An interview with Evgueny Kovtun
Question: The pace of Russian gambling industry development is very fast now. Even 10 years ago in was hard to imagine such a situation. Do you consider it to be a positive trend?
Answer: It's my firm belief that the development of legally allowed activities is a positive trend. The gaming industry is mainly represented by small- and middle-scale enterprises, which provide new workplaces, tax proceeds and infrastructure development. At present more than 500 000 people work in the field of gambling and betting and some more hundred thousand people are employed in the related industries. All of them receive good salaries on a regular basis. Young people with new professions, i.e. managers in gambling houses, croupiers as well as economists and marketologists, enter the industry. A lot of former military men work in security services.
Question: What are the reasons for such a rapid development of the industry?
Answer: First of all, they are the changes in the gambling business licensing. In summer 2002 the right to license was passed to the State Sport Committee (today's Sport and Physical Training Agency) and the licensing procedures were changed. The process became more formalized and licenses – easier to obtain. The fact that the licensing body did not control the process practically at all, let the people, who had seen slot machines only in American movies, enter the business.
Question: What is the current number of slot machines in Russia?
Answer: About 220 thousands. May be, a bit more. It's less than in Germany, Australia, Great Britain, and the USA, but more than in Poland, Bulgaria and Canada. Actually, the number of slot machines or gambling tables is not that relevant, since Russia is different concerning its territory and economy.
Question: Does the state govern the number of slot machines?
Answer: Speaking about the world's practice I should say that there's no single approach. Every country has its own legislation. It's not quite clear how to govern legally the number of slot machines in Russia. Its territory is so vast that it's practically impossible to determine how many slot machines should be in Amur region or in Magadan. It might be possible but after a lot of time has passed. The gambling business has to acquire its own history. As for the prospects of development, it is quite probable that within the following two years the number of slot machines will cease to increase and "the gambling boom" will pass.
Question: The more the Russians lose the more taxes the state receives. Is it so?
Answer: No, in this country we have a system, according to which the tax rate per a slot machine is fixed. Income taxes of gambling houses are not collected and they do not depend on the players' losses.
Question: Is it necessary to change the present licensing procedures?
Answer: In my opinion, it is necessary to pass a separate Federal law, governing our activities and explaining in simple words all the possible restrictions and rules for businessmen rather than to change the existing rules themselves.
Question: Are you talking about the Law "About gambling houses activities", which was rejected by the Duma in autumn?
Answer: The fact that the Duma has rejected the project, is quite reasonable and welcomed by us. Actually, the law did not solve any of the existing problems in the industry. It would have led to a dead end.
Question: It's not a secret that the gambling business is very miscellaneous, a lot of small and middle companies operate there. What should be done in order to bring the sentiments in the field together?
Answer: Traditional mechanisms should be applied, and first of all different forms of self-organizations, including Industry Funds and organizations, which voice the opinion of business participants. Russian association "The World of Games" regards it as one of its key objectives. Last year the Declaration was passed, which not only highlighted business problems but also formulated ways and mechanisms of their solutions. We do our best to realize this document.
Question: What are the main obstacles preventing the business from developing?
Answer: First of all, it is the absence of precise legislation that governs gambling and betting. By the way, not only the business itself but also ordinary people suffer from it. Lets take for example so called "columns" (slot machines). They are everywhere: in subways, in shops and just in the streets. This process is being out of control now and a lot of people are really indignant with it. The slot machines are installed in the most inappropriate places, the personnel that should always watch the equipment is absent. Some careless businessmen do not pay taxes, and sometimes it's even impossible to find the slot machine owner. Such gambling business should not exist! The solution to the problem belongs to the sphere of legislation. Licensing and tax authorities as well as self-regulated organizations should control the situation. Such slot-machines exist all-over-the-world but they their use is only allowed in cafes and bars but not in the streets. Maximum stakes and winnings are limited in such slot machines, that's why it's impossible to lose a lot playing them.
The second problem is officials' incompetence. We have lots of examples when field checks of gambling houses result in court trials. In 99 cases from 100 tax authorities lose actions. It is a characteristic example of incompetence. And some individual officials have even made their own business out of the process of slot machines certification.
Inside the industry a very serious problem is represented by infringing products. Nearly half of Russian slot machines in the market are not certified and their operation might be unsafe.
Question: Is there any possibility to influence unfair businessmen with the help of law?
Answer: Licensing is of no use in this respect. It's impossible to define whether a businessman is fair or not at the moment of licensing. Unfair businessmen will keep existing in this industry just like in all others. A good remedy here is competition. It is also necessary to control the professional level of the personnel and to set legally allowed minimum amount of money at operator's disposal. And the most important thing to do is to establish and to develop the gambling culture among Russian operators and the population of this country.
Question: What measures should be applied to those who do not pay the winnings? What should the gamblers suffering from low-quality services do?
Answer: Fraud does exist. And operators as well as gamblers can be found guilty of it. There's no point in making a secret of it. However, these are isolated instances, but not a system. As for the criminal aspect, I would say, it's not a problem of the industry itself but of the society and individual businessmen trying to economize on guarding. If offenders have robbed a casino, they can rob a shop or something else as well. Refusals to pay the winnings are a very serious problem and it should be solved on a legislative level.
The forthcoming Law should contain all common requirements applied to all gambling houses, i.e. the location, prohibition of gambling advertising, the personnel qualification, insurance amounts, and payoff procedures. Non-compliance with these rules should entail revocation of license and subsequent prohibition of any business activities. Thus, an effective and considered legislation can be very helpful.