How would Russia benefit from a change in its gambling laws?

    • Gambling in Russia was first banned in 1927, but flourished after the fall of the Soviet Union
    • However, it was banned again in 2007 – but allowed in four gaming zones across the country
    • Under Putin’s presidency, legalisation looks unlikely, despite the potential economic gains

The legality of gambling is something that divides the world. For every free-for-all like Vegas and Macau there’s a heavily regulated market like the UK’s. And then there are places where gambling is entirely illegal – as it is in almost all Islamic countries. In Russia, gambling is legal in four specific regions. In this article we’ll discuss why this is, and how the country might benefit from a change in the law.

A brief history of gambling in Russia

Gambling is embedded in Russian history and culture

The Russian government has completely outlawed gambling on two occasions. In 1927, when the Bolsheviks were busy figuring out how the state would begin to look in the future, it was decided that gambling conflicted with the ideology of socialism, and became completely outlawed.

Despite the ban, during the 1980s slot machines had become popular in the hotels that were only open to foreign tourists. By the time the Iron Curtain had been lifted, so had the total ban on gambling. On August the 23rd 1989, gaming ceased to be illegal and the first casinos popped up across the country, notably in the Savoy Hotel in Moscow.

Once the gambling ban had been lifted, casinos started to pop up everywhere. By the early 2000s, games like poker had become extremely popular. Seeing an opportunity, individual states were given the opportunity to tax gaming tables, slot machines and various other gambling outlets. Although not a problem to the majority of the population, the government began to fear that gambling was having negative effect on younger generations who were keen to emulate Western culture, which painted gambling as an exotic and exciting pastime. By August 2009, the crackdown on gambling had begun, with all casinos and gambling establishments outside of four designated areas closed for good.

Banned but not completely illegal

Casinos are still legal in certain parts of Russia

As part of the ruling, gambling wasn’t prohibited everywhere – it remained legal in four designated states. These states are Kaliningrad, probably the most ‘European’ territory that is a Russian exclave on the coastal borders of Poland and Lithuania; Krasnodar Krai, home to the famous Russian seaside resort of Sochi; Altai Krai, and Primorsky Krai, in the far east of the country. In each of these so-called ‘gaming zones’, visitors will find Russia’s only casinos, bookmakers and other betting outlets, serving both locals and tourists. These ‘gaming zones’ allow the Russian government to still make money from gambling tax revenue, while limiting the influence of gambling on Russian youth culture.

The Sochi Resort and Casino for example, is a heavily regulated, but also highly successful complex that provides Las Vegas-style gambling to both international and Russian national gamblers, without hindrance. Gamers will need to provide ID and be over 18 of course, but the atmosphere is relaxed with a typically Western feeling, according to Western visitors who have stayed at the resort.

The potential for gambling in the east of Russia

Vladivostok has plenty of potential as a prime gaming resort

On the other side of Russia, it’s a different story. The only other casino that lies east of Sochi is the remarkable Casino Altai Palace, a gambling resort built quite literally in the middle of nowhere to adhere to laws that state that new casinos cannot be built in populated districts. Then there’s a newer casino, the Tigre Cristal, which is located near the port city of Vladivostok.

Vladivostok is famous for being one of the most remote cities on earth, but this isn’t stopping the city from being touted as the next big thing in the casino world. If the Tigre Cristal is anything to go by, then this area could not only attract visitors from Russia, but also Chinese and possibly even Japanese gamblers, with hundreds of millions of people only a few hours’ flight from Vladivostok. This is just one of the massive opportunities that is sitting waiting to be exploited by the Russian government, but the outlook is certainly complicated.

Because other large, developed nations around the world are actually taking steps to creating gambling industries that regulated and heavily taxed, the Russian model is different in that the reverse on gambling prevalence only happened a decade ago. Although much more money could be made by allowing casinos and bookmakers to operate in all territories, Putin’s stance won’t be changing any time soon. He is said to be personally against the ‘immoral’ pastime, and his outlawing of gambling in all but certain areas is an attempt to appease the Oligarchs who still want to gamble, while removing temptation from the population. The problem with the casinos in these specially designated areas is that they are difficult to reach, and are sometimes limited to those with enough money to pay membership fees and the often expensive food, drinks and accommodation prices.

Russia’s relationship with gambling

Roulette is one of the most popular games in Russia

Gambling in Russia certainly isn’t a new phenomenon – and history tells us it would be popular across the population. One just has to look at the many references and instances of gambling interwoven into Russian culture. The Gambler, one of Fyodor Dostoevsky’s most famous novels, tells the tales of the writer’s own addiction to roulette, and of course the lethal game of chance that is Russian Roulette is often said to have began within the Russian Army in the early 20th century. Naturally, normal roulette is a lot less dangerous than Russian Roulette and way more accessible than in Dostoevsky’s lifetime.

A bleak outlook for online gamblers

Online gambling is illegal in Russia

However, Russians don’t have the same freedom when it comes to gambling online – and it doesn’t like the situation is going to change anytime soon. That’s despite its success in places like the UK, where the online industry has grown into a £4.5 billion industry, with growth expected to continue well into the future. Such is its success, in 2016 online gambling comprised 33% of all gambling in the UK, according to the Gambling Commission.

Despite highly successful online industries in the UK, Spain and Italy – and the potential tax revenue it would earn – the Russian government is staunchly against any form of online gambling, going as far as fining both gambling providers and gamblers who flout the rules. It seems that the fear of problem gambling and personal feelings towards gambling heavily outweighs the benefits of increased public money.

However, online casinos still flourish in Russia. Despite the Russian government’s cyber police blocking online casinos when they find them, mirror domains are springing up all the time to stay out of their clutches and serve millions of gamblers playing from home. For example, if a site is blocked, it creates a copy of itself, which can still function without any issues until it is blocked, and a new copy is created, repeating a continuous cycle. As part of an attempted crackdown on these illegal mirror domains, the government even temporarily blocked access to Google last year, accusing it of linking to a banned online gambling domain.

All of this means that online gambling is still alive and well in Russia – just below the surface of mainstream life.

Comparing the online gambling situation in Russia and the UK, it appears that the demand for gambling is the same – but the law couldn’t be much more different. Russia’s hardline approach contrasts strongly with the freedom gamblers have in the UK. This is largely thanks to online gambling operators providing an experience that increasingly replicates the real thing. Online operators are able to provide players with high quality games in the comfort of their own home, often making them more appealing than a trip to a land-based casino.

At leading online casinos, the gameplay is even more realistic as they use studios with real dealers via live streaming. It’s much better experiencing it first-hand and a good place to play live roulette, blackjack or baccarat is this state of the art internet casino.

Driving gambling underground

Organised crime units profit in the underground casino scene

The final issue with Russia’s stance on gambling is the fact that illegality only drives gambling underground. In the absence of gambling regulation, organised crime steps in to run the game, and of course these forms of illegal aren’t taxable. With a World Cup around the corner, there are plenty of worries that not only Russians but international visitors could be targeted by criminals who seem to be legitimate, especially if visitors aren’t aware of gambling rules in Russia.

The trouble with trying to convince the Russian government, and especially Putin, is that they have actually had legalised gambling before, and they feel it didn’t work. Despite happening in a different era altogether, the alleged pressure and advertising put on young people in the 1990s and early 2000s is seemingly enough to opt for a severely restricted model, and one that promotes underground gaming and doesn’t open up a developed economy to the advantages of a taxed gambling system.

With a fresh Putin presidency ahead, it looks like the current gambling situation won’t be changing anytime soon.

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