Underground casino network exposed in?Moscow

As Russia’s legal gambling zones build interest, underground operations continue to proliferate through the country’s back streets. The recent arrest of the deputy chief of Moscow district police has led to ten illegal gambling clubs being uncovered in the Russian capital and start of a new search operation.

The chief of police was arrested in connection with covering up illegal gambling activity and absconded the investigation after making a statement. A press official of the Russian Interior Ministry reported that the information resulted in the discovery of a network of ten casinos operating in various parts of Moscow, with each venue generating in excess of 100,000 rubles (US$ 3,000) a day.

“As a result of over 20 searches,” informed a police spokesperson, “some 300 gambling machines and computers with gambling software were confiscated, as well as over 5 million rubles (US$ 150,000) in cash.”

It is anticipated, however, that this merely scratches the surface of illegal gambling haunts the police are yet to expose in the city. According to the statement, the business was organised by immigrants from Georgia and Udmurtia and was managed remotely. Generating in excess of $10 million a year between the ten venues, money was reportedly laundered into offshore bank accounts before being distributed to members of the crime syndicate.

This is by no means the first case of its kind. Illegal gambling has thrived in Moscow since casinos were outlawed nationwide in 2009. A major scandal broke out in November 2011, after an underground casino racket was exposed in the Moscow Region, with the alleged involvement of police and prosecution officers.
It is no secret that police protection has helped underground casinos to operate. The 2011 scandal involved eleven high-ranking members of the Moscow police force and prosecutor’s office. Last year, another bust in Moscow and the Moscow Region closed a further wave of illegal casinos, which used fronts such as restaurants, internet cafes and lottery clubs.

Authorities have discovered a wide variety of illegal gambling dens, many of which are located in flats. Gaming tables and computers that contain betting information, as well as cash, are the most commonly seized items. Slot machines are still being confiscated too, but in addition to traditional gaming equipment, raids have unearthed a number of bizarre discoveries such as caged roosters, rats and even insects, all believed to be used for gambling inside the venues.

Passage of Federal Law ? 244 on 1st July 2009 outlawed casinos in Russia except in four specially designated zones in different regions. The ban came as a rapid increase of slot machines spread throughout the country, caused by a lack of regulation. Casinos were also thought to have had a negative effect on society and fuel a lawless business culture. However, the ban ensured a lawless culture emerged as casino gaming business moved underground.

Despite casino prohibition, the appetite for gambling remains strong. According to Global Betting and Gaming Consultants CEO Warwick Barlett, the average Russian still spends $170 per year on gambling, double the global average of $82. The potential market size is the reason that major casino operators are interested in developing in the hard-to-access gambling zones.

So far, only Azov City has become host to a casino, but interest is building in Primorye Integrated Entertainment Zone, located in Russia’s far east. Just two and a half hours by plane to Beijing, investors are looking to develop a tourism zone that will target northern China. Operators have been selected from the US, Malaysia, Russia, Macau and Hong Kong to create an all-encompassing gaming and entertainment destination, with hotels, exhibition centres, retail and casinos.

With attention focused on the ambitious new projects, organised criminal enterprises are left to profit from the ban. Gamblers continue to gamble, travelling overseas or to illegal casinos in Russia. Since the 2009 law, police have reportedly raided some 60,000 illegal establishments across the country.  The precise number of venues is unknown, but the National Association of Bookmakers estimate at least 800 illegal venues are still operating in Moscow.