Azov City liquidation: reasons, consequences, and hope for future

26.12.2018

Azov City, a gambling zone located in the Krasnodar Territory, will be closed on December 31, 2018. The State Duma adopted this bill two years ago.

The article explains why the popular gambling zone will be closed, how it will affect personnel and local citizens, as well as what will be placed in the Azov City territory in the future.

Development of Azov City

Azov City was Russia’s first gambling zone established when the country imposed a gambling ban.

It has Oracul casino as well as Nirvana and Shambala gambling venues. Besides, there are a lot of hotels, restaurants, shops, and spa centers.

The gambling zone became popular among tourists and had a positive impact on the infrastructure of Kuban’s Scherbinovsky Region: for example, prior to the establishment of Azov City, the territory did not have comprehensive hard-surfaced roads.

According to the Department of Strategic Development, Investment and Foreign Economic Activity of the Krasnodar Region, Azov City was attended by approximately 600,000 people in the first four years of its operation. Moreover, about 1500 people were employed.

Reasons for zone closing

Despite the positive dynamics, in 2014, one offered to close Azov City because Dmitry Medvedev introduced a project on opening a new gambling zone in Sochi’s Krasnaya Polyana.

Although citizens of Sochi were aware of crime growth in the region, the gambling zone was built. However, according to the gambling law, one entity can have only a single gambling cluster. Therefore, the State Duma adopted the bill on Azov City liquidation in 2016.

As part of the roundtable in Krasnodar, Maxim Smolentsev, the owner of Shambala, expressed an opinion that a Singapore-based offshore called Domain, an operator of Sochi’s casino, would benefit from Azov City closing.

What will zone liquidation lead to?

According to David Baginyan, Deputy Director of Marketing at Shambala, the object shutdown will result in social disaster.

Consequences for region inhabitants

The main challenge for residents of Scherbinovsky Region is job losses. David Baginyan says that Azov City has around 1500 employees now, and it is too difficult to find another job.

The expert believes that after zone liquidation, citizens will have to move to other places, searching for jobs, and the region will simply become empty.

At the same time, Sergey Tsirulnik, Head of Scherbinovsky Region, states that the reduced staff will receive all due payoffs. Besides, some employees have been offered employment at a new gambling zone in Sochi.

RGW: Azov City liquidation: reasons, consequences, and hope for future 1

Tax losses

Dmitry Malaychik, a legal adviser at Royal Time Group Investment Company, mentions that Azov City is the only venue that has succeeded in the Scherbinovsky Region.

The gambling zone provides the region’s budget with 500 million RUB annually. That is why the Azov City liquidation will negatively affect the region development because of losing the essential part of taxes.

Investors’ losses

The closing of Azov City will cause huge losses to investors. Billions of RUB were invested in zone construction.

Shambala will lose 3.3 billion RUB, while Royal Time Group’s damages will reach 3.6 billion RUB.

As soon as the bill on Azov City liquidation was adopted, investors addressed the authorities, requesting compensations, but they failed to succeed.

In December 2018, it turned out that investors would receive compensations in case of gambling zone liquidation. Nevertheless, the bill treats Azov City as an exception: the new changes are not applied to this gambling zone.

What will be built on Azov City location?

Currently, the authorities of Kuban are discussing a solution for job losses and an application of Azov City infrastructure in the future.

Pavel Sokolenko, a representative of the Communist Party of the Russian Federation, has already offered to redesign the gambling zone into an industrial park.

The final decision on this issue is not yet accepted, but Yury Burlachko, Chairman of the Legislative Assembly of the Krasnodar Territory, offers to consider the offer, as such a solution will allow to save jobs in the region.

Moreover, Enel Russia reports that it is going to build its own 90MW wind park in the gambling zone territory.

Does Azov City have any chance to survive?

Representatives of Russia’s gambling industry believe that Casino Sochi and Azov City do not compete: zones are aimed at different audiences, without interfering each other’s operation.

Resident companies and investors ask the authorities to introduce amendments to the legislation in order to permit two gabling zones in a single region. But this suggestion was met with silence.