Russia bans all gambling and shuts casinos

MOSCOW Russia closed down its casinos overnight as gambling was banned nationwide, a move the industry says could throw a third of a million people out of work.

The July 1 ban shut gaming halls, from gaudy casinos crowned by extravagant neon structures to dingy dwellings containing a handful of slot machines.

"I feel terrible. We just let 1,000 people go," said Yuri Boyev, general director at Metelitsa, an upmarket casino where billionaires rolled the dice and Russia's gas giant Gazprom held a lavish Christmas party.

Vladimir Putin, now prime minister, came up with the idea in 2006 when he was president after the Interior Ministry linked several gaming operations in Moscow to Georgian organized crime.

The Kremlin plans to restrict gambling to Las Vegas-style gaming zones in four rarely visited regions deemed to need investment, including one near the North Korea border, but nothing has been built and critics say the zones will fail.

Though gaming establishments knew the shutdown date for at least a year, few thought the government would go through with it, but officials moved in overnight to close them down.

The industry says the ban will axe at least 300,000 jobs but officials in Moscow put the national figure at only 11,500.

Rows of slot machines, usually blinking around the clock in smoky, crowded halls, lay dormant and wrapped in cellophane.

Moscow deputy mayor Sergei Baidakov, watching men dismantle poker tables and lay roulette wheels on the floor, said the state was ready to thwart any big to move gambling underground.

"We are confident we will control the situation," he said.

He said the ban was to protect the health of society. Many critics in the gambling industry say it has more to do with Russia's poor ties with Georgia. Georgians are thought to run many Russian gaming halls.

City police stood on guard in case of protests by disgruntled former workers in the popular gaming halls that have sprouted since the Soviet Union collapsed in 1991 and now pepper Russia's cities.

A hotline was set up Wednesday to report on those suspected of operating illegal gambling, Itar-Tass reported.

Moscow had around 550 gambling places, including 30 casinos in prime spots, symbolizing the capital's love of excess.

Midnight on Novy Arbat street, the heart of the gambling scene, was muted as its flashing lights and loud music were turned off for the first time in over a decade.

"I'm upset but I guess I'll have a little rest and re-visit my job situation in August," said Elena, a slot machine operator who has worked in the gaming business for five years.

Each year gaming brought in up to $7 billion and paid $1 billion in tax, a gap the industry says will cause the state a budget headache.

The development replacement zones -- in southern Krasnodar, the Baltic enclave of Kaliningrad, east Siberia's Altai region and the Far East -- require investment of up to $40 billion and have not been built.

"The zones have no roads, water or electricity. We fulfilled the law by shutting, the government did not fulfill it as the zones are not ready yet," said casino director Boyev.

The industry has raised eyebrows at government guarantees of work in restaurants and shopping centers that are to replace casinos when unemployment in Russia has hit an eight-year high.

But some addicted gamblers thought the ban might help them.

"Maybe this is all a good thing. I'm a family man and I come here every day and lose all my money. I'll be happy to see them go," said a 40-year-old Muscovite near the flashy Shangri-La casino in the city center.

(Additional reporting and writing by Amie Ferris-Rotman, edited by Richard Meares)