IGN Reported last month that Kalmykia, a member republic of the Russian Federation, introduced the first know law in Russia to recognize Internet gambling. It was drafted by a law firm called John Tiner & Partners and it passed on March 9, 1999. The following is an English translation of the law.

LAW OF THE REPUBLIC OF KALMYKIA

[ABSTRACTS]

On Development of Gambling Business in the Republic of Kalmykia

This Law establishes the legal basis for business related to gambling on the territory of the Republic of Kalmykia.

Article 1. Definitions

In this Law the following terms shall have the meaning ascribed to them below:
«Gambling Establishment» means an enterprise where on the basis of a licence for conducting entrepreneurial activity related to gambling there are organised games of chance and (or) bets are accepted: casinos, totalisers, booking offices, gaming machines and other gambling houses (places);
«Internet Casino» means a software complex, placed on a computer server or other device allowing free access through networks of general accessibility (including the Internet), the basis of which is a programme whereby the users of the said network can make bets fixed by the programme and learn through the network the result of the game (of the betting). Payment for the bet and payment of the win may be made through regular methods of payment and with the help of payment systems based on transmittal of data through a computer network. Unless otherwise clearly stated, Internet Casino is recognised a «Gambling Establishment» through the text of this Law, and for the purpose of determining the rate of Tax on Gambling Business the Internet Casino shall be recognised a «gaming machine».

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Article 2. General Provisions

1. The business of running gambling establishments on the territory of the Republic of Kalmykia may only be transacted under a licence issued by the Licensing Body in accordance with the procedure provided by this Law.
2. The following entities may obtain a licence under this Law (hereafter referred to as «Licensees»):
   (a) enterprises, organisations being legal entities under the laws of Russian Federation, including the enterprises with foreign investments established on the territory of the Russian Federation, international associations and organisations, conducting a business of a gambling establishment;
   (b)affiliates and other similar divisions of enterprises/organisations conducting a business of a gambling establishment;
   (c) foreign legal entities.
   The enterprises established in the territory of the Republic of Kalmykia enjoying the tax privileges under the Law of the Republic of Kalmykia «On Tax Privileges to the Enterprises Investing into the Economy of the Republic of Kalmykia» and other acts or legislation may also be Licensees under this Law.

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Article 8 . Internet Casino

1. The Internet Casino is recognised as situated on the territory of the Republif of Kalmykia, and the Licensee - conducting a business of a Gambling Establishment on the territory of the Republic of Kalmykia if the Internet Casino is situated on a computer server or other device situated on the territory of the Republic of Kalmykia or if the rights to the Internet Casino are owned [retained] by the Licensee located on the territory of the Republic of Kalmykia, namely if the agreement with the person providing the service of access to the computer network allowing to place certain software on the computer server is entered into by the Licensee situated on the territory of the Republic of Kalmykia.

   [Note. If the foreign company has an office registered for tax purposes on the territory of Kalmykia, such foreign company will be deemed the Licensee situated on the territory of Kalmykia for the purpose of the above section.]

2. The licence to run an Internet Casino provides for the right of the Licensee to open access to the Internet Casino to any persons in any country of the world, mindful of the exterritorial and global character of world computer networks.
3. The Licensee running an Internet Casino shall place among the messages appearing on the screen at the time of entry into the Internet Casino the following:
   (a) details of the licence for running the Internet Casino and the name of the licensing body;
   (b) a message in all the languages on which other messages are written in the Internet Casino that the access to the Internet Casino is forbidden for the residents of those countries where gambling is recognised as illegal activity.

   The Internet Casino shall include the rules of games of that Internet Casino, including the rules of accepting bets and payment of wins.

Article 9. Guarantees of Investment into the Gambling Business in the Republic of Kalmykia

Legislative and other acts adopted by the State bodies of the Republic of Kalmykia, worsening the position of the Licensees running Gambling Establishments on the territory of the Republic of Kalmykia shall not be applicable up to the end of the financial year and then within 4 years with respect to the Licensees which obtained licences under this Law before such acts were adopted.

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