Gambling in Russia: results of the year 2014

Gambling zones in Russia

Eight years ago, the deputies of the State Duma adopted the law "On state regulation of the organization and conduct of gambling and on Amendments to Certain Legislative Acts of the Russian Federation". The idea was bold: firstly, clean the Russian cities from casinos; secondly, develop backward regions of the country using gambling industry. Therefore, areas for the construction of future casinos were allocated in the open field, far away from major cities.

The construction of four gambling zone was planned in 2006:

1. Altai Krai - Siberian Coin.

2. Kaliningrad region - Yantarnaya.

3. Krasnodar Krai - Azov City.

4. Primorsky Krai - Primorye.

The State Duma made amendments to the Federal Law "On state regulation of the organization and conduct of gambling and on Amendments to Certain Legislative Acts of the Russian Federation" on July 22, 2014, which provided the creation of two gambling zones:

5. Crimea.

6. Sochi.

It should be noted that in 2006 many experts of gambling business doubted that Russia would be able to repeat the experience of the American Las Vegas, but nevertheless the decision was made. Let's see what happened in these gambling zones this year and what prospects they would have in the future.

Azov City

Azov-City is the most successful gambling zone at the moment. The first casino Oracle was built by the Kazan company Royal Time Group in January 2010. The area of the casino that time was around 4000 m2. In September 2010, this company launched the second phase of the project, and on November 1, 2014 the third phase of the project was finished with an opening of the entertainment complex Oracle with an area of 7900 square meters, which included new casino halls for 40 gaming tables and 850 slot machines, hotel with 90 rooms and SPA center.

The company Royal Time Group totally invested 2.3 billion rubles in the project, and their affairs are going not bad - attendance increases every year and tax payments increase, respectively. For example, 400 thousand players visited the casino Oracle in 2013, visited in this year their number reaches 600 thousand, and the forecast for 2015 is up to 1 million visitors.

Therefore, the Royal Time Group continues developing its business. Now a concert and entertainment complex is being built. It should be put in commission in the third quarter of 2015. In addition, preparatory works are held for the construction of the first phase of an integrated resort with gambling component of the total area of over 80,000 square meters, which will include 250 hotel rooms, casino halls and other services for a high-quality recreation of guests; as well as hotel and entertainment complex that covers an area of 45,000 square meters, and 15,000 m2 of them will be occupied by casino halls, and the remaining area will be used for more than 400 hotel rooms. The company estimates that the total investment in the first integrated resort will be about 10 billion rubles, and the sum for the construction of hotel and entertainment complex will be 7 billion rubles.

JSC "Shambala" is the second operator that works in this gambling zone. It opened two casinos: Shambala - in 2010 and Nirvana - in 2013. These casinos are smaller. Their areas are 1,400 and 1,500 square meters, respectively, and they cost about 175 million rubles. Currently the second phase of the project Shambhala is active. The area of the casino will be increased to 18,000 square meters. New restaurants, concert areas and five-star hotel with 120 rooms will be built. The investment will comprise approximately 1.5 billion rubles.

In general, Azov City is developing. However in the summer of 2014 investors almost had a heart attack. The Federal Law of July 22, 2014 "On Amendments to the Federal Law" On state regulation of the organization and conduct of gambling and on Amendments to Certain Legislative Acts of the Russian Federation" implied the elimination of Azov-City due to the opening of a gambling zone in Sochi.

Of course, Sochi is more prospective from point of view of the gambling business compared to Yeisk, but after the closing of Azov City two and a half thousand people would lose their jobs, and the budget would lose 10 billion rubles of annual income, and reputational costs - who wants to invest money in the construction of casinos, if in a few years they could just be closed? Taking into consideration these circumstances, it was decided not to disturb the gambling zone Azov City.

Siberian Coin

The gambling zone Siberian Coin is physically located in the Altai Krai, not far from Barnaul. It is bordered by the tourism and recreation zone "Turquoise Katun" and they share common communications and infrastructure. The initial project of the entire gambling zone involved the construction of 15 casinos, 30 hotels for 3,000 visitors and 10 gambling and entertainment complexes. Thirty billion rubles of investments is expected to be attracted to the construction of the gambling zone.

Three companies are operating in the Siberian Coin: the company Alti from Kemerovo, RTG Siberia that is a subsidiary enterprise of the Kazan company Royal Time Group and JSC Energy M from Yoshkar-Ola.

Energy M surprised the public: in December 2011, the company won the right to lease 6.6 ha for the construction of hotels and casinos, provided the project and made an agreement under which it was obliged to invest 580 million rubles and completed the construction until 2015. However the company has not lifted a finger and the construction has still not begun.

RTG-Siberia became the operator in the Siberian Coin only in March 2014. Now the concept of a gambling cluster is being developed and the company promises to build casinos with hotels until 2019. "In November, we will complete the conceptual planning and start developing the project, and then determine the terms of construction, - said the representative of the resident Olga Khalitova. - RTG-Siberia pledged to invest 1.1 billion rubles in the construction of an entertainment complex, but, according to specialists of the company, the volume of the investment may rise by half during the realization of the project. The activities of Royal Time Group in the Azov City persuade us that these promises should not remain just empty words.

And the company Alti finally pleased its players this year: on November 1 it opened the first casino of the Siberian Coin called Altai Palace. Or rather, not even the casino was opened, but just the first halls: now casino hall with higher bets is available for players, where there are nine tables for roulette and card games, 50 slot machines and three small VIP-halls with two tables for roulette and card games in each of them.

Another gambling hall for games on low bets of 1 ruble was opened on December 26 at Altai Palace was opened, and Alti promises to open in March-April 2015 the entire hotel and entertainment complex that is located on an area of 7000 square meters and includes a large hall, the hotel "Four Stars" with 100 places for accommodation, a gym, a restaurant with 120 seats and a SPA.

Thus, changes in the Siberian Coin are clearly visible in 2014, and the first 500 people have been already able to play in the new casino.

Yantarnaya

For this gambling area 2014 was also a decisive year. According to experts, Yantarnaya was the most attractive of four initial gambling zones. It seems that this zone possesses all properties to attract investors: good location almost in the center of Europe, sandy beaches of the Baltic Sea, excellent infrastructure potential of the region, unique amber deposits... Eight years ago, it seemed that the first casino would operate here, but nothing of this kind happened.

Originally selected areas were not attractive for investors. Experts from Germany and Austria, who came to assess the prospects of the construction of the gaming and entertainment center in the Yantarnaya carried a negative verdict: the rich players will not ride 50 kilometers on the broken dirt road to play in the casino "in the open field". And the military training center, located in the neighborhood, where soldiers are constantly shooting, does not increase the popularity of this zone.

Only in 2014 the authorities of Kaliningrad succeeded in changing the boundaries of the gambling zone by the addition of more attractive areas. Now Yantarnaya is located near the airport and just within 30 minutes drive from Kaliningrad. There is a railway station in the neighborhood, as well as developed transport and energy infrastructure. Thus the costs for the construction of communications in the gambling zone decrease significantly, and these changes immediately attract investors. The Kazan company Royal Time Group that is familiar to us thanks to the construction Oracle Casino in Azov-City decided to mark its presence in Kaliningrad. Its subsidiary enterprise JSC Group of STK Companies won the right to lease area of 99.5 ha.

The operator does not waste time. The international architectural company with a worldwide reputation Steelman Partners was involved in the work on a project of the gambling zone, and developed its concept together with the company AECOM. The project is called Amberland and it is designed for 15 years. It provides investment of 45 billion rubles. And in the middle of September, builders began to dig a foundation pit for buildings of the first phase of the construction of the entertainment complex, which would consist of casinos, hotels and restaurants. The second phase of the gambling cluster includes hotels, conference rooms, SPA centers and restaurants. In addition, an amusement park for children and adults, golf course and a park with a fountain will be built according to the project Amberland.

The developer promises that the first casino of Yantarnaya will meet its first visitors on September 1, 2015. We hope that the company Royal Time Group fulfills its promises.

Primorye

"Russian Macau" is the title of Primorye in the media. The organizers of the construction of the gambling zone are the Department of the International Cooperation and Development of Tourism of Primorsky Krai and the First Gambling Company of the East. The construction of the first phase of a gaming and entertainment complex was started in the spring of 2013, but shortly after that construction was frozen due to the lack of funds. In the spring of this year, funds were found and construction was resumed, and even accelerated: if in the spring on the place of the future complex there was only the foundation of the building, now capital construction is completed, utilities are laid and internal and external finishing works are conducted. Developers promise to open the first casino and hotel in May 2015.

The area for the gambling zone is chosen in accordance with international standards: the distance from the airport to Primorye comprises only 12 kilometers and it is 50 from the center of Vladivostok. The total area of this zone is 619 ha and it will be located on the bank of the Ussuri Bay, among the picturesque hills. And the gambling cluster occupies only one fifth of the area: "The gambling zone is not only hotels and casinos. The current international experience shows that the entertainment component will occupy about 20 percent of the territory of Primorye". Everything else is additional services: entertainment, family recreation, places for walking, splendid quay, exclusive shops that are attractive, especially for tourists from China, water parks, theaters and others. The list can be very long. The gambling zone Primorye will be the largest gambling complex in the territory of the Russian Federation. We left the rest of the world behind", - said the Deputy Director of the Department of the International Cooperation and Tourism of Primorsky Krai Konstantin Shestakov.

The gambling zone Primorye is unique among all the gambling zones in Russia. Firstly, it is designed for foreign players, primarily Chinese, Japanese and Koreans. Russian Macau is going to lure residents of Northern China, who do not want to spend eight hours on a flight to Macau in China, and this is, by the way, over a hundred million potential visitors. Besides, Primorye is built also by the Chinese. Two dormitories with all amenities were built for them next to the construction site. Finishing materials and elements of decor are also purchased in China.

Secondly, it is the only gambling zone in which a foreign investor is interested. It is a corporation Naga Corp from Cambodia. In December, employees of Naga Corp presented a project of the hotel complex in the future gambling zone, which was approved in the Administration of the Primorsky Krai. In the near future the company will develop a design and estimate documentation of the future complex, and then begin construction. Naga Corp is going to invest about $1 billion in the development of the gambling zone.

Crimea and Sochi

Gambling zones in Crimea and Sochi were established only in 2014. There is no doubt that gambling and tourism in Crimea have a very high potential (we discussed it in a separate article on Casinoz), but it is too early to say that the gambling zone on the peninsula is about to start its activities. It will take a lot of time and financial investments to create high-quality infrastructure and services that meet international standards. Investors know how to count money and will not work without any profit. Therefore, we will likely wait a few years for the opening of a gambling zone in Crimea, despite all the efforts of the federal and regional authorities to create a favorable investment climate.

In addition, keep in mind that the United States, Europe and Ukraine make efforts to make this investment climate less favorable. Recent events include additional sanctions from the US Administration against Crimea, termination of VISA and MasterCard payment services on the peninsula, cancellation of train and bus services to Crimea from Ukraine, problems with electricity and water. These events do not encourage investment in Crimea.

Now there is no even a determined place for a gambling zone in Crimea. The opinion of the President of the Multitour Company Alexei Vysokanov reflects the most precisely the current situation of gambling in Crimea: "The establishment of gambling zones will be an additional advantage for resorts, but global positive changes will not be seen immediately. It takes time to develop all that. The time is required to start building casinos, to make an advertisement of them and to attract visitors. In any case, this will last two or three years".

As for Sochi, the gambling zone there looks much more attractive that in Crimea from the point of view of short-term prospects. The infrastructure that is necessary to conduct gambling activities has been already created in Sochi and it is idle after the Olympic Games. Forty nine four-star and five-star hotels, as well as a variety of restaurants, shopping centers and clubs were built there. Everything that tourists need for their entertainment is present. At the moment, Sochi is able to accept 160 thousand tourists simultaneously. This is a great potential.

Therefore, promises of officials about the opening of the first casino in the spring, at the beginning of the tourist season, can be realized. For example, the mayor of Sochi Anatoly Pakhomov says that this will happen in May: "We now have open skies, we will most likely have 72-hour visa-free stay in Sochi next year and we will open the gambling zone in May. This contributes to this great interest in Sochi. "

Reliable information about the place of the opening of the first legal casino in Sochi is unavailable. Most likely the gambling cluster will be available in Krasnaya Polyana, where the "Gorky Gorod" is situated, which includes residential and commercial real estate with a total area of over 600,000 square meters, where the "Olympic Village" for media was situated. It will be cheaper to develop these areas for the gambling establishments than the area for the restaurant. And there are many other suitable buildings. So, we hope that everyone will be able to play in casinos of Sochi in the spring.

Illegal casinos

Since it is almost impossible to gamble legally in Russia (except for 3-4 official casinos in the gambling zones that are open nowadays), it is not surprising that underground casinos sprang up like mushrooms after the rain in all cities of the country. According to unofficial data, there are even more casinos than it was before the ban! For many players the fact that they play illegally turned into an additional source of adrenaline. Players feel engaged in some kind of a spy game when they have to play through the quest with SMS and checks for surveillance while visiting the casino, as well as recognizing themselves as members of a certain closed VIP club.

How does it work? An entrepreneur opens a usual Internet cafe - this business will look like that on paper. Then it is necessary to buy gaming Internet terminals, which are connected with network to a conventional PC, where administrator is sitting, or to special payment devices that receive and issue money. The administrator receives money from users, credits an account on the selected slot machine and issues winnings.

At the moment there is a popular option when the program of the online casino is downloaded to the terminal from a flash card at the beginning of the working day, then flash card is removed and hidden and devices operate as "slot machines". If the device is rebooted (in case of verification), a normal desktop without any traces of the previously launched applications of the online casino is seen. This makes the legal business of gaming terminals more secure.

It is also offered to avoid taxes: "Taxes are paid by online casinos in their offshore zones, and you also pay taxes as Internet cafes and authorized payment centers." The company that offers these services indicates that under the law the entrepreneur opens only an Internet cafe, where just access to certain content with the help of the terminals is provided.

Law enforcement authorities have closed more than 73 thousand illegal gambling establishments for just five years and confiscated 1 million units of the gambling equipment. The struggle against illegal casinos was very active in 2014. If you search for "illegal casinos" in Yandex, you can see reports about closing illegal casinos almost every day. However this does not help much. Underground casinos are of two types: low cost and luxury. And mainly the first ones are closed, because high-ranking officials can play in luxury casinos, and the police just can not dare to close them.

This year there were two events that would surely worsen the situation of illegal gambling establishments. The first event is the creation of a system of civilian control over illegal gambling business by the Public Council within the Ministry of Internal Affairs. It will start operating in 2015. How will it work? The special website kartakazino.rf has been already operating where any person can inform the Ministry of Internal Affairs about any illegal casino, map its location, as well as be able to see how the police respond to his information. In the future, these interactive maps will be integrated into social networks and mobile applications. Thus, the Ministry of Internal Affairs relies on concerned citizens.

The second factor that should influence the illegal casinos is the law on strengthening the criminal responsibility for the organization of gambling, including on the Internet, which in December 2014 signed by the President of Russia Vladimir Putin. This law provides penalties for organizing illegal casinos, including on the Internet: a fine from 300 to 500 thousand rubles or in the amount of income for a period from one to three years, compulsory labor from 180 to 240 hours, and up to four years of restraint of liberty or up to two years imprisonment. In addition, this law provides fines for organizing and conducting gambling games at bookmakers and betting without a license, outside gambling zones, as well as for gambling itself with the receipt of a large income.

It seems that the underground casinos will have hard times in 2015. It is not enough that new legal casinos are opened in the gambling zones, and draconian fines and real prison sentences will also add adrenaline in the life of the organizers of illegal casinos. And, of course, competition from online establishments becomes tougher.

Online casinos

The company Global Opinion investigated the Russian Internet in autumn 2014 and found that the number of gambling sites has been increased three types for the first 9 months. What is the reason of such a rapid growth?

It is not officially prohibited to play in online casinos in Russia, but as it is stated in the law, "activities for the organization and conduction of gambling, including the use of information and telecommunication networks and means of communications are prohibited". Therefore, all Russian casinos are registered in other countries.

An extraordinary event happened in the world of Russian online gambling in March: the Federal Service for Supervision of Communications, Information Technology and Mass Media (Roskomnadzor) banned access to more than fifty gambling resources, such as casinos, bookmakers and poker rooms, the best known of which are Pokerstars, Fonbet, Redkings, Patypoker, Betaway, Titancasino, Casinoeuro, and Titanpoker. Soon, however, it was forced to unblock them, since there was a gap in the legislation, which was beneficially used by online gambling resources.

The essence of this gap by the representative of Roskomnadzor Vadim Ampelonsky: "In accordance with the law" On information", before blocking a resource we must notify its hosting provider about it and give three days to remove illegal information. In the case of a change of the hosting provider, we have to go through this procedure again, that we have already made in regard to these resources". And the director for strategic marketing of the Internet Research Institute Irina Levova states the fact: "This case means a gap in the legislation. The owner of the resource present in the register of banned sites can achieve delisting for three days by changing the hosting provider, and then repeat this procedure".

Thus, the majority of new gambling online resources, appeared in 2014 in the Russian segment of the Internet, are not new players on the gambling market, but just copies all the same old online establishments of key market players, who circumvent the bloxking by Roskomnadzor or remove their business from the Russian domain zones. The share of absolutely new online resources does not exceed 20%, and most of them are fraudulent, made on a public script of online casinos, which can be downloaded by any user of the Internet.

Another extraordinary event in online gambling occurred in August: an unknown Indian company Amaya acquired two largest and most popular online poker rooms: PokerStars and FullTilt. Moreover, after the "deal of the century" Amaya announced its desire to become the undisputed leader in online gambling and made an advertisement of the creation of the online casino and bookmaker on the platform PokerStars. New software has been already developed for two platforms - mobile and stationary, which is adapted to all more or less popular operating systems, smartphones and tablets. This software has been already locally tested in Spain. Its weaknesses and shortcomings were identified. Now they are eliminated, and in early 2015 the players from all over the world will be able to play in the online casino PokerStars. Of course, this is good news for Russian players, because the new high-quality and trustworthy online casinos do not appear so often. The market is already divided between the major players, and now a new online casino appears, which promises to be one of the best even before the opening!

Conclusion

Let us make a summary. In 2014 we saw all the new laws on gambling and attempts to block access to foreign casinos and other gambling resources for Russian citizens. This was motivated by the struggle against illegal business and protection of citizens from the harmful effects of gambling. But in case of the struggle against illegal casinos in the country such a motivation has the right to exist, in the field of online gambling the struggle against gambling establishments looks like a clumsy attempt to stop the outflow of money from Russia abroad. Roskomnadzor has failed yet. Casinos have found the antidote, but who knows what thoughts will be born in brilliant minds of officials. It is also difficult to cope with underground casinos. Despite all raids and closing them their number does not decrease. It is likely that the new "draconian" law and the system of the civilian control over illegal gambling business, created by the Public Council within the Ministry of Internal Affairs, will be able to influence the course of the struggle of the state with this Lernaean Hydra.

Undoubted successes are visible in this year in the field of offline gambling. The third phase of the construction of the entertainment complex Oracle was launched in Azov City and the first casino Altai Palace was opened in Siberian Coin. Funds were found in Primorye and the major construction of the entertainment and gaming complex Mayak was completed. There are good chances that in the spring of 2015 the first casino will be opened there. And even in Yantarnaya there is a significant progress. The investor was found. The project was ready and finally the construction began.

Well, the new gambling zones in Crimea and Sochi can also be considered as positive results, taking into account that there is a nonzero probability of the opening of the first casino in Sochi in the spring.

Anyway, the year is almost over, and all events will take place in the new 2015 and the portal Casinoz will surely cover them. Now, let me wish you never lose hope for the best, be an optimistic, good health and, of course, good luck that is so necessary to all players!