Casinos Pushing to Avoid Moscow Ban

bloombergBoettcher's Jazz Town casino on Taganskaya Ploshchad. The city had 33 casinos and 574 gaming clubs in March.
Ibragim Ibragimov stands glued to the flashing lights of a slot machine at the X-Time club in Moscow as he pumps in rubles and tries to match three toadstools, girls in swimsuits or Egyptian treasures to win a jackpot.

"I like it for the adrenaline rush," said Ibragimov, a 50-year-old building foreman who visits the club at least once a week.

That thrill has created about 3 million gambling addicts in Russia, according to the NarcoDen rehabilitation center in Moscow, and it sparked a drive by Prime Minister Vladimir Putin and President Dmitry Medvedev to banish gaming to four special zones in the country's hinterlands by July 2009.

Russia's two biggest gambling companies, Storm International and Ritzio Entertainment Group, are fighting back, saying they will move their casinos and the taxes they generate abroad if the rules aren't relaxed. Gambling revenue quadrupled to 185 billion rubles ($7.8 billion) in the six years through 2006, according to the Russian Union of Industrialists and Entrepreneurs.

"We need a balanced regulation and not a total ban," said Oleg Boiko, 43, the billionaire owner of Cyprus-based Ritzio, Eastern Europe's largest slot-machine operator. "It would take years to create the zones. The chosen territories are remote and lack infrastructure."

Russia has 360,000 slot machines, the most in the world after Japan and the United States, a according to market research firm Taylor Nelson Sofres.

The number of gambling addicts may drop by two-thirds once gaming halls and casinos are moved to resorts on the Pacific Coast, the Baltic exclave of Kaliningrad, Siberia's Altai region and around the Azov Sea in the south, NarcoDen estimates.

The Kremlin says the legislation is designed to stop young people and pensioners from wasting their money. Industry leaders argue, however, that banning gambling will only push it underground.

Moscow had 33 casinos and 574 gaming clubs with slot machines as of March, according to the city commission that oversees gambling.

The X-Time club on Smolenskaya Ploshchad has 150 machines costing anywhere from 1 ruble to 200 rubles ($8.50) to play.

Aldar Boldyrev, 19, has been gambling for two years and spends around 5,000 rubles ($210) per trip. His biggest win was about 100,000 rubles ($4,200) and most painful loss 80,000 rubles.

"Of course we'll miss the clubs," said Boldyrev, who studies in the Plekhanov Russian Academy of Economics in Moscow. "It's just an adrenaline rush, like sex. You can't stop."

Some companies are converting their premises to retail stores amid a boom in consumer spending. Ritzio, which owns the X-Time brand, is building jewelry stores, perfume shops and supermarkets in Russia as it plans gaming clubs abroad.

Storm International opened a casino in Armenia earlier this year and plans another in Costa Rica. Storm is also moving into jet- and yacht-chartering services, chief executive Michael Boettcher said.

"If the law doesn't change, we'll leave Russia," said Boettcher, a 60-year-old Briton.

Ibragimov, married with two children and a granddaughter, goes to clubs whenever he has free time. His biggest win, he said, was 170,000 rubles ($7,200).

"I will just stop playing if they close all clubs," he said. "Maybe it's the right thing. There are many careless people, and it won't be a big loss."