Gambling culture depends upon ourselves. Interview with Dmitrii Slobodkin
Dmitrii, when did slot machines appear in the USSR? Various sources disagree on the exact date. You are one of those who introduced the first slot machines in our country, could you maybe shed some light on this?
It depends on the type of slot machines. Machines that payed cash bonuses were first introduced on the “Morpasflot” ships, which were used for international cruises in the 70's. Only those Soviet citizens who had foreign cash were allowed to play. Slot machines were installed by the Swedish company “Bo Billing”. The same company opened the first experimental slot casino in the House of Games in Mustamae (Estonia). That was it. There were also a few illegally imported and illegally installed slot machines at the southern resorts. The very first legal slot machines appeared in the Intourist hotels in 1988, but again, you had to have foreign cash to play.
Very few Soviet citizens could afford foreign cash then and therefore play. When did the situation start to improve?
In 1989, a joint Russian-Spanish company “Fortune” obtained permission to accept stakes in rubles. So this year we have a 15 year anniversary.
Which slot vendors were the first to appear in the USSR? What companies did you talk to?
We got many offers. Bally, IGT, Aristokrat showed interest. Eventually we chose a Spanish company “Recreativos Franco SA.”
Here's what American press wrote about this:
U.S. Embassy put pressure on Washington in order to obtain information.
Transnational slot vendors are concerned about Franko's business in Russia. Many in gaming business were glad to see the article in El Periodico del Operador about Joaquin Franco's visit to Russia and the possible commercial deals related to “C” machines. At the same time, the biggest U.S. slot vendors were concerned because they had hopes to start doing business in the USSR after “perestroika”. The fact that Soviet Embassy specifically contacted Recreativos Franco caused suspisions. U.S. Embassy put a lot of pressure on Madrid in order to obtain information on the negotiations, which was later used in the interests of american vendors. Judging by this article and Ruffino Gonzales' company's prestige, Recreativos Franco was very excited although never really commented on this.
Why did you choose this company?
First, Recreativos Franco was one of the biggest slot vendors in the world. Second, back in 1988 they offered USSR to experimentally install 148 machines and let the government have all the profits. They also invested 4 million dollars in the new company and provided all necessary know-how and technical documentation.
As I understand, 148 was only the beginning.
Right. Since Recreativos Franco started business in the USSR it shipped about 2000 slot machines.
How big were the stakes then? How much one could win or lose?
Minimal stake was 0.20 rubles and ranged up to 10 rubles. At that time, 10 rubles was a significant amount of money. In two Intourist hotels in Yalta Franco's machines turned $94,000 profit in 57 days, and during off-peak season from December to March turned 980,000 rubles profit.
Minimal stake was equal to four subway rides, but these days subway costs twice the minimal stake for VIP's. Hyperinflation!
I was impressed by the profit numbers you mentioned. How did people perceived the new first slot machines back then. The early 90's were difficult times for many Russians.
Our society is quite inert in respect to all new things and slot machines weren't an exception. But the interest grew very fast, sometimes people even had to make reservations to play at particular hours. So during Perestroika gaming became hugely popular, even though the government was still undecided and legal foundations were not laid down yet.
So how could gambling even exist at that time?
The government decided to allow it only because of extra taxes.
In early 1989 a number of foreign companies asked “Intourservice” for a permission to open first casinos in the USSR. I participated in dozens negotiations and on 23th of August 1989 the “Casino Armherst International” company opened the first Moscow casino in the Savoy hotel.
Also in 1989, the government issued a resolution “On the economy improvement” and based on past experiences with slot machines it was decided that legalized gambling would provide additional sources of income. It was the time when economy got higher priority than ideology.
The gaming “vacuum” opened a lot of opportunities for enterpreneurs. There was similar “vacuum” in the areas of advertisement, limo service, credit cards and duty free stores, all of which I dealt with.
Anything changed since then?
Motivation changed: it is now about having a good time, not necessarily winning. The rules are still the same. The roulette has been the same since 1765, although there are some new projects out there.
There are some serious changes, too. There are new slot vendors on the market. The industry is growing, both in terms of volume and quality. The market has been divided. Legal foundation is improving. More taxes are being paid and more workplaces are being created. And, of course, competition has become more fierce.
I often wonder why it so happens that the government first legalizes gambling, but then looks at it as something amoral, something related to crime, money laundering and drug dealing.
One could write a book to answer this question. Gambling generally is frowned upon in most countries. The difference lies in government's motivation to legalize it.
In most cases it is due to historical reasons, for instance, horse and dog racing in Britain or country's budget deficit.
In the United States, Las Vegas has this image as a world-class recreation and entertainment resort. There are movies about Vegas, books about Vegas, gift shops, even marriages are easier done in Vegas.
In other words, once the legal foundation has been laid out, it's all about business now. And people from all over the world come to Vegas indirectly making U.S. budget richer. Why can't it happen in Russia?
For some reason, we make decisions only to fail implementing them.
I see many newspaper articles quoting members of government who are absolutely incompetent in the area of gaming business. People without special training are trying to regulate and control this industry.
Could the problem lie in the absense of a gaming culture in Russia? We have no 100 years of American experience or 300 years of French experience, but maybe we can create this culture now?
Gaming culture heavily depends on the casino owners, but there should also be clarity and transparency at the government level. Not only the citizens should understand gaming, but the government should understand it, too. And it's not the case.
For instance, the Russian Federal Tax Code defines gaming as a kind of business that makes profit by winning. This is a fundamental misconception: lost stakes are also part of the profit. Very simple.
The player makes a bet and the owner of the gaming business agrees to pay if the player wins. The owner does not make a bet and therefore it is incorrect to say that he wins when the player loses.
There are also mistakes in Chapter 29 of the Tax Code that lead to the loss of millions tax rubles. Noone even knows who authored this chapter of the code and who to punish. And so they blame the business people who supposedly avoid taxes.
There was some gaming culture in Russia, before communists came to power. Could the mentality that “cards are bad” still be rectified after so many years?
It won't be easy to recreate a culture that's been lost 60 years ago. But I feel optimistic. There are many examples in history, especially in France.
If you had the ability to go back 15 year, what would you do differently?
Lots of things could be changed. But every time you do something radically new, it's not easy, trust me.
What kind of advice could you give to the new times, new comnaies and technologies, to the colleagues and friends?
I wish us all not to have to rewrite the history from 15 years ago. To my colleagues in the gaming business I'll quote our company's slogan: May Fortune smile on you! Seriously though, I'd like to see our culture and knowledge prevail in the area of gaming business, and especially its legal aspect.
Interviewed taken by Eugenii Kovtun.