Friday, November 17, 2006

State Duma deputies unanimously gave tentative approval Wednesday to a bill
that would tighten the screws on gamblers and ultimately ban gambling except
in four special zones from 2009. But the legislation -- criticized for
clumsy wording and prohibiting activities such as betting on friendly card
games in private homes -- is widely expected to undergo drastic changes
before it passes a second reading, probably later this year. "There is no
doubt the bill will change beyond recognition," said Yevgeny Kovtun, a
spokesman for the Gaming Business Association, whose members have been
operating in Russia for the past decade. The bill, submitted by President
Vladimir Putin last month, sailed through a first reading Wednesday by a
vote of 440-0 and one abstention. Under the bill, small slot-machine halls
and casinos will be closed next July, when a minimum gambling age of 18 and
other restrictions come into effect. Duma deputies stressed the need for
national gambling regulations, but said the legislation must clarify how the
four gambling zones would be set up. The current version does not outline
how many of the zones would be established inside residential areas. Also,
it does not provide a mechanism for creating the zones, which is also key to
the legislation's success, United Russia Deputy Igor Dines said. Federal
authorities would grant five-year licenses for operation inside the zones.

The exact locations of the four zones have not been chosen, but Duma Speaker
Boris Gryzlov has said two zones will be in European Russia, one in Siberia
and one in the Far East.

The first zone will be created in July, Putin's representative to the Duma,
Alexander Kosopkin, said during his presentation of the bill on Wednesday.

Moscow does not plan to apply for the status of a gambling zone, a Moscow
deputy mayor, Iosif Ordzhonikidze said last month. This means that the 537
gaming establishments that are licensed to operate in Moscow would need to
close or relocate to a special zone by 2009.

The national gambling industry, with revenues surpassing $5 billion per
year, could shrink by at least 70 percent next summer, according to the
Association for the Development of the Gaming Business.

Slot-machine halls smaller than 100 square meters and casinos smaller than
800 square meters would be outlawed beginning in July.

The bill does not address how businesses that took out loans or began
expansion before the Kremlin drafted the legislation would recoup their
investments, Kovtun said.

The bill, nevertheless, easily passed the first reading because gambling is
a hot-button political issue.

"The reason we are discussing this bill is clear. It is elections," Liberal
Democratic Party of Russia leader Vladimir Zhirinovsky said.

Duma elections are scheduled for December next year and the presidential
vote is scheduled for 2008.

Communist Deputy Sergei Reshulsky said approving the current version of the
bill was "the lesser of two evils." An imperfect law is better than no
federal law at all, he said.

About 3 percent of Russians gamble at least once per month, according to a
survey by the independent Levada Center in October. Most people who gamble
are under 40, it said.

Gambling businesses are pushing to soften the bill's provisions and extend
the gambling ban beyond 2009.

"What stance the presidential administration takes on this situation is
important," said Duma Deputy Alexander Lebedev, an outspoken gambling
critic.