Russia proposes limiting gambling to four zones - Wednesday 13th of December 2006

Russian lawmakers are hoping to stem the tide of gambling in Moscow and other major cities with a Kremlin-sponsored bill that would limit casinos to four Las Vegas-style zones in far-flung parts of the country.

In post-Soviet Moscow, hundreds of neon-spangled casinos and slot-machine halls illuminate a city once dominated by Stalin-era skyscrapers and golden-domed Orthodox churches. Under the proposed law, the gambling halls would be shut down by 2009.

Casinos would be allowed only in four gambling zones located in less populated areas of the country, including two zones in European Russia, one in Siberia and one in the Russian Far East.

The Kremlin has yet to name the specific zones. Kaliningrad, a Russian enclave tucked between Poland and Lithuanian, the Black Sea resort of Sochi and the Siberian region of Lake Baikal are a few of the areas being proposed.

Gambling industry officials say the sweeping legislation would cripple a $6-billion-a-year business. In the Russian capital alone, there are 540 gambling businesses, from large casinos with names like New York and Shangri La, to small slot machine halls tucked along alleyways and next to subway stations.

Significant investment

Creating the four zones would require significant investment and time in a country where red tape and overwhelming bureaucracy often stall business projects.

Many gambling industry executives say the two-year deadline to close casinos in the cities and rebuild them elsewhere would be impossible to meet given Russias underdeveloped hospitality industry, dilapidated roads and Soviet-era airports outside of the large cities.

"It certainly took more than one or two years for Las Vegas to develop," said Yevgeny Kovtun, vice president of the Gambling Business Operators Association. Even if the federal government provided incentives for investors, building the Vegas-styled zones "will require at least 10 years," he said.

Supporters of the bill say the proposed zones are necessary to protect the Russians from the evils of gambling. In October, President Vladimir Putin likened gambling to an affliction on par with "the spread of alcoholism."

Lure of striking it rich

Lawmakers here accuse the gambling industry of taking advantage of the countrys poor, who advocates of the law say are lured to casinos in hopes of striking it rich.

"Lonely mothers, low-paid workers and people who see no future for themselves — these are the victims we are obliged to protect from the vices of gambling because they are trapped by huge advertising," said Alexander Lebedev, a parliament member and billionaire businessman who has lobbied for gambling reform for several years. "Those in the gambling business are highly unethical. I think gambling is not a normal business and is certainly one that we dont require in this society."

In Soviet times, gambling was outlawed, seen as a vice of capitalism in which only the greedy indulged. But 15 years after the fall of communism, Russias economy is booming, thanks to high world oil prices.

More Russians with more disposable income have provided fertile ground for the gaming industry. Slack regulations and licensing fees of less than $20 made it easy for just about any entrepreneur to install a slot machine in a corner grocery or kiosk.

By the late 1990s, casinos had become a hobby of the elite, who visit the top-notch Moscow clubs, and the working class, who can easily slip into a neighborhood slot machine hall.

The gaming industry contributes about $1 billion of tax revenue each year to the Russian government.

Casino owners say they have been calling for a change in the unregulated gaming industry for years.

Higher license fees and a gaming commission to oversee regulations would better serve the industry and be more feasible than forcing all casinos to relocate to remote areas of the country, they argue.

Dropping the hammer

The proposed zones will be "like going from one extreme to the other," said Michael Boettcher, an Englishman and former blackjack dealer who moved to Moscow in 1992 and now runs some of the citys top casinos.

His company, Storm, also manages Moscows popular slot machine hall chain, Super Slots.

"The federal government just came in and let the hammer drop instead of listening to what we had been suggesting for years," he said.

Lebedev and other lawmakers say they expect the bill to pass before the end of the year.

Opinion polls show support for the proposed law. In an October poll conducted by the All-Russian Opinion Poll Center, 65 percent said they were in favor of removing casinos from city centers and relocating them to special zones.

For gamblers like Artur Luzin, 24, a waiter who frequents the tables and slot machines of the Golden Peacock Casino in central Moscow, closing the citys casinos will be a disappointment.

"These places make the city an attractive place to visit for young people like me," he said. "I agree that they should close down the smaller, seedier places. But let us spend our money they way we want."

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