Saturday, October 07, 2006

President Vladimir Putin introduced in the parliament Friday a draft law
proposing a new set of regulations for the gaming industry. The president
proposed the new law after the Interior Ministry launched an apparent sting
operation to check the financial, tax and sanitary-epidemiological documents
of a variety of gambling establishments in the capital allegedly linked to
the Georgian mafia. The wave of closures of Georgian-owned casinos and
restaurants in Moscow follows on the heels of a recent spying scandal
between Russia and Georgia that saw the arrest of several Russian officers
on espionage charges. If the parliament passes the law, which envisions the
establishment of two types of gambling zones where gambling will be allowed,
the new rules will come into effect January 1, 2009. The first type
comprises gambling zones in residential areas. These can be established on
territory allocated for urban and rural development. The federal government
will issue permits to gambling establishments in these areas in coordination
with local authorities. Permits will be issued for five years and will allow
each organizer to set up one gambling facility per permit. The second type
comprises gambling zones established on parcels of land belonging to federal
or municipal authorities not allocated for urban or rural development. These
parcels will be leased to the owners of gambling business by the Russian
government.

The draft document also outlines the requirements for owners of gambling
establishments. The owners must be Russian legal entities that have not been
created by the Russian government or local authorities, and whose net assets
are not less than 600 million rubles (about $22.4 million).

All gambling businesses that do not meet the requirements proposed in the
draft will be shut down after July 1, 2007. Those gambling establishments
that meet the requirements will be allowed to operate without special
permits until January 1, 2009, when the new law comes into effect.