Gambling Legalized in Parts of Russia

July 22, 2014

The Russian government banned gambling in the year 2009 in the belief that it would solve the problem of rampant gambling among Russian citizens. Gambling has been heavily restricted in Russia since then and allowed only in four designated zones located in the country’s outskirts. However, the Russian government was unable to curtail gambling completely in Russia.

New casinos to be built

The Russian legislative body Duma has recently decided to create two special gambling zones in Sochi and the former Ukranian province of Crimea. While announcement regarding the construction of casinos came recently, the process was initiated in March, 2014 when Russia’s Deputy Prime Minister, Dmitry Kozak discussed the possibility of opening a gambling centre with a large number of officials from the region. While the exact locations where casinos will be built has not been determined yet, a clause included in the bill passed by Duma states that gambling facilities will be established in the facilities where the Sochi 2014 Winter Olympics were organized.

Kozak said that the locations for construction for casinos will be decided within 10 days. By constructing special gambling zones, Russian government wants to earn income in the form of taxes and license paid by casino organizers. Moreover, Russian government was also hoping that the construction of casinos would give a boost to Crimea’s economy and make the people of the newly annexed territory happy. In view of the failure of Russia’s first legal casino to generate any profits, Russian government was treading cautiously with the proposed new projects in Sochi and Crimea.

Sochi and Crimea- Ideal locations for a casino

By selecting Sochi as one of the location for the establishment of casinos, Russian government wants to utilize the Olympic facilities and get some extra returns made by private investors in the black sea region. The US$ 51 billion expenditure incurred for the Sochi 2014 Olympics included building of huge sporting infrastructure. The decision of Russian government is in lines with decisions made by other countries that have held major international sporting events. Countries like U.S.A and China that have organized Olympics have converted the gaming cities into sporting hubs.

A large number of international investors have expressed their interest to build casinos in Sochi due to its recent reputation as a gaming centre. Similarly, Crimea is also being proposed as an ideal location for the establishment of casino to reduce its financial dependence on Moscow. The newly added territory of Crimea is relatively poorer than other parts of Russia and the Russian government was hoping that the creation of a gambling zone would help attract investments, create new jobs, and give a boost to the regional budget. Russian government also has plans to develop Crimea as a tourist centre that can attract thousands of tourists from all over the world and make the economy self-sufficient.

Russia’s new approach to gambling

The decision to legalize gambling follows a new path that was chosen by the Russian government regarding gambling. By legalizing gambling, Russian government hopes to create special gambling zones that can be better regulated. At the same time Russian government also wants to put the infrastructure built for the Sochi Olympics to better use and make the Crimean economy self-sustainable. Many analysts have said that the Russia’s new approach towards gambling to be pragmatic and follows the policy of countries like China that has built special gambling zone in its special administrative region of Macau.

The failure of the 2009 ban made it clear to the Russian government that could not be eliminated through an outright ban. Fresh from his successes in foreign policy related decisions, Russia’s president wants to increase tax revenues at times when the country is experiencing a decline in revenues from sale of oil and gas. Russian government was expecting that legalizing of gambling would bring in additional revenues of US$ 150 million within three to four years.

Conclusion

Other than the creation of new gambling zones in Sochi and Crimea, Russian government was also considering the option of legalizing online poker. By legalizing online poker, Russian government wants to create a newly regulated market for gambling. All these recent developments point to a bright future for gambling in Russia.