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Exiled by Russia: Casinos and Jobs

One of the largest mass layoffs in recent Russian history is to occur on Wednesday, and the Kremlin itself is decreeing it, economic crisis or not.

The government is shutting down every last legal casino and slot-machine parlor across the land, under an antivice plan promoted by Vladimir V. Putin that just a few months ago was widely perceived as far-fetched. But the result will be hundreds of thousands of people thrown out of work.

And in a move that at times seems to have taken on almost farcical overtones, the Kremlin has offered the gambling industry only one option for survival: relocate to four regions in remote areas of Russia, as many as 4,000 miles from the capital. The potential marketing slogans — Come to the Las Vegas of Siberia! Have a Ball near the North Korean Border! — may not sound inviting, but that is in part what the government envisions.

All the same, none of the four regions are prepared for the transfer, and no casino is expected to reopen for several years. As of July 1, not even two decades after casinos began proliferating here in the free-for-all post-Soviet era, the industry’s workers will be out on the street.

“This is shaking my life to the core — such a blow for me and my family,” said Irina Mysachka, 32, a single mother who is a supervisor at the Shangri-La Casino in Moscow, which appears as orderly and preened (if your tastes run to fire-breathing neon dragons and other Oriental kitsch) as any similar luxury attraction in the United States.

“The authorities are taking this step without thinking at all,” she said. “They have not considered what this decision means for the workers. With the crisis, it is going to be very difficult for us.”

Unable to find a job in Moscow, she said she was going to leave her 5-year-old son, Yegor, with her mother and venture abroad.

Aleksandr Osin, 24, who has been at Shangri-La for five years, said he would try his luck in the insurance business, but was not hopeful. “We all thought that this was some kind of government thing that would not happen,” he said. “But now we know.”

The law that started the whole process was introduced in 2006 by Mr. Putin, then the president and now the prime minister, who spoke of the perils of the blackjack tables and the one-armed bandits, of shady characters having a grip on the industry.

The casinos have repeatedly asked for a reprieve, proposing a regulatory body to cut down on abuses, and lately pointing out that the ban would create hardships for workers during the crisis. The industry has also said it pays more than $1 billion a year in taxes. But Mr. Putin and his protégé, President Dmitri A. Medvedev, have not yielded. “The rules will not be revised in any way,” Mr. Medvedev said last month, “and there will be no backsliding, although various business organizations have been lobbying for precisely this.”

CNBC.com

The gambling industry here does not have the loftiest of reputations, and many Russians will not grieve for it. Still, many of the 40 or so casinos in Moscow sought in recent years to behave more respectably, even as hundreds of slot-machine parlors retained a seedy, enter-at-your-own-risk feel.

The gambling industry says the ban will leave more than 400,000 people without work in Russia, at a time when it has been hard hit by the economic downturn: the World Bank predicts the economy will contract by 7.9 percent this year. The government has put the figure at 60,000 people, though industry analysts say that is absurdly low.

Storm International, a gambling conglomerate controlled by a British expatriate, Michael Boettcher, said that until recently, it alone employed 6,000 people at Shangri-La and several other casinos in Moscow.

Casinos in Russia are now to be confined to the Altai region of Siberia; the coastal area of the Far East, near the border with North Korea and China; Kaliningrad, a Russian enclave between Poland and Lithuania; and the Azov Sea region in the south. Until casinos open there, Russia will be one of the few countries in Europe without them, though underground ones are likely to be established.

After the law passed, federal officials and casino executives seemed certain that it would be watered down, which is apparently why neither the casinos nor the four regions did anything to prepare. “You know, in our country, the decisions are made by only one person,” said Samuil Binder, deputy executive director of the Russian Association for Gaming Business Development. He was referring to Mr. Putin.

After the Soviet Union’s fall in 1991, gambling sprang up everywhere in Russia, from first-class locations in Moscow to side-alley hangouts in the provinces. The crazy-quilt growth was something of a metaphor for capitalism here, full of possibilities and schemes and corruption.

The industry has been largely unregulated, and especially in recent years, almost anyone could get a license, for as little as $50. Russia is not a strait-laced place — rates of smoking and drinking are high — but an outcry about gambling ensued. “It is not only young people, but also retirees who lose their last kopecks and pensions through gambling,” Mr. Putin said in 2006.

His plan was announced during a spy scandal between Russia and its neighbor Georgia, and the timing suggested that Mr. Putin was in part seeking to wound the Georgian diaspora here, which is said to have an influential role in the industry.

As with the workers, it seems to have dawned on the gamblers themselves only recently that the casinos are closing.

“It is going to be strange, and even now, it’s hard to believe,” said Aleksei Ustinenko, 29, a construction executive who was playing at Shangri-La.

“Here we are, in one of the biggest, most beautiful, most expensive cities in the world,” he said. “And yet other people can decide that I cannot gamble if I want to.”

Some casinos said they might try to devote some space to private poker clubs, which they believe will be allowed under the law. But executives say such clubs are far less lucrative, and will employ very few workers.

And so laborers have been pulling down gambling signs and carting slot machines from sites all over Moscow.

“There was a time when all these clubs and casinos grew like a cancer tumor,” said Moscow’s mayor, Yuri M. Luzhkov. “We will close them all. By July 1, Moscow will be clean.”

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