Russia approves gambling zones in Crimea and Sochi

By Brad Allen
The Russian State Duma has passed a new law establishing gambling zones in Crimea and Sochi.

The law is intended to boost the struggling economies, particularly in the newly annexed region of Crimea, which currently costs Russia $3bn a year to maintain.

"The creation of a gambling zone in the Republic of Crimea will help attract additional investment to the region, create new jobs and replenish the revenue base of the regional budget.” said Anatoly Karpov, deputy chairman of the Duma’s Economic Policy, Innovation Development and Entrepreneurship Committee.

Gambling in Russia was restricted in 2009 with four exempt regions designated as gambling zones.

The exact location of the new zone will be decided by local Crimean authorities, but the Black Sea resort city of Yalta is the likely destination.

Crimean deputy prime minister Rustam Temirgaliyev claims that the region has already attracted $1.5bn in private investment.

However, Pyotr Kuznetsov, a pioneer of gambling in Ukraine, told Forbes earlier this year that not only does the region lack the necessary infrastructure but that it is "unrealistic" to think the region could attract the required volume of investment.

He added that the territory's current gambling facilities, consisting of casinos in major cities and coastal gambling machines, were mainly used by holidaying Ukrainians who were unlikely to visit the area now it has been claimed as part of Russia.

Jonathan Galaviz, a partner at casino consultancy firm Global Market Advisors said that the Sochi gambling zone made more sense than Crimea.

“The infrastructure built in Sochi due to the recent Winter Olympics is significant and would support tourism growth,” said Mr Galaviz. “It would be important for Sochi to approach the casino gaming issue in the same way Vladivostok did – with transparency and structure.”

Vladivostok is rated by Goldman Sachs as the most successful of the four existing gambling zones, thanks partly to its exceptionally low taxes.
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