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Russian Gambling Ban Creates Underground Gambling

Posted on December 20th, 2010

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Gamblers in Russia may now have to resort to clandestine activities as Prime Minister Vladimir Putin sets an iron clad rule to ban casinos and gambling in Russia. Prime Minister Putin, once dubbed by The New York Times as Russia’s dominant politician, who holds a firm grip on power, proved once again how firm that grip is. Avid gamblers who once enjoyed poker have gone through a lot of effort in order to play their favourite pastime. The Russians have been able to enjoy gambling and slot machines only about twenty years. Putin moved to outlaw all gambling activities back in 2006 when he was still the President. Those who still attempt to gamble must now hide away in a clandestine location, hidden from any outsiders just to enjoy a game of poker. The people forced into such drastic actions claim that without the ban, activities such as these would not be happening

Seen by Putin as an immoral industry, Russian gambling houses are going underground. According to Pricewaterhouse Coopers LLP., an accounting firm, the revenues collected for gambling will have a growth rate of around 57%–this is a worldwide estimate. Critics expressed their exasperation as Russia bans a high-potential industry. Only four areas in the country holds special exemptions, one near the borders of South Korea, Ukraine, in the ex calve of Kaliningrad between Poland and Lithuania and the last one Kazakhstan—but so far, nothing has been developed there.

“Russia is quite unique because it went against the trend globally,” says Laurie Korpi, Head Regulatory Analyst in Gambling Compliance. She says not many countries in the world have been successful in establishing a booming gambling market then shuts it down overnight. Current President Anatolyevich Medvedev, who was backed by Putin during his presidency, has ordered an investigation why the hundred or more “illegal gambling halls” are still in operation. A compromise between Prime Minister Putin and the casino owners was rumored to have been in the table. But casino owners came out empty handed as Putin held his ground. An estimated 400,000 people will be out of work as a result. For the workers, this could not have come at a worse time. With the worsening economic conditions, laid off workers are not expecting to find new employment any time soon. Experts have criticized this as a very bad move. The government disagrees. Studies they have conducted show that unemployment due to the ban will only be at 60,000. Critics, however, are not convinced. “We are planning to close for a month. After that we’ll open somewhere else”, a casino owner claimed.”Everyone is shutting for a while. But we are all watching to see who is first to reopen.”

Medvedev stresses the need to finish the task of tracking down illegal casinos.“This is an illegal business and it’s a crime.”, he says in a meeting in Ryazan. Raids organized by the Moscow Mayor Sergei Sobyanin, is set to be carried out by special units and will do round ups around the clock. Sobyanin’s predecessor, Yuri Luzhkov was ousted by Medvedev citing “lack of confidence” as the reason. This method of dismissing public official is common in the Russian government .It is viewed as a “legal formula for dismissal.”

“I think we will sort out the mess within a month,” Sobyanin told Medvedev. Storm International, Russia’s biggest casino operator based in Moscow. Chief Executive Officer Michael Boettcher says that the government should be ready to face difficulties in wiping out gambling altogether. The industry is expected to double every couple of years. Still, gambling establishments are getting ready to move out. “I’ve got phone numbers for about 40 places, and about 20 percent of them have been shut down in the past two years, if this keeps up, where are the decent people supposed to go to relax, a dungeon?” says one of the gamblers who engage in underground gambling.

Russia will be one of the very few countries in Europe to have no gambling industry—that is until those four locations prove to be successful. “The rules will not be revised in any way, and there will be no backsliding, although various business organizations have been lobbying for precisely this.” says President Medvedev.