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Russian Casino Ban Costing 400,000 Jobs

The online gambling media may have been following the story for months, but the draconian Russian ban on casinos in major cities has now caught the attention of the mainstream media in America, with the New York Times carrying a major story over the weekend.
 
Recapping on events, in 2006 Russian strongman Vladimir Putin decided that gambling in Russian should be confined only to four remote geographical regions: the Altai region of Siberia; the coastal area of the Far East, near the border with North Korea and China; Kaliningrad, a Russian enclave between Poland and Lithuania; and the Azov Sea region in the south.
 
Existing casinos and slots parlours in major cities like Moscow and St Petersburg were warned that the ban would come into effect on July 1st 2009, although few thought that the government would carry the law through in the long run.
 
Early this (June) month they were disabused of that notion as the police started moving in, and a mass clear out of gambling operations is currently in full swing.

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The result is that Russia will be one of the few countries in Europe without legal gambling facilities until the new locations are up and running - likely to take at least two years given the remote nature of the relocations.
 
There is also the possibility that gambling in the main population centres will go underground, although the penalties for that will be stiff, and government has already warned that it will be merciless in imposing the new laws and punitive measures.
 
The NY Times article reports that casinos have repeatedly asked for a reprieve, proposing a regulatory body to cut down on abuses, and more recently pointing out that the ban will create hardships for workers during the crisis. The industry has also said it pays more than $1 billion a year in taxes. But Putin and his protégé, President Dmitri A. Medvedev, have not yielded.
 
“The rules will not be revised in any way,” Medvedev said last month, “and there will be no backsliding, although various business organisations have been lobbying for precisely this.”
 
The Russian gambling industry says the ban will leave more than 400 000 people without work in Russia, at a time when it has been hard hit by the economic downturn: the World Bank predicts the economy will contract by 7.9 percent this year. The government disagrees, publicising its own estimate of 60 000 people, which independent industry analysts say is absurdly low.
 
Since the law was passed in 2006 little has been done by either regional authorities or the gambling industry to prepare for the huge move to the specified regions, probably because there were few who believed that such radical change would be insisted upon.
 
“You know, in our country, the decisions are made by only one person,” Samuil Binder, deputy executive director of the Russian Association for Gaming Business Development told the New York Times. He was referring to Putin.
 
The article examines the development of the Russian gambling industry following the fall of the Soviet Union in 1991, when gambling sprang up everywhere in Russia, from first-class locations in Moscow to side-alley hangouts in the provinces.
 
"The crazy-quilt growth was something of a metaphor for capitalism here, full of possibilities and schemes and corruption," says the report.

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The industry has been largely unregulated, and especially in recent years, almost anyone could get a license, for as little as $50. Russia is not a strait-laced place — rates of smoking and drinking are high — but an outcry about gambling ensued. “It is not only young people, but also retirees who lose their last kopecks and pensions through gambling,” Putin said in 2006.
 
As with the workers, it seems to have dawned on the gamblers themselves only recently that the casinos are closing.
 
“It is going to be strange, and even now, it’s hard to believe,” said Aleksei Ustinenko (29) a construction executive who was playing at the Shangri-La casino in Moscow.
 
“Here we are, in one of the biggest, most beautiful, most expensive cities in the world,” he said. “And yet other people can decide that I cannot gamble if I want to.”
 
Some casinos have said they might try to devote some of the vacated space to private poker clubs, which they believe will be allowed under the law. But executives say such clubs are far less lucrative, and will employ very few workers.
 
And so labourers have been pulling down gambling signs and carting slot machines from sites all over Moscow.
 
“There was a time when all these clubs and casinos grew like a cancer tumor,” said Moscow’s mayor, Yuri M. Luzhkov. “We will close them all. By July 1, Moscow will be clean.”



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