Image: Moscow casino
Igor Mikhalev  /  AP
Gamblers place their wagers in a casino in Moscow in September 2005.
updated 12/20/2006 10:28:42 PM ET 2006-12-21T03:28:42

Garish or goofy or grim, Russia’s casinos and slot-machine halls are some of the most vivid testimony to communism’s collapse.

But under legislation approved Wednesday by Russia’s lower house of parliament, the $6 billion industry is to be driven out of Moscow, St. Petersburg and most of the rest of Russia.

Once the bill is signed into law, gamblers will have only until mid-2009 to lay their bets in Russia’s major cities. After that they’ll have to go to a remote part of Siberia or three other regions distant from Moscow.

“These are repressive measures — essentially they amount to a ban,” said Yevgeny Kovtun, vice president of the Association of Gambling Businesses, which unites about 30 gaming companies.

With the exception of a drab national lottery, Soviet citizens had no outlet for their speculative urges. That changed with the chaotic arrival of capitalism: neon-decked casinos sprouted in big cities — the exterior of one in Moscow is fitted to look like a steamship — some offering prizes of luxury cars or $1 million in cash. Slot-machine halls have appeared throughout the country, sometimes even next to schools.

Backlash emerges
Russia’s oil-driven economic upswing of recent years sent new cash to the gaming tables. But a public backlash has grown.

“This is a business based on vice. It brings no good,” said Vladimir Medinsky, deputy chairman of the parliament committee that drafted the legislation.

“It hasn’t been banned altogether, because it is a natural vice and should therefore be controlled,” he told The Associated Press.

Industry players say that while limitations are needed, a complete ban except for the gaming zones is harsh and could kill the industry. The restrictions, they say, assume Russians will be ready to jump on a plane and fly to the taiga — the sub-Arctic forest region — to make a bet.

“In the U.S. people know about Las Vegas from childhood, but in Russia gambling tourism doesn’t exist,” Kovtun said. “Before, a person would pop into a casino or slot-machine hall between the metro and his house. Now ... the gaming companies will have to entice him to the Pacific coast.”

The zones, which are currently infrastructure-free wilderness, are located in the Altai region in Siberia, the rainy Pacific coast region of Primorsky, the Kaliningrad area along the Baltic coast and an area in Russia’s south between Rostov and Krasnodar.

Deadline: Summer 2009
With the new legislation, no new gambling institutions will be allowed to open as of the new year and by summer, only those with assets worth more than $23 million will be allowed to continue working, killing off smaller operations. Those that survive will have to move out after summer 2009, though the industry hopes to prompt changes that could soften the law before then.

According to Kovtun, the restrictions are unnecessary as the market is already cooling: The volume of gaming equipment now in use has shrunk by 20 percent in 2006, he said, after showing growth of more than 100 percent in some years.

But Medinsky scoffed at the idea that the industry is faltering.

“You have to be blind or an idiot to say that the market is shrinking,” he said. “I’m driving past the Havana cinema right now. Once there was a movie hall here, now half the building has been taken over by a casino.”

Dr. Zurab Illiich Kekelidze, deputy director of the Serbsky Center for Social and Forensic Psychiatry, said citizens of the former Soviet Union are more vulnerable to gambling’s pull.

“They have no psychological immunity to casinos and to slot machines, because in Soviet times they didn’t exist,” said Kekelidze, who treats patients with pathological gambling dependency.

While Kekelidze welcomed the creation of gambling zones, he said efforts should be made to educate people about gambling and provide better treatment and counseling for addicts. Otherwise the gaming zones could act as “levers of psychological instability,” in poor regions like Kaliningrad, he said.

Big operations may crowd little ones
Lavrentii Gubin, a spokesman for Storm International, which runs six casinos and 26 slot-machine halls across the country warns that only big gaming companies will survive the tough new rules, allowing illegal gambling to flourish.

He said it was unclear if gaming companies will flock to the zones.

Although the government has said it is willing to allocate billions of dollars to build infrastructure, “so far not a single company has said it is interested in the project,” Gubin said. “So, from the point of view of business, its inefficient for the government to invest. These are very large amounts of money that could be spent on social projects that are desperately needed in Russia.”

While the bill appears to sound a death knell for most gambling establishments, Russians who want to bet still have outlets. Russian news agencies reporting on the casino bill noted that one venue for risk-taking won’t be closed — the stock exchanges.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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