Russia Shuts Down Thousands of Casinos

New Rules Banish Gambling Parlors to Four Far-Flung Areas, but Construction Lags

MOSCOW, July 1 -- Thousands of casinos and slot-machine parlors across Russia were outlawed Wednesday as new restrictions on gambling took effect, shutting down an industry that had come to embody the seedier side of capitalism in the post-Soviet era.

The law, approved three years ago at the request of then-President Vladimir Putin, banishes casinos to four special zones in far-flung corners of the country. But none of the planned resorts have been developed, and the prohibition could put hundreds of thousands out of work during an economic crisis that has caused a sharp rise in unemployment.

When Putin first proposed the sweeping ban, burnishing his populist image as a tough leader battling corruption and vice, many wondered whether he could follow through on his campaign against a business he portrayed as a breeding ground for money laundering, organized crime and destructive addiction.

The industry resisted, offering to accept tighter regulations and highlighting the $1 billion it paid in annual taxes. When the economy soured, the industry pushed for a delay, saying the ban would eliminate as many as 400,000 jobs, far more than the official estimate of 60,000.

But Putin's successor, Dmitry Medvedev, declared in early May that there would be no reprieve. "The rules will not be revised, and there will be no backsliding, despite the lobbying efforts of various businesses," he said.

And as Wednesday's deadline approached, the blinking neon lights of Moscow's most famous -- and infamous -- gambling halls began going dark. Police were conducting surprise inspections to make sure that the few establishments that were staying open to the end closed their doors on time.

The Soviet Union prohibited all gambling, but casinos took off after its collapse, especially in the past decade as licensing rules were relaxed and the economy boomed. Moscow became home to more casinos than any other city outside Las Vegas and Miami, and slot machines appeared across the capital -- in stores, subway stations, even near schools and churches.

Now they are all supposed to move to remote, impoverished zones in the mountainous Altai region of Siberia, the Primorsky region on the Pacific coast, the Baltic exclave of Kaliningrad or a southern stretch of land on the Azov Sea. But officials acknowledge that the plan has been a bust, with construction underway at only one of the sites.

"Are we going to move? Of course not," Konstantin Kopylov, owner of the Kristall casino, told the state news agency RIA-Novosti. "You cannot run a business on someone's wish. Business is run in the areas where a profit can be made."

Some casinos have shifted their operations to post-Soviet countries where gambling has thrived. Other industry executives say the ban will only force Russian gambling underground, strengthening the influence of organized crime and fueling police corruption.

A few casinos have announced plans to retool their businesses as "sports clubs" where poker is permitted, or parlors for gambling on the Internet. The law also permits lotteries and bookmakers to operate.

The public, however, seems in favor of the ban, with 60 to 70 percent expressing support in various opinion polls. "The fact that taxes from this business will not be in the budget is nothing compared to . . . the damage from gambling," Valery Draganov, a member of the parliament, told state television. "Much greater damage has been inflicted on the families and players who have not just lost their jobs but, in fact, become seriously ill."