy Prime Minister Igor Shuvalov has been the main promoter of this potential U-turn. In 2014, he pushed the ministries of Economic Development and Justice to produce a report on legalizing online poker, its taxation and regulation. Now a decision appears to be closer. In a nod to sensitivities about the decline of chess, the government plans to use the tax proceeds that result to fund the National Chess Federation, so that it can foster passion for the game once more. 

Another major goal of the project would be to ensure that poker winnings remain in Russia. Marina Bludyan, Chairwoman of the public council of the Poker Enthusiast League, was reported as saying that international operators would be asked to keep data servers in Russia, and forbidden from transferring the data collected abroad. That way they can be made accountable to Russia's tax authorities, while all unregistered sites would be considered illegal, she said.

All this activity has sparked a lively public debate on the morality of poker, much of which has focused on the question of whether the card game should be categorized as one of skill (like chess), or of chance. If it's a game of skill, then legalizing its playing online would be relatively straightforward. If it's a form of gambling, that becomes far more complicated. The government seems to be leaning toward skill.

Kirsan Ilyumzhinov, the multi-millionaire Russian businessman, former president of the Russian Republic of Kalmykia, and head of the World Chess Federation, says that online poker “should be legalized; too many people are involved and are playing online. There are no reasons that it should be hidden and illegal.” He has proposed that poker should be included in the International Mind Sports Association -- representing chess, bridge, checkers and the Chinese game of Go -- of which he is also president.

Whatever the niceties of poker's categorization, which has also exercised Dutch courts in the past, legalizing online poker makes sense for Russia. It would boost the government coffers at a time of need. And, by following the French model in which regulatory powers go to the Ministry of Finance, rather than a sporting agency, the government could do much to ensure the resulting revenues don't get waylaid by oligarchs.

In any case, it's clear that the presumed goal of criminalization -- to discourage the game's spread in Russia -- is not being achieved. Despite being widely considered less prestigious than chess, online poker's potential financial rewards ensure the game’s continued popularity. Making online poker illegal has done nothing to prevent Russians from playing on websites that belong to foreign companies, or to Russian ones registered abroad. The sole impact of legalization would be to bring that business onshore.

And who knows, maybe poker will become the 21st century equivalent for Russians of Soviet chess -- played across the nation's parks and producing an array of globe-trotting champions, who are treasured at home and ambassadors for Russian intellectual prowess abroad.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

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