Russia Legalizes Gambling in Sochi and Crimea

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A decision made by the Russian legislative body Duma will see the creation of two new special gambling zones — one in Sochi and one in the former Ukrainian province of Crimea.

While authorities have not yet agreed on the precise locations where the new casinos will be built, a controversial clause included in the bill states that in Sochi "the gambling venues can only be established in Olympic facilities that were bank-rolled by private investors."

During a press conference held in Moscow on Tuesday, Russia's Deputy Prime Minister Dmitry Kozak explained that the locations chosen for the new casinos in Crimea and Sochi will be determined "within 10 days." "The issue is being discussed," Kozak said,” and I think we will need another ten days to decide on the exact location."

However, the fact that the national and local authorities still need to agree on the precise location of the new brick-and-mortar casino rooms will not influence the final outcome of a process started at the end of March. "The principled decision on the establishment of a gambling zone in Sochi has been taken, and we have supported it," Kozak said.

"We should ensure that these projects pay off and do not go bankrupt," he added, explaining that before giving green lights to any new project, authorities will have to verify their effectiveness and sustainability.

Sochi is seen by a large number of international investors as an ideal location for a casino, even if the special aforementioned clause suggests that the project may have been around long before the recent Winter Olympics took place. But the lesson learned from the existing casino zones is making Russian authorities exceptionally careful.

After the Parliament decided to allow brick-and-mortar casino gambling in Krasnodar, Kaliningrad, Altai and Vladivostok in 2009, only the first one managed to have a gambling complex built to completion. The first legal casino in Krasnodar’s Azov City "may be closed" in the near future due to its poor performance, Kozak admitted.

One of the biggest enthusiasts about the new casino zones is the member of Duma’s Economic Policy, Innovation Development and Entrepreneurship Committee, Anatoly Karpov.

As reported by The Moscow Times, Karpov explained that "the creation of a gambling zone in the Republic of Crimea will help attract additional investment in the region, create new jobs and replenish the revenue base of the regional budget," giving a precious financial boost to help make the newly added territory less dependent on Moscow.

According Karpov, the boost that Crimea's budget could get from the creation of the casino zone could be approximately a 25 billion ruble ($725 million) a year, as thanks to the special status given to the region, "one can expect an increase in the flow of tourists, together with development of the hotel business and food service."

Russia's new approach to gambling

The decision to profit from the infrastructures built in Sochi for the Winter Olympics and to make Crimea almost self-sustainable focusing on its tourism and entertainment offer, follows a clear path that Russia has chosen for a completely new approach toward gambling.

After online and offline gambling were banned from the country with a series of restrictive and populist measures instituted by President Vladimir Putin in 2009, the country has now decided to focus on the development of its entertainment and gambling offerings in order to increase tax revenues.

Besides the creation of two new gambling zones in strategic tourism destinations as Sochi and Crimea, Russia is also reportedly interested in lifting the current ban on online gambling and looking to launch a newly regulated market.

As anticipated here at PokerNews on July 3, the Russian government has given mandate to the Ministry of Finance, the Ministry for Economic Development and the Ministry of Justice to evaluate the possibility of legalizing online poker in the country.

The preparation work, which is supposed to be handed to Russia's Prime Minister Dmitry Medvedev by July 21, is aimed to the creation of a new market that the Russian Legal Information Agency (RAPSI) estimates "would bring additional revenues to the [State] budget in the amount of 2 to 3 billion rubles (approx. $58 million to $87 million) in the first year, and exceed 5 billion rubles (approx. $150 million) within three to four years."

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