The end of the road for Russia's roulette

From 1 July, all casinos and slot machine halls in Russia will be forced to close their doors. In their place will be four Las Vegas-style gambling zones across the country, but building work has yet to start

Shaun Walker
Wednesday 17 June 2009 00:00 BST

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Louise Thomas

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The time is 7am and the sun has long come up over Moscow, but inside the Shangri-La casino, the tables are thronged with gamblers, most of whom have been here through the night, throwing down chips on blackjack and poker. It's a sight that is soon to disappear, as Russian officials insist they will strictly enforce a law due to come into force at the end of this month that bans all casinos in the country, except in four gambling zones.

Gambling has been a very visible part of Russian life since the collapse of the Soviet Union, a reckless all-or-nothing game of chance that seemed to mirror the business climate of Russia itself during its wild transition years. The hub of Moscow's elite gambling district is the Novy Arbat, a wide thoroughfare of ugly grey tower blocks, with a plethora of casinos, strip clubs and bars dotted along the roadside at ground level. On any given evening, the parking lots outside the casinos are crammed with black Bentleys, Mercedes and Hummers, as Moscow's rich try their luck at the gambling tables.

There's a cross-section of Moscow society at the Shangri-La, a cavernous building that's lit up with neon lights and fringed with plastic palm trees. A chubby middle-aged Russian flips his waif-like young girlfriend a $500 chip to keep herself amused with; a businessman from Azerbaijan delivers an ongoing monologue of obscene Russian swear words as his poker hands are repeatedly beaten by the dealer, and a British lawyer plays $100 hands of blackjack. The air is thick with smoke and waitresses glide between the tables bringing complimentary whiskies and vodkas to the gamblers.

At the other end of the gambling spectrum are the slot machine halls dotted around the suburbs of Moscow, where workers and poverty-stricken immigrants can often be seen, shovelling their last roubles into the slots in the hope of a big win.

Officially there are 30 casinos and more than 500 slot machine halls in Moscow, but as of 1 July, they all have to be closed down, along with casinos in every other Russian city.

The idea was that by the time the ban came into force, four "gambling zones" would have been set up, each of which would be a mini Russian Las Vegas, spread across Russia's vast landmass: one in the Baltic exclave of Kaliningrad, one near the Black Sea, one in Siberia and one on the Pacific coast. When the project was announced three years ago, it was presented as the ideal solution – it would remove gambling from city centres, and stimulate the growth of business and tourism in economically neglected areas. The minor problem is that none of these zones is yet ready for operation. Indeed, building and construction work has not even started, according to reports. One Russian publication sent a reporter to check out progress on one of the zones, who discovered open fields filled with grazing cows.

Those in the industry suggest that the idea will never get off the ground, given the necessary infrastructure and construction that would be needed to make them a reality. Especially during a time of financial crisis, it's unlikely that the investment will be found to make the zones a reality. "They are all at least 100km from the nearest settlement," says Samoil Binder, of the Russian Association for the Development of the Gambling Business. "The cost of building will be at least $40bn (£24bn), meaning we'd need 35 years to break even, and that's assuming that the profits of these new zones will be the same as in Moscow, which is unlikely."

Others have asked for at least a delay in the implementation of the law, to avoid leaving the thousands of casino industry workers unemployed. In February, the trade union that represents workers in the gambling sector appealed to the Russian President Dmitry Medvedev to delay the gambling plan until the special zones were completed. According to the union, about 500,000 people would lose their jobs as a result of the ban.

Part of the reason that work has been so slow on the new zones is that nobody believed that the ban would ever be properly implemented. As an industry with powerful mafia backers, which brings in huge revenues for the Moscow tax budget, few expected the government to act so decisively. One theory is that the ban is the result of an anti-Georgian campaign that spiralled out of control. Many casinos are rumoured to be controlled by Georgian mafia figures, and some were raided during a political spat between Russia and Georgia in 2006. It was at that time that the then-President Vladimir Putin first proposed the law.

Moscow authorities are adamant that come the end of this month, casino gambling in the cities will be a thing of the past. As of last week, only 17 of more than 500 venues in Moscow had closed down. Quite what will happen to the juicy real estate occupied by casinos in central Moscow and other cities, nobody seems to know. Sergei Baidakov, the Deputy Mayor of Moscow, told reporters last week that any casino that failed to shut down by the end of the month would face legal action, and suggested that most casinos would become shops or restaurants.

There have been rumours that casinos will simply exploit loopholes in the new law to continue operating. With poker classified as a sport in Russia, the authorities are expecting a sharp growth in "Poker sports clubs". But Moscow officials insist that in these establishments, "games of chance" will not be allowed, and alcohol and cigarettes will be forbidden.

In the casino at the Hotel Cosmos in northern Moscow, the croupiers claim to be confident that the ban won't affect them and they'll be able to carry on working as normal after the ban comes into place. In the Shangri-La and other casinos, however, the staff say they have been told they'll have to look for new work at the end of the month. "We'll definitely be out of a job," says Andrei, a croupier at Imperia Casino. "I have no idea what I'll do after this, maybe try to move abroad somewhere where they need croupiers. As for what they'll do with the building, we don't know. Maybe turn it into a library, or a swimming pool."

Back in the Shangri-La, there are mixed feelings about the impending casino closures. Many of the gamblers express regret that their favourite pastime will be taken away from them. But one, a man in his twenties who asks that his name not be published so that his fiancée doesn't discover his gambling problem, is relieved. "I can't wait for 1 July," he says, tossing another $200 on to the table. "It's so easily to lose your money in these places and I come here far too often. It will be good not to have the temptation."

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