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The state of the Russian gaming industry has been radically modified in recent years, shifting legal casinos from highly populated cities to remote, lesser traveled areas.
Helping shed some light on the current state of affairs in Russian Gaming is Lyubov Loginova, a highly respected industry professional and CEO of Moscow-based Alsart.
[G&L] On 1st January 2007, Federal Law № 244 took effect, creating four specific gambling zones within Russia. Five years have passed since the law took effect. Where are the four zones, and are they prepared to meet the demand for gaming in Russia?
[LL] Three years have passed since the actual ban on gambling business in 2009, and what we have today – two casinos in Azov City, several construction sites in the Altai and Far East zone. These gambling zones are planning to open their first casinos before the end of this year, whereas the gambling zone in Kaliningrad is still not functioning.
According to the Accounts Chamber of the Russian Federation, the special zones that the government has designated for gambling business development are not worth the cost of their creation, which is not surprising as creation of gambling zones was a political decision, the economic feasibility was not taken into account. In addition, the current legislation has many loopholes for illegal business.
According to the Accounts Chamber, the state has allocated over 1.4 billion rubles for the organization of gambling zones, yet tax revenues recover merely 7% of the cost. This, however, is not surprising when you consider that out of the four gambling zones planned for opening, only one has launched operations – "Azov City", where there are just two casinos.
Payoff from public funds in excess of 1.4 billion rubles spent for the establishment of "Azov City" gambling zone is now close to negative values.
In 2009, instead of relocating gambling clubs and casinos, businessmen either preferred to close up their business or to continue it illegally. Loopholes in the law allowed them to operate almost legally. It was only in August 2011 that the amendments to the Criminal Code, which allow condemning the illegal businessmen for 4-6 year term in prison were adopted.
However, that hardly discourages the illegal business, as there are many people willing to take risks for large and quick profits.
It’s worth noting a trend that the major players started leaving after the business became illegal. The number of people who are willing and ready to play is many times lower than what it was five years ago.
Limiting the illegal business opportunities didn’t make the legal gambling zones any more attractive for the businessmen because of two main reasons: the accessibility problem and rules of the game.
Gambling establishments are to be built in Altai, Primorsky and Krasnodar Krai as well as Kaliningrad oblast. Moreover, the proposed sites are located in unpopulated areas, where there is neither infrastr