Has Russian gambling ban just created new problems?

Has Russian gambling ban just created new problems?

Tuesday, July 7, 2015
The gambling industry was effectively outlawed in Russia in 2009

Russia has become a haven for illegal gambling operations since casinos were banned in 2009, according to a senior figure within the nation’s gaming industry.

Samoil Binder, deputy executive director of the Russian Association of Gambling Business Development, told the Pravda newspaper that the nation has seen a spike in unregulated gambling since Federal Law № 244, which outlawed the industry other than in a small number of designated zones.

Binder also explained that, as well as deregulating gambling, the ban across the country has simply led to a decrease in tax revenues and almost half a million job losses.

“More than 400,000 people - most of them young people - lost their jobs,” said Binder. “The state lost $2bn (€1.8bn) in taxes, mainly in regional budgets. Moscow lost $315m from this.

“A large casino in Moscow would have up to 200 contracts with a variety of companies that were created for serving the needs of casinos. All of that collapsed.

“According to my data, the number of underground casinos and slot machines in Moscow and the Moscow region is larger now than it was during the time when gambling was legal and law-abiding. They do not pay taxes, of course. All this game will continue until the authorities realise their mistake.”

Online gambling is banned in Russia, while land-based gaming is allowed only in five regions - Vladivostok, Altai Territory, Crimea, Kaliningrad and Sochi.

Last year, Russian President Vladimir Putin signed a bill to impose tougher penalties on illegal gambling operators in the country, with fines of between R300,000 (€4,300/$5,300) and R500,000, or an amount that is equivalent to the offender’s income for a period of one to three years for organising unauthorised gambling.

Binder believes that the gambling regions have not been a success, explaining that foreign investors are only interested in opportunities in major cities, such as capital Moscow.

“In Vladivostok, there is no gambling zone,” he said. “Something is being done in the Altai region. There is nothing in the Kaliningrad region either. There is no infrastructure for the gambling business there.

“When the ban was passed everyone wanted foreigners to come. One of them came, an American, Sheldon Adelson. He was the only foreigner, who expressed a desire to work in Russia. He wanted to work in the Moscow region, but was not allowed, and so he left, even though he was ready to invest $5bn.”

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