Gambling in Russia: To bet or not to bet

Six years ago, the government decided to close all casinos and gambling bars in Russian cities and relocate them all to special gambling zones. Nowadays, it is possible to try your luck on legal grounds in Kaliningrad and Rostov regions, as well as in the Far East, Krasnodar and Altai territories. Where does the profit from gambling bars go - in the budget or in private hands? Who benefits from the law?

The turnover of the gambling market prior to the adoption of Federal Law 244 was evaluated at one billion dollars per year; tax revenue amounted to $100 million. In this case, according to the Russian law, the tax on gambling business was a local tax. To put it in a nutshell, all payments would be wired to the regional budget, where casinos and gambling bars are located. In the beginning of 2006, in Moscow alone there were 56 casinos and 5,000 gambling bars. There were also 65,000 slot machines in the Russian capital. No other country in the EU had the number of licenses that Russia had at the time of the adoption of the law. The turnover of the gambling business reached six billion dollars by the time when all casinos and gambling halls were closed. The illegal turnover was three times as much.

The first "legal" casino opened in January 2010. There were almost 500 million rubles spent for the arrangement of special gambling zones, following the example of Monte Carlo and Las Vegas.  However, only 97.8 million returned to the treasury in taxes. Investors were in no hurry, and they still do not rush to invest their funds in regional gambling zones.  

Casinos have been banned throughout the rest of Russia. More than thirty regions - Arkhangelsk, Belgorod, Kurgan, Omsk, Chelyabinsk, Krasnoyarsk, Tatarstan, several regions of the Northern Caucasus - banned gambling institutions on their territories even before the federal law came into force . However, nothing has changed. The turnover of the gambling market in 2008, for example, after the adoption of the law, made six billion dollars (annually). Special gambling areas started to work only in 2010, such as "Yantarnaya" ("Amber"), "Azov-City", "Primorye" and "Siberian Coin."

Is the turnover of income from casinos still illegal? Not at all. The special legal zones have been divided, and it is very unlikely that the state treasury will receive taxes. Who gets the money that people leave in gambling bars?

It was originally believed that the gambling zones would receive the support from private investors. A group of businessmen showed great interest in the "Amber" gambling zone, but the government did not like them much for some reason.

Obviously, with this level of illegal gambling institutions, neither investors, nor the government will be able to obtain any profit in the legal gambling zones. No wonder that investors turn to neighboring countries where it is possible to profit from casinos. The share of foreign capital in Belarus, for example, makes up ten percent of the total gambling market in the country. From 2011, the tax rates deducted by the state treasury, are calculated in the national currency - Belarusian rubles. President of Belarus Alexander Lukashenko stated that he would only welcome the inflow of the Russian capital in Belarus.

Thus, if there is someone who profits from casinos, it is surely not the federal budget of Russia. After all, the activities of illegal casinos bring much more money than the legal gambling zones that no one needs for several years already. Originally they were created not only as a way to control the gambling activities, but also as a lure for investments in the regions that do not hold the title of "donors" of the federal budget.

But now the government spends billions to struggle against illegal gambling institutions. The government also gets a lot of money for their "protection" by the agencies of the Ministry of Internal Affairs. It is worthy of note that the closure of casinos in major cities has led to a lower level of street and household crimes.  This is a double-edged sword, so to speak.

Ilona Raskolnikova


Read the original in Russian 


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Author`s name Dmitry Sudakov