Russia Poker & Gambling Bill approved by Duma

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.

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