Europe

Las Vegas on the Black Sea? Putin's Weird Economic Plan for Crimean Casinos


The Russian navy moored in the bay of the Crimean port of Sevastopol on April 1

Photograph by Olga Maltseva/AFP via Getty Images

The Russian navy moored in the bay of the Crimean port of Sevastopol on April 1

Russian President Vladimir Putin has crusaded against gambling, calling it a dangerous addiction and a magnet for organized crime. He even backed legislation in 2006 that shut down most of Russia’s casinos and slot-machine parlors. So guess what Putin is planning in Crimea?

Putin asked Russia’s parliament to designate the newly annexed Black Sea peninsula as a “gaming zone” where casinos could operate legally. Dmitry Peskov, Putin’s spokesman, declined to comment on the plan, which was posted on the parliament’s website on Monday. It’s part of an effort noted by Bloomberg News last month to make Crimea less reliant on subsidies from Moscow. The region is expected to run a 55 billion ruble ($1.5 billion) budget deficit this year and may receive some $2.8 billion of emergency subsidies, an expense the Russian economy can ill afford.

Crimean gambling isn’t likely to produce a revenue windfall. To succeed, casino developments need “large, nearby pools of players who can travel there,” says Andrew Gellatly, the London-based head of global research at industry research group GamblingCompliance. Take the Californians who gamble in nearby Las Vegas and Chinese who flock to the coastal enclave of Macau. “You have nothing like that in Crimea,” Gellatly says. The peninsula has “no road connection at all” to the Russian mainland and is far from any major city.

The Kremlin has discussed plans to build a bridge between its new peninsula and the mainland, but that could take several years—and even then Crimea remains almost 900 miles from Moscow. What’s more, Gellatly says, prospective investors in casinos “are not interested in any place that doesn’t have political stability.”

Russians are avid gamblers. But that didn’t stop Putin from spearheading a crackdown in which he called gambling “no less serious than dependency on alcohol and drugs” and had it outlawed across most of the country. Gambling is legal in only four designated border zones, and the sole casino currently operating in Russia is in Azov City, about 200 miles northeast of Crimea.

After the 2006 gambling crackdown, Storm International, a Moscow-based casino operator, moved into such former Soviet republics as Armenia, Belarus, and Georgia. A spokeswoman for Storm declined to comment on whether the company might consider operating in Crimea.

Storm’s casinos and the Azov City facility have struggled because they’re in locations that offer few other tourist attractions. “Russian high rollers are more likely to gamble in London or Monaco than in one of the former Soviet republics,” Gellatly says.

Matlack is a Paris correspondent for Bloomberg Businessweek.

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