Monday, November 27, 2006

The Gambling Bill President Vladimir V. Putin proposed in October, with
plans to set up four gambling zones in Russia, has been approved at its
first reading by the Duma last week by a vote of 440-0 and one abstention.
The president had proposed the bill after the Interior Ministry launched an
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 bill will tighten control on gambling and ultimately
ban gambling except in four special zones beginning 2009. The four special
zones are to be located in unpopulated regions: two in European Russia, one
in Siberia and one in the Far East. Federal authorities will grant five-year
licenses for operation inside the zones. Putin warned United Russia leaders
to resist lobbying attempts to increase the number of gaming zones beyond
the four he specified. Putin said, "I am calling on United Russia not to
concede to such lobbying." In response, the Duma's speaker and United Russia
leader Boris Gryzlov asked Putin to give Duma the responsibility to select
where the gambling zones will be located, versus the government. The
president has not given a response yet.The first zone will be created in
July 2007, Putin's representative to the Duma, Alexander Kosopkin, said
during his presentation of the bill. 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. 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.

Also under the bill, slot-machine halls smaller than 100 square meters and
casinos smaller than 800 square meters, and gambling businesses with net
assets below 600 million rubles would be shut down by July 2007. And a
minimum gambling age of 18 will come into effect. Duma deputies stressed the
need for national gambling regulations, but said the bill must clarify how
the four gambling zones would be set up, and are doubtful the zones could be
set up as quickly as planned.
The mechanism for creating the zones is a key to the legislation's success,
according to United Russia Deputy Igor Dines. The current version also does
not outline if any or how the zones might be established inside residential
areas.

Besides lack of specifics, the legislation has also been criticized for
prohibiting activities such as betting on friendly card games in private
homes, and for restrictions
on online activities.Because of these issues, many observers expect the bill
to undergo dramatic changes before it will pass a second reading, likely
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. Gambling is a hot topic
because of upcoming elections. Duma elections are scheduled for December
next year and the presidential vote is scheduled for 2008. "The reason we
are discussing this bill is clear. It is elections," Liberal Democratic
Party of Russia leader Vladimir Zhirinovsky said.

The Association for the Development of the Gaming Business predicted that
the national gambling industry, whose revenues surpassed $5 billion per
year, could shrink by at least 70 percent by July 2007 if the bill is
implemented. So gambling businesses in Russia are pushing to soften the
bill's provisions and extend
the gambling ban beyond 2009. Gambling businessmen met in the Trade and
Industry Chamber on Nov 17 to discuss amendments they have drafted.

The gamblers suggest putting off the deadline for leaving cities to 2011.
Experts say that two years is not enough to create proper infrastructure and
attract people to the zones. "What stance the presidential administration
takes on this situation is important," said Duma Deputy Alexander Lebedev,
an outspoken gambling critic.

Vladimir Putin has urged the deputies to adopt the law without change or
amendments by the end of the year. The Duma speaker has promised this.