Gambling has been a major policy problem for the Russian government since the early 21st century.
The problem was the rapidly increasing number of slot machines and gambling houses, including casinos, spreading all over the country. According to city officials, after the year 2002 there were 58 casinos, 2,000 gaming rooms and approximately 70,000 slot machines in Moscow.
It became a greater problem for the government because the younger population was widely exposed to the obtrusive advertising of gambling houses.
Teenagers missed school to crowd around slot machines hoping to win some money.
This behavior affected the society’s welfare in a way that was external to the market, thus, giving rise to a negative externality.
Experts from the Russian Association of Gambling Business Development claimed that approximately half a million people on a regular basis indulged in gambling in the capital city of Moscow.
At the same time, city psychiatrists, who met with people addicted to excessive gambling, provided quite different information arguing that the number was much higher.
“The head of the extra-hospital aid in the National Narcological Scientific Center Taras Dudko says that the number of people regularly going to Moscow casinos, bookmaking offices and gambling houses is over 1.5 million people”.
According to marketing research by Bookmaker-Ratings, in Russia from May 2016 till May 2017 services of illegal offshore bookmakers were used by 1 million 410 thousand players, services of legal Russian bookmakers – by 820 thousand players.
Additionally, money laundering was another concern of every city government that failed to collect estimated tax revenue from gambling businesses, that kept the profits and did not share them with the city by avoiding tax payment.
These were the major rationales for the government to get involved and implement a policy on gambling restriction.
One of the policy solutions to solve the gambling problem in Russia was proposed in the form of limiting the number of gambling establishments throughout the country.