Russia's casinos face exile from cities

Putin proposes moving gambling to restricted areas

November 24, 2006|By Erika Niedowski | Erika Niedowski,Sun Foreign Reporter

MOSCOW --The gaudy, glittering complex of the Shangri La casino, less than a mile from the Kremlin, boasts on three distinctively themed gaming floors about 40 playing tables, nearly 200 slot machines and an invitation-only restaurant called Exotika with three international chefs.

"Closest to Vegas, without leaving Moscow," promises the casino, which has a kaleidoscopic lotus flower towering above the sidewalk out front.

It's a rather good slogan - but perhaps only for now.

The federal government is considering sweeping legislation, proposed by President Vladimir V. Putin, that would force casinos such as this one - garish flower and all - out of Moscow and other Russian cities and into one of four special, more tightly restricted gambling zones.

Two likely would be in less-populated areas of European Russia, though it is unclear precisely where. There also would be one each in Siberia and the Far East; imagine a miniature Las Vegas, albeit in the frozen steppe.

The way the bill is written, relocation to these zones - nothing short of a vast undertaking requiring an equally vast investment in a nation where decent roads and airports are in short supply - would not take place until 2009. Other changes would push smaller casinos and slot halls out of business altogether, and soon: Those that don't have at least 10 tables, 50 slots and net assets of $23 million would have to darken their neon lights by July.

The bill, in some form, is all but certain to pass, and not only because Putin proposed it. Many here see gambling as he does: an illness like alcoholism, which is what he compared it to in recent publicized remarks (other politicians have referred to gambling, variously, as a crime, a sin, an evil and a plague).

But a slew of amendments that would make the bill more lenient have been rolling off the lips of gaming lobbyists, who call the current version, among other things, unrealistic and unconstitutional.

Losing money - just like making it - is, after all, a capitalist right.

"It's way too revolutionary," Samoil Binder of the Russian Association for Gaming Business Development said last week after meeting with industry representatives at a gathering in Moscow that was compared by participants, on more than one occasion, to a funeral.

It's not the spirit of the bill - tighter regulation of an industry that, by nearly all accounts, has been allowed to spiral out of control - that Binder objects to, he says. It's basically everything else.

"The whole gambling industry is going to collapse," he said, pointing to a potential loss of jobs and what he called an overly ambitious timetable for raising entire casino complexes from nothing.

Gambling has proliferated in Russia in recent years, particularly in the capital, home to the vast majority of the country's wealth. Its growth has occurred as part of a self-perpetuating cycle: People made, spent - and, apparently, were willing to lose --- more money, so ever more gambling houses continued to open. A change in licensing regulations only helped, making licenses available for a nominal fee.

Gambling, which was banned during Soviet times, has long been a part of Russian life. Peter the Great liked a good game of cards but had an unwritten rule that kept players' losses to a single ruble. Pushkin and Dostoyevsky, both notorious gamblers, wrote of the vice. Pushkin's famous short story "The Queen of Spades" describes a man's quest to pry out of an elderly countess a foolproof secret of winning at cards. He ends up ruined, in a mental hospital, babbling about a three, a seven and an ace.

The last attempt here to legislate morality provides a less-than-successful model. Mikhail S. Gorbachev's draconian anti-drinking campaign, launched in 1985, decreased alcohol consumption, but at a price: It devastated the nation's economy and led to the creation of an underground criminal market.

Critics of the gambling bill predict that outlawing gambling in all but four zones will have similar results.

"It will open the doors to illegal casinos all over," said Michael Boettcher, a former blackjack dealer who is now chief executive officer of Storm International, which employs 6,000 people at seven casinos in Russia, including Shangri La. Of Putin's proposed legislation, he said: "It's like taking a sledgehammer to a nut."

Regions from the balmy Russian south, on the Black Sea, to Kamchatka in the Far East already have expressed a desire to be counted in. Seemingly overlooking Putin's point, Yevgeny Gerasimov, chairman of the Moscow City Duma's culture committee, has proposed that the capital itself be named a zone.

He suggests that casinos here - of which there are about 60, including another Storm-owned casino called New York, where the carpet depicts skyscrapers and the birthdays of Elvis and Marilyn Monroe are cause for celebration - relocate to a self-contained area on the city's southeast side.

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