Where have all the Russians gone?

Where have all the Russians gone?

December 27, 2009.

The draconian government bans that shut down thousands of casinos and gambling parlours in Russia earlier this year spawned an exodus to the Internet, but also to lands both more climate and state-­fri­end­ly...like Latin America.

This week the news magazine Time examined the phenomenon, reporting that some Russian casino owners are content to stay in the motherland and relocate to four geographically remote regions to re-start their businesses, but that others have sought pastures that may be greener and friendlier.

Bolivia is one country in the region where the Russian presence is being felt. Time quotes Marco Antonio Cardenas, the director of the National Lottery of Bolivia, which also regulates casino gambling. In the last year, he says, gambling operations in Bolivia have nearly doubled - there are now more than 80 casinos and about 10 000 gambling machines in this country of 9 million people.

Cardenas attributes the rise to foreign investors taking advantage of Bolivia's loose regulations. Once a gambling company is granted a license to operate, there are no limits on the number of sites it can open in Bolivia.

One of the operators in Bolivia is the Moscow-based Ritzio International, the largest casino operator in Eastern Europe. Ritzio does $1.2 billion in business annually at its 1 000 venues worldwide. The Russian giant is the majority shareholder in Lotex S.A., whose 15 purple and orange Bingo Bahiti clubs have become a fixture in Bolivia's major cities over the past two years. Inside the venues, large Bingo rooms are the main attraction, although there are also hundreds of blinking slot machines and other automated games that accept dollars or bolivianos.

Ritzio says its international expansion is not a consequence of the Russian government's tough restrictions. "The law has intensified the process of our intern­ati­ona­liz­ation, but not radically," a Ritzio spokesman told the newspaper, explaining that when Russia announced the ban the company already had assets in eight countries. (Today, that number has doubled and includes Bolivia, Peru, Colombia and Mexico).

There are other opinions, among them that of Samuel Binder, deputy executive director at the Russian Association for Gaming Business Development, who told the Reuters news agency: "It's preposterous to think these (gaming zones in remote locations proposed by the Russian legislation) could be up and running soon. Even those who have investments for gaming have realized they'd rather take their money elsewhere in the ex-Soviet Union or to Latin America."

Mexico and Colombia have also seen the opening of new Russian-owned mega-casinos this year; Chile's gambling sector is rapidly expanding despite the economic downturn; and Lima, Peru is now known on the South American travelers' circuit as a sweet spot for gambling. Argentina's casino business, the largest on the continent, brings in between $4 and $5 billion a year, the Time reports reveals.

Bolivia only allows "soft" gambling - no dealers and no wheels, only machines programmed to give a win at least 80 percent of the time. Despite this enforcement officials are less than enthusiastic about continued expansion. "It's a dangerous topic," says Santa Cruz District Attorney Hector Cornejo, who's part of a special unit on corruption and gambling-related crime.

He and others "in the know" - journalists, investigators, public officials - speak in hushed tones about a growing Russian mafia. Cornejo alludes to casinos being the gateway to an underworld of money laundering, drug trafficking and recent spikes in crime in Bolivia's wealthy city of Santa Cruz, though he offers no specifics. Even Cardenas, who is wary of condemning the sector he runs, has this admission: "Gambling, drugs, prostitution and arms - they go together."

Time says that Cardenas and other enforcement officials like him are less concerned about major, legal operators than the smaller and more quickly developing sector of operators. The Corhat group is one such entity, comprised of 67 gambling venues in which the group legal adviser claims there is no Russian involvement.

Cardenas and Cornejo insist that Russian interests are involved in Corhat, and a gatekeeper at one of Corhat's operations seems to reinforce their doubts, telling Time: "The Bolivian manager is just a front. There are three Russian guys who are the ones running the show."

Bolivia is not likely to limit gambling operations, however; its newly approved constitution allows for the maintenance of the industry.

"Indeed, gambling looks set to be a growth industry in the region," concludes Time. "Even Latin America's economic powerhouse, Brazil, is currently considering lifting its longstanding prohibition on casinos."

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