Lyubov Loginova, Chairman of the Board of Alsart Group for Vegas Magazine

The fact remains that the industry is currently practically unregulated and gives huge scope for the unscrupulous and dishonest companies.
It is important to understand that the measures taken by the state to regulate gambling business are not aimed at total elimination of the industry. It is obvious that the business that annually generates just for Moscow budget alone over 6 billion in tax revenues (in 2009) must not be disfavored by the state.

That is to say that the widely discussed measures to tighten gambling regulations, in particular, the introduction of criminal liability are merely a factor moving the industry to a new stage of development – a more orderly and transparent stage for the market participants.At the moment the legal business is limited to the four zones with clearly unsuitable territorial segmentation. Now no one would dispute this statement – just consider what happened to Rostov section of Azov City. The consequent quick decision to relocate the zone has shown that practicality of planting “las vegases” away from high tourist traffic areas and more or less developed infrastructure is out of the question.

Now much has been said that the selected locations are of no interest even to Russian, let alone foreign investors. Development of any of the areas would require a pool of investors with a wide range of specialization – from construction to building roads. In this case any investor would want to see guarantees and, of course, projected investment returns, if any.But the precedent of the gaming zone relocation and in-limbo status of those who have already invested in the development of Rostov section of Azov City cannot but cause concern from even those interested to get involved in the zones’ development.In my opinion, the best solution would be for the government to grant state guarantees to the investors involved in the development of gaming zones. This practice has long existed and in fact it heightens the interest in investments.

Unfortunately, Russia has no proven track record in the creation of such gaming zones. The practice makes perfect and it’s a long way to go.Hence we see the need for a large foreign investor to enter the market and get involved in comprehensive gaming zone development. Consequently the non-core investors will be quickly “tailored” to provide the maximum development of related infrastructure.The choice of the location for gaming zones essentially turned out to be a major stumbling block to investments in view of virtually guaranteed absence of tourist traffic. Had the gaming zone been located, say, in Sochi, in principle no financing challenges would arise.Incidentally, one of the reasons why major hotel chains are not willing to invest in the Olympic capital, is precisely the inability to arrange hotel based casinos, which have always and in all countries been a major source of hotel revenues. Although as likely as not that the policies with regard to Sochi will change, considering the instance of relocating Azov City gaming zone.Getting back on topic of gambling business prohibition and its survival in the restricted zones, it should be noted that even the restricted last resorts are unlikely to meet the public needs. Remember the era of gaming houses despite their location they were always crowded. Demand creates supply – hence the existence of illegal “Internet clubs” and other schemes for gambling business operation generating no revenues for the state treasury.

Ban on gambling business was primarily intended to safeguard the socially vulnerable groups – the young and rising generation, which is absolutely appropriate. In many European countries only persons over 21 are allowed to visit gambling establishments. It is clear that such limitation would hardly work in Russia.In fact the youth and the elderly wouldn’t go to the casinos even before they were banned, preferring smaller facilities or outdoor slot machines, while the casinos were the main source of the state revenue from gaming business.

Thus, I would like to stress once again that the current uncertain and ambiguous status of gambling industry is transitional and cannot last long. The state can’t afford disfavoring the industry that generates multimillion-dollar revenue for the budget, so the way to put it back on the legal track will be found in the near future.For the state the best way out of this legal deadlock would be to establish state-owned casinos, national lottery operator and partly state-owned gaming houses. This would solve the taxation problem, revenue would go to the treasury, underground businesses would hardly survive as for the gamblers there would be no sense to visit underground, hidden rooms, whereas next door there are open bright casinos, where one can have fun without fear of being arrested by the police. Many countries have resolved the issue in this manner and quite successfully.It is also important to point out the need for regulation of Internet casinos and any games in the cyberspace. Complete legal anarchy currently causes huge capital outflow abroad, as well as online fraud and loss of tax revenues.

Vegas