The new law states that there are two types of zones where gaming will be allowed in Russia. The first will be gaming in residential areas, which will be permitted in locations allocated for urban and rural development. Licences will be issued by the government for the development of gaming businesses in these areas in coordination with local authorities. These will be valid for five years and will allow each operator permission to establish just one gaming facility per licence. The second type of gaming zone will be established on land owned by the federal or municipal authorities and not allocated for urban or rural development. These areas of land will be leased to operators by the Russian government.

The Bill is clear that operators must be Russian companies and not state-owned. In order to open a casino, a bank security of US$22.4m will be required in net assets. Any existing businesses that do not meet the requirements set out in the draft Bill will have until July next year to wind up their businesses. Those that do meet the requirements will be able to operate without special permits until the new law is imposed in January 2009.

Understandably, this will have a devastating effect on the gaming industry in Russia, which has proliferated in the past decade and which is inundated with small operators, many of whom will fail to meet the new requirements.

Putin’s government has made it clear for some time that it wishes to clear up the gaming industry and the threat of this new law has already had a negative effect on machine sales in the region for at least a year.

According to other details in the Bill, only four kinds of gambling activities will be permitted in Russia from 2009: casino activities, slot halls, totalisers and bookmaker offices. Such organisations must be set up and managed based on the following principles: licensing, net-assets requirement and obtaining a customer quota. The quota system was introduced to decrease the number of gamblers. The quota for gaming institutions will be determined for every region of the Russian Federation depending on the number of citizens in its territory. Winnings must comprise no less than 80 per cent of play.

The rules will mostly affect Moscow, St Petersburg and Volgogradand, and also threaten to place severe restrictions on the siting of machines – ensuring gambling-free zones within a certain distance of schools and churches. Some believe this crackdown was simply inevitable. After all, not many markets have seen such a free-for-all, where casino slots can be placed in street locations with very little supervision or protection for the underaged and vulnerable. Hardly surprising, then, that neighbouring markets such as Ukraine or Kazakhstan are now catching the eye of the international machine supplier.

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