Russia to Liquidate Azov City Gaming Zone, Casinos Ordered to Close by December 31

Posted on: October 26, 2018, 05:00h. 

Last updated on: October 26, 2018, 09:26h.

Philip Conneller @casinoorgphilc Read More
Expertise: Gaming Business, Regulation, Tribal Gaming.

The Azov City gaming zone in Krasnodar Krai, Western Russia, has two months in which to contemplate its impending extinction.

Azov City
The Shambala Hotel-Casino in Azov City is one of three that will be forced to close its gaming operations, as of December 31, after its president Maxim Smolentsev’s pleas for a reprieve fell on deaf ears. (Image: Shambala)

The zone’s fate was sealed by an order signed October 20 by Russian Prime Minister Dmitry Medvedev, which commands its three casinos to close permanently by December 31.

Azov City was the first of Russia’s specially created economic areas to have gambling facilities. In 2009, President Vladimir Putin launched a widespread “anti-vice” crackdown that shuttered casinos and card clubs in major metropolitan areas.

Gaming operations were exiled into four far-flung zones — initially, Azov City; Primorye, near the Pacific port of Vladivostock; Kaliningrad on the Baltic coast; and Altai, in western Siberia.

Collateral Damage

But the success of the 2014 Winter Olympics in Sochi convinced the Kremlin to tweak its plans and Azov City would be collateral damage.

Sochi, 430 miles south of Azov City, was just another dilapidated Black Sea Resort before the Olympics transformed it into an international tourist destination that has since hosted FIFA World Cup matches and Formula One Grand Prix. Foreign tourists flocked to these massive events, but Azov City was not on their radar.

Last year, Maxim Smolentsev, president of Azov City’s Shambala Hotel-Casino, wrote an open letter to Putin, begging for reprieve.

“I’m sure you do not want more than 2,000 Russian citizens to lose their jobs, and the budget annually receives less than 400 million roubles in taxes,” wrote Smolentsev. “I am convinced that you do not need a social implosion in the Krasnodar Territory, impoverishment and bankruptcy of thousands of families.”

No Compensation

Not only did his plea fall on deaf ears, but in July draft legislation was submitted to the Duma specifically exempting Azov City operators from any claim to compensation for the forced liquidation of their casinos.

The bill would require the government to compensate casino owners from any other gaming zone should those zones also be liquidated in the future.

Smolentsev had hoped his company’s investment in the Primorye gaming zone in Russia’s far east would give him some clout with the Kremlin, which is eager to encourage investment in Primorye.

This zone has quickly become to most successful of all four zones, thanks to its proximity to China. In 2015, Macau gaming mogul Lawrence Ho opened the lavish Tigre de Cristal in Primorye, Russia’s first integrated resort.