Russian casino business zones are floundering with less than 10% of the 1.4billion rubles spent to establish them recouped. The government established the four zones more than five years ago with companies only choosing to set up two casinos in total in one of the four zones: Azov City. Russia’s Accounts Chamber report that: “More than 1.4 billion rubles of government funds assigned for the establishment of the Azov City gambling area is tending towards negative efficiency.”
Tax revenue has only born the government 7% of the original outlay and with no one clamoring to invest in the casino business it’s unlikely this will increase. A Ria Novosti article claims that the amount of “computer clubs” has increased by 50% in recent years with many choosing to take advantage of gaming industry laws that were once ambiguous. The odds and ends were tied up over the past 18 months and the heavy penalties, which can see you jailed for as long as six years, put many off from operating a gambling industry business altogether. This also meant players “began drifting off” according to Moscow Lotteries President Igor Dines, and he added: “The number of people ready and willing to play now is a fraction of what they were five years ago.”
At it’s current level, the market is quite clearly not sustainable but the casino zones were supposedly put in these areas for a couple of reasons. One was to eradicate gambling from urban areas whilst at the same time encouraging developers to invest in regions that they otherwise wouldn’t go anywhere near. There are problems that have arisen from the latter as well as the former. National Bookmakers Association President Oleg Zhuravsky told Ria Novosti: “Along comes an investor ready to sink $5 billion into a gambling area, an entertainment complex and a resort. And next to it springs up a kebab house with five slot machines or a tent with two roulette tables. Tell me, will a serious businessman invest in such projects?”
Hope could come with news over the weekend that Prime Minister Vladimir Putin’s majority has diminished but another overhaul of the rules could have a disastrous effect by putting off investors even more than they already have been. Observers are suggesting a new casino zone on the outskirts of Moscow or the possibility of something springing up around the site of the 2014 Winter Olympics site at Sochi.
