International edition
October 27, 2021

Tax revenues for this activity do not exceed the 7%

Games of chance project fails in Russia

(Russia).- Special areas the government has set aside for gambling are not recouping the costs of their establishment, Russian Accounts Chamber said. More than us$ 44 million have been invested for the creation of casinos in special gambling zones, but tax revenues for this activity are recouping only 7% of the costs.

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hat is not surprising, considering that only one of the four planned areas – Azov City – has opened at all, with two casinos. “More than 1.4 billion rubles of government funds assigned for the establishment of the Azov City gambling area is tending towards negative efficiency”, said the auditors.

A federal law banning games of chance is in force since July 1, 2009 everywhere except specially allocated areas was passed back in 2006. Business is not surprised: creating gambling zones was a political decision, with no economic considerations factored in.

Besides, existing legislation contains enough loopholes for dishonest businesses if they decide to go underground. But instead of relocating gambling clubs and casinos, their owners have opted either to wind down their businesses or carry on illegally. Especially since the penalty for violations is not too stiff: a first-time fine is 1,200 euros.

Law enforcement agencies have reported that, after the gambling ban, the number of virtual casinos in Moscow has increased a 150%. Anyway, at the beginning of 2010, professionals of the sector had unofficially acknowledged that the 90% of the gambling centers have continued with their activities under some guise or other.

“The provisions of this law do not apply to lotteries and exchanges,” explains Gaming Business Association Vice-President Vladimir Ilyushin. “This made many businesspeople turn their gaze towards the lottery law, which contains definitions that can be interpreted at will. For example, the description ‘lottery equipment’ is not specified, and no special regulations apply to such equipment.” As a result, many gaming arcades have turned into instant lottery clubs.

The situation, in the expert’s opinion, dramatically changed in the summer of 2011 when organizing underground casinos became a criminal offence.

“The current criminal legislation is very tough – the owner of an illegal gambling business can be sentenced to six years in jail,” says Moscow Lotteries President Igor Dines. “This threat is stopping many risk-takers in their tracks. So rampant gambling is a thing of the past.” The expert admits that “players began drifting off” once the gaming business was made illegal. “The number of people ready and willing to play now is a fraction of what they were five years ago,” Dines notes.

“The gambling areas were set aside to attract big investors expected to build an amusement city with children’s parks, shopping facilities, concert grounds and casinos,” says National Bookmakers Association President Oleg Zhuravsky. Such investors do exist but only abroad, Zhuravsky believes. But the law’s strict provisions stand in their way.

Currently, the areas allocated for gambling are located in the Altai, Primorye and Krasnodar territories and in the Kaliningrad Region, in unpopulated areas that have no infrastructure, including transportation. Understandably, the owner of ten slot machines at a busy railroad station will not move there, nor will the owner of a Moscow casino – there will not be enough capital.

Clearly, the establishment of a large entertainment center calls for huge investments spread over many years. “But the law says that land can be rented out for only 10 years, and nobody knows what will come next,” Ilyushin shares his fears. “The southern gambling area, for example, first consisted of two regions – Krasnodar and Rostov. Rostov has now been dropped, but imagine if people had started building something there.”

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