Russia: Proposed gambling zones see an increment in prices
Real estate prices in two of the four zones designated for legal gambling, set to come into existence in mid-2009, have seen a spectacular rise since the beginning of the year.
Under a new anti-gambling law, which received President Vladimir Putin’s official approval December 31, gambling in Russia will be restricted to four zones from July 1, 2009. Elsewhere in the country, gambling will become illegal.
The positioning of the zones - the Baltic exclave of Kaliningrad, the Primorye region, the Siberian Altai region and the southern Krasnodar-Rostov area - raised eyebrows when it was first announced in December.
Besides the Primorye region, which already attracts a large number of gamblers from nearby China, the economic logic behind the selection of the other zones seemed unclear. Investors, however, now appear keen to get on board the potential gaming boom, which has caused real estate prices to skyrocket.
One of the intended zones, a 1,000-hectare site by the Sea of Azov, on the border between the southern regions of Rostov and Krasnodar, has seen real estate prices shoot up tenfold in recent weeks, Vedomosti reported Thursday. This is despite the fact that civil servants will only settle on the exact parameters of the zone in early February.
Private businesses are expected to invest up to us$ 2.5 billion by 2010, with the government putting in us$ 500 million for initial infrastructure, Krasnodar Deputy Governor Alexander Remezkova said in a statement published on the region’s official web site.
The reports of a meteoric price rise in the Krasnodar-Rostov zone followed similar news from Altai, where another of the gambling zones will be situated. With investors from all over Russia looking to buy up land for potential hotel redevelopment, prices have quadrupled in the village of Solonovka, on the edge of the intended zone, Rossiiskaya Gazeta reported January 11. Former inhabitants have even begun returning to reclaim any land they once owned, local news agency Amic reported.
Describing the proposed site as little more than a cluster of typical Russian villages, Alexander Smirnov, director of the Altai-based Tourist Agency Plot, expressed incredulity at the expected rate of change. "Its difficult to imagine that this will become a Russian Las Vegas, but that’s what they’ve said will happen”.
Lavrenty Gubin, spokesman for Storm International, one of the country’s biggest gaming companies, which runs the Super Slots chain and several Moscow casinos, said his company had no intention of venturing into the gambling zones before carrying out marketing research.
Also, although foreign gaming giants are backed by the necessary financial resources, they will not be prepared to risk investing in the zones without guarantees that the gambling law will come into effect and with the limited infrastructure in place, Gubin said. "This is Russia, and anything could happen. It is obvious that these zones are not going to start functioning in 2 1/2 years," he said.
However, supporters of the gambling law see it as a way to wrest control of the industry from the criminal elements that controlled it during the ’90s.
Uprooting the gaming industry piecemeal and relocating it to remote locations, with the state able to determine how any new operating contracts are divvied up, will give the industry a clean start, proponents of the move argue.
The Moscow Times