Moscow Puts Its Bets on a Rally - Sunday 12th of June 2005

About 200 people showed up outside the White House on Thursday morning for what the United Russia party billed as an anti-gambling rally.

But some expressed disappointment when it turned out that the demonstration was not against gambling per se but was part of an attempt by Mayor Yury Luzhkov, a co-leader of United Russia, to gain control over gambling licenses.

"Game-mania is a 20th-century plague just like drug addiction and alcoholism," Moscow City Duma Speaker Vladimir Platonov told the crowd. "We ask only one thing: Let Moscow do some cleaning up."

The demonstrators, mainly pensioners and young adults, held up signs reading, "Cut Off the Arms of the One-Armed Bandits," "We Don't Want to Lose Our Youth" and "Put Out the Volcano of Luck" -- a nod to gaming giant Vulkan and its ads that promise a "volcano of luck." United Russia representatives handed out party flags, vests with the party's logo and ready-made posters outside the Krasnopresnenskaya metro station before the start of the rally.

The demonstration took place a day after City Duma Deputy Andrei Metelsky urged the federal government during a Duma session to act on a United Russia appeal to allow regional authorities to grant gambling licenses. The city of Moscow has the status of a region.

Luzhkov, who has been lobbying for jurisdiction over licenses for some time, told City Duma deputies earlier this week that Moscow needed to have its own law on gambling.

"Today, the gambling business is not controlled by federal or regional authorities," Metelsky said at a news conference Thursday.

There is no federal law to regulate the gaming industry, but a 2002 government decree gave the State Sports Committee the authority to grant gaming licenses. The committee was disbanded last year during government restructuring, but its successor, the Federal Agency for Physical Culture, Sports and Tourism, did not receive the licensing powers.

As such, no licenses have been granted for nearly seven months. MDM Bank put the annual turnover of the country's gaming industry at $3.53 billion.

Industry players said it was high time for a decision on who can hand out licenses but expressed doubt that a demonstration was the best way to resolve the issue.

"I don't see the need to make this a populist issue," said Stanislav Bartnikas, marketing director of Ritzio Entertainment Group, which controls Vulkan's 13,000 gambling machines in Moscow and the region and has assets worth more than $200 million.

Bartnikas also defended the gaming industry, saying, "Large market players back transparency, civilized methods and social responsibility."

Last Saturday, City Hall officials praised Vulkan for bankrolling a new discount food store for pensioners near Tverskaya Ulitsa.

Alexei Barbariush, co-chairman of the Association for the Development of the Gaming Business, said gaming operators were seeking clarity from the government. "Everyone understands that this is a lucrative business," he said.

There is less agreement among market players on who should control Moscow's gaming industry, which according to United Russia has 56 casinos and more than 50,000 slots machines. In the two years that the State Sports Committee was in charge of gambling, it awarded more than 4,200 licenses nationwide. A five-year gambling license costs 1,500 rubles ($53), Metelsky said, so nearly anyone could afford to buy one.

Moscow's gaming market grew 35 percent last year, according to MDM Bank.

Barbariush said city authorities, which handled licensing before 2002, were much stricter about who got permits and deserved to once again receive the right. He said many countries allowed local officials to oversee licensing.

Bartnikas disagreed, however, saying the industry needed federal regulation. "On the regional level, everyone will paint the fence a different color. We'll have the same chaos that we see now," he said.

If United Russia's initiative is approved, Metelsky said, the party will lobby for legislative changes to limit the number of gaming establishments in Moscow.

"We need to create conditions that make it unprofitable to run gambling facilities all over the place," Metelsky said.

United Russia is drafting a municipal bill to tighten fire and building security regulations for gaming facilities, ban stand-alone slots machines and increase taxes for the gaming industry. The bill may be submitted to the City Duma as soon as next week, Metelsky said.

The city currently collects about 1.5 billion rubles ($52.8 million) in annual taxes from gambling establishments, he said.

Many of Thursday's demonstrators decried gambling addiction and other negative social ramifications brought on by gambling. Larisa Luzhina, an actress, said her family fell apart because her 50-year-old husband spent all his time at slot machines. "I am afraid that my grandchildren are going to turn into such zombies as well," she said.

Galina, 68, said she showed up to voice concern that slot machines were taking up valuable city real estate, but was disappointed with the rally's tone.

"The bureaucrats are the ones who granted space to gamblers. Why are they doing so much yelling now?" she said.

"I don't want to be some sort of dummy," she said. "I was told this protest was against gambling, but it's all about whose pocket the money will go into."

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