Let me start saying that 'Gambling business' is former CIS is as other business spheres. Do not expect to have criminal mob or gangs around it less or more than they are involved in any profitable business.
All started by the mid 90's when first slot machines appeared in the Baltic States and Moscow...rapidly, with a very primitive regulation being in force, as in many other spheres again !!, people who started that time were able to grow fast and capitalize, investing further in opening Saloons and Casinos which already were fullfilled with very modern machinery. Step by step and in different ways, local goverments started to issue regulations to control more tightly this business. New systems were implementated to control income and assure that tax were paid by companies involved. Licenses, Tax per machine, tax per location etc.. were the most common ways of taxing in the business.
In countries like Estonia, Lithuania, Belarus, Moldova state tried to limit growth, banning 'street operation', that means machines being installed in each bar or cafe. In Latvia legislation was more permisive. In Russia and Ukraine till beginning of the 2000's we could not see a strong growth in the business, mainly due to limitations in street operation. At some point, situation changed and this two countries had probably the fast growth of machinery park...by end of 2008 in Ukraine approx. 200000 machines were being operated in the market. In Russia, amount was probably much higher ( there's no reliable statistics ).
At some point, prices of commercial Real Estate in prime locations and outskirts were biazed by the fact that Gambling Operators had a very aggressive comercial policy to catch stake of the market. At evenings, you were not sure if you were in a shanty Las Vegas or in some ukranian or russian cities. Meanwhile, goverment collected very much needed revenues from gambling business and efforts were being done to agree a Law which would be convenient for the State and for the operators. All this, crack down, for a cocktail of reasons which meant business was fully forbidden in Russia and Ukraine from 2008-2009. Specially, in Ukraine, situation was very dramatic for companies that had payed for a License for 5 year which was ending non sooner that april 2011. PM Julia Timoshenko decided to pass this law which left 250000 people without a direct job and many bars in a very critical situation after loosing income from this business. Besides, State lost these revenues in a time of very deep crisis. Before that, President Putin in Russia also decided to forbid gambling, which probably influenced Timoshenko's decision.
I have been trying to understand the motivation which were behing this decision. Frankly speaking, I have not a answer but I would like to mention some possible reasons:
1.Political: Banning is supported by more than 50% of the population. It allows Goverments to present themselves in front of citizens as people who are doing the best for the moral and future of their countries.
2.Gambling Monopoly: States wants to control ALL income generated by this sphere. National Lottery is the main example of income for them. Plans are done to create 'state controlled' zones for Casinos. Licensing will be of course, based not in economical but political basis which will be based on corruption at very high level of administration. Bribes will decide who is involved in this sphere.
3.Eliminate and Create: Some people might have been very interested to ban gambling business to allow it after some years but having already new companies involved in it. Basically, to have its own people controlling this sphere.
4.Online gambling: Big companies involved in online gambling, Sport-betting and Poker mainly, have a big interest for banning this sphere of business. Once this happens, players have the ONLY option to play in international well-known sites, which have their companies located in 'off shore countries', allowing them to pay nothing or very low taxes in countries where players are based. As a result they have a huge amount of money to 'arrange' legislation in countries where they find the 'enthusiastic support' of local politicians and goverments.
Bearing in mind situation today and changes brought by @gambling, in my understanding, countries as Russia and Ukraine should take a more serious approach in this question. Living in a globalized world, they have to realize that they will not be able to stop local people betting. In such a case, they have to implement the best legislation as possible in order to minimize loss of taxes due to money flowing abroad through @gaming sites. Probably, the best way to do that, is to allow companies, street operators, @gaming operatort to workate in the country, creating a reasonable taxing level convinient for both parts which will benefit State. Besides, this will create a lot of new jobs for people involved in these spheres which requires technical support, law and accounting advice etc..
As the time being, we do not have any information which shows that this might happen at short term, although even World Bank has recommended it to increase state revenues. Meanwhile, illegal gambling business is being run by local mobs with support of local authorities and Russian, Ukranian, Belorussians, Lithuanians, Estonians keep on gambling is sites located abroad which do not pay any tax to Russia, Ukraine, Belarus, Lithuania or Estonia. Is this situation to continue what we would like for future years ?
