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. Last Updated: 07/27/2016

First Limits on Gambling Kicking In

It was one of the most famous illegal gambling dens in the Soviet Union: a small, unassuming apartment near the Taganskaya metro station that drew inveterate gamblers from across the country.

"Everyone knew where it was," said Valery Zheleznyakov, an old-school card shark known on the poker circuit by the nickname Partizan. "Even the police knew. But they never closed it because they liked to know where the criminals were."

Come Monday, finding a place to gamble won't be quite as difficult as in Soviet times, when gambling was forbidden altogether. But it will be more trying as the country moves toward a nationwide ban.

The first restrictions under a gambling law passed in December will come into force Monday, and there are signs that illegal gambling dens are beginning to spring up.

"In Krasnoyarsk there are already five or six illegal casinos and dozens of illegal slot clubs," said Michael Boettcher, CEO of Storm International, a casino group that operates the Super Slots chain and several casinos, including Moscow's Shangri La. "Every time you try to ban something it goes underground."

The restrictions will make illegal any slot machine hall occupying less than 100 square meters and operating fewer than 50 slot machines, in an effort to prune the industry ahead of a nationwide prohibition in all but four approved reservations.

The owner of a gaming hall will also be required to have capital of at least 600 million rubles ($23 million), and casinos will need to occupy at least 800 square meters and have at least ten gambling tables.

The total ban on gambling is set to begin on July 1, 2009, across the country except for reservations in the Kaliningrad, Altai, and Vladivostok regions, as well as one on the border of the Krasnodar and Rostov regions.

The new regulations have already had a sweeping effect on the gaming industry.

Moscow will have 33 casinos and 401 legal gaming halls as of Monday, said Valery Ivanov, deputy head of the city's commission on the gambling business. Last year there were 2,000 slot halls alone and almost 800 casinos.

"In a year's time, in my opinion, the gambling industry will be 20 percent of what it is now," said Yevgeny Kovtun, an industry expert at the Gaming Business Association.

Gambling proponents say the law threatens to destroy a reputable industry worth $5.5 billion annually that helps fill tax coffers, while critics say the industry has been incapable of regulating itself and exploits those who can least afford to play.

And with the Monday deadline looming, gambling establishments that don't meet the new standards are working around the clock to cash in before they're shut down, said Alexei Galaguzov, head of the Urals Association for Development of Gaming Business.

Some will stay open anyway, perhaps operating only in the evening to keep their one-armed bandits away from the long arm of the law, he said.

Some 2,000 people in the Urals have lost their jobs already, and the Sverdlovsk region will lose up to 40 per cent of its tax revenues, Galaguzov said.

The eventual nationwide ban has widespread public support, a legacy of the chaotic and brash way the gambling industry has expanded in recent years.

The first official casino appeared in Moscow in 1989 in the Savoy hotel, and the number of casinos and slot machines grew steadily in the 1990s.

It was only after the federal government took regulatory powers away from regional governments in 2002 and gave it to the Federal Agency for Physical Culture and Sports that the number of casinos and slot machines exploded.

Slot machines appeared on the streets, in shops, in youth centers and underpasses and in seemingly whatever small space could be found, complete with a neon tastelessness and relentless dinging that knew few boundaries.

Some in the gambling industry praise the first stage of the new law as a way of clamping down on the industry's unregulated side.

"For at least ten years the gaming society had cried for federal powers to bring order to the gaming business," said Samoli Binder, deputy head of the Association for the Development of the Gaming Business.

"The places that are being shut down are the places that should never have been allowed to have opened in the first place," Boettcher, the Storm International head, said.

They are less happy, however, that the new law has inspired attempts to ban gambling even before the law comes into force.

"As of July 1 about 20 regions will close down gambling," Kovtun, the industry expert, said.

Slot machines will be banned completely in the Moscow region and St. Petersburg as of Jan. 1.

State Duma Deputy Alexander Lebedev, a long time opponent of Moscow mayor Yury Luzhkov, is collecting signatures to support an immediate ban on gambling establishments in Moscow -- not in 2009.

Such a ban would "protect millions of Muscovites who live on the poverty line because of direct robbery," Lebedev said.

"The rich people who cannot refrain [from gambling] can spend some money and travel," Lebedev said, claiming that he has the support of 96 percent of city residents.

Binder dismissed criticism as media hype over a "fictional babushka who has lost her pension" gambling.

Meanwhile, some in the gambling industry are actively seeking ways to skirt the law.

Poker was officially recognized as a sport three months ago by the Federal Agency for Physical Culture and Sports, said Dmitry Lesnoi, head of the Russian Poker Federation. This status will allow poker to be played -- for fun, not for money -- in sports halls around the country even after 2009.

Lesnoi insists these post-ban poker games will not involve gambling, stressing the intellectual nature of the game.

"It is a game of skill, not chance," he said. "Like chess."

Lesnoi saying the new law is a chance for poker to change its image.

"Twenty years ago, billiards had a reputation as a sport for con men," he said.

Companies have also been created to allow smaller slot halls to circumvent the new restrictions, said Oleg, a manager at one such company.

Smaller slot halls can join up as part of a single company, pooling their financial resources to reach the required amount of capital and avoid closure, Oleg, who declined to give his last name, said.

Where exactly the industry will be in 2009 remains a mystery. Experts say people are unlikely to travel to the four regions to gamble, and that many casino and gaming hall owners will set up shop abroad.

"Why would anyone go to Altai when he can go to Monte Carlo," Zheleznyakov said.

And the prospect of such treks could prompt people to seek out places like that old apartment on Taganskaya.

Twenty-five percent of those who frequent gambling establishments said they would be willing to go to illegal gambling dens, according to a VTsIOM poll conducted earlier this year.

"They will play no matter what the law is," Lesnoi said. "It's part of human nature. You can't take a toy away from a child."