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The projection of the new federal law which imposes a state monopoly on gambling businesses and creates special gambling zones may result in the loss of a considerable part of the regional budget’s profit.

The law, proposed by Russia’s President Vladimir Putin and voted for consideration by State Duma deputies on October 19, suggests creating four special zones allowing casinos, bookies and various gambling machines, with two zones in Russia’s western part, one in Siberia and one in the country’s Far East. The project will be considered by the State Duma deputies in its first reading at their regular session on Wednesday.

The new federal gambling law, proposed by Putin on October 6, is comprised of three stages to be implemented within a two-year period. According to the project, the first stage requires that all small gambling businesses should be eliminated by July 1, 2007, allowing only companies with assets over 600 million rubles ($22.5 million) to remain. At this stage, the project also prohibits gambling through the Internet or any other means of telecommunication.

The project’s second stage involves the distribution of state licenses to companies allowing legal gambling. Finally, starting on January 1, 2009 all gambling businesses are to be relocated into the appropriate zones, which can be both outside the cities residential areas and within them. All gambling businesses outside the licensed gambling zones will be closed.

According to the State Duma speaker Boris Gryzlov, Vladivostok might be one of the places intended as the gambling zone in the Russian Far East. However, the city is unlikely to become the local Las-Vegas, and the territory more likely to be chosen is in the Khabarovsky region bordering China.

In Primorye, gambling businesses bring a decent profit to the regional budget. This year, the regional Duma deputies passed a law which increased the gambling taxes by 500 percent, which has resulted in an additional monthly supplement of 4.5 million rubles ($168,856) to the regional budget, with each gambling table giving an estimated 125,000 rubles.

In the region, a total of 3,781 gambling machines are registered as of this year, with 56 licenses being distributed over the past ten months. The casinos and gambling house visitors are mostly residents of Japan, China and S. Korea.

“Casinos, like it or not, are the tourist centers, and as a tourist city Vladivostok receives much profit from foreign visitors from China and Japan,” Nelly Sokolovskaya, director of the casino ‘Primorye’ said, Zolotoy Rog business weekly reported. “If the casinos are removed, the region risks losing a source of financing, with gambling businesses, as well as hotel, restaurant and souvenir businesses losing their profit,” she emphasized.

This June, Primorye's Governor Sergei Darkin signed into law putting regulations of the gambling industry in the region, stating that casinos, bookies and various gambling machines are prohibited from public places, residential houses, shopping malls, market places, railway station buildings and airports. The law stipulated that the owners were to remove gambling machines from prohibited public places within six-month time.

From the Vladivostok News and Zolotoi Rog Business Weekly