Monday, October 23, 2006

Speaker Boris Gryzlov has announced that the State Duma is set to consider the first reading of a new bill that would push the bulk of Russia's gambling halls into four Las Vegas-style "colonies." Gryzlov, reacting to President Vladimir Putin's initiative and subsequent suggestion that his gambling bill be approved as soon as possible and without obstruction, on 17 October predicted that the Duma would overwhelmingly approve the measure. The third and final reading, Gryzlov predicted, could come as soon as November. During the course of an October 4 meeting with the heads of Duma factions in which he outlined the lower house of parliament's top priorities, Putin pulled no punches in criticizing the country's gambling industry. Equating Russia's gaming addiction with the serious "material and moral damage" inflicted by alcoholism, Putin said severe measures were in order. To this end, he presented the lawmakers with his new bill. It calls for the federal government to reimpose state regulation over gambling, and to sweep small-time casinos and slot machines from the streets of Russian cities. Instead, the gambling industry would be concentrated by 2009 into four regional gaming colonies -- two in European Russia, one in Siberia, and one in the Far East. His bill, however, does make a provision for another type of gaming zone that would allow regional and municipal authorities to oversee smaller gambling centers on their territory, albeit under very restricted and specific conditions.

Many observers linked the timing of Putin's initiative to Russia's political crisis with Georgia. This argument followed on the shuttering of four large casinos in Moscow with ties to ethnic Georgians.
 
But a more likely scenario is that Putin merely saw the opportunity to use the Georgian crisis to his advantage. In regaining state oversight of the gambling sector, he could take control one of the most rapidly growing and problematic sectors of the Russian economy. In addition, the Kremlin could also benefit by using the growing antigambling movement as a populist platform ahead of the 2007-08 parliamentary elections.

Gambling in Russia was relatively underdeveloped in the 1990s, when the country was making the transition to a market economy and the majority of its citizens were too poor to take an interest in games of chance. But the situation changed radically by 2002, as rising oil revenues began to trickle down to ordinary Russians. This phenomenon coincided with the state's relinquishing of control over gambling to the State Sports and Tourism Committee and to regional and municipal governments.
 
In anticipation of huge tax revenues, local authorities issued gambling licenses very liberally and ushered in a period of exponential growth. Some estimates have placed the number of slot machines in Russia today at 400,000 or even 500,000, compared to 70,000 one-armed bandits in 2003. Combined, the major U.S. gambling centers of Las Vegas and Atlantic City have only about 280,000.
 
Slot machines are everywhere in Russia -- they are a common sight in railroad stations, grocery stores, clinics, at bus stops, and community centers. As for more traditional settings, Russia's 5,000 casinos are more than double the number found in the United States.
 
Moscow accounts for the lion's share of the country's $6 billion gambling business, boasting 56 casinos and 5,000 slot halls with some 56,000 slot machines. Another 9,000 slot machines can be found on the streets. In the wake of Putin's initiative, Mayor Yury Luzhkov publicly touted Moscow's plans to have just 540 casinos and gambling centers in operation by the end of the year.
 
Gambling is also pervasive in the provinces. Channel One television reported on October 8 that there are more than 2,000 gambling centers in Vologda Oblast's Cherepovets -- a city of just 300,000. On a smaller scale, Volga Oblast's Krasnoye has 10 slot halls to serve its 9,000 residents.