Russia Said to Weigh Plan to Introduce Gambling in Crimea

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Russian soldiers build barricades as they maintain control of the Feodosia military base in Crimea. Close

Russian soldiers build barricades as they maintain control of the Feodosia military base in Crimea.

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Photographer: Bulent Doruk/Anadolu Agency/Getty Images

Russian soldiers build barricades as they maintain control of the Feodosia military base in Crimea.

Russian officials are weighing a proposal to create a gambling zone with casinos and hotels in Crimea, the Black Sea peninsula annexed from Ukraine, according to four people with direct knowledge of the planning.

Officials discussed the option at a March 21 meeting led by Deputy Prime Minister Dmitry Kozak, the people said, asking not to be identified as the information isn’t public. Russia’s ministries of economy, finance and regional development have an April 15 deadline to present a plan for the gambling project with spending and revenue estimates, the people said.

Russia is seeking to make Crimea less reliant on the state budget. The region may run a fiscal deficit of about 55 billion rubles ($1.5 billion) this year, which Russia plans to fully cover, Finance Minister Anton Siluanov said last week in an interview on state television. Russia had a budget surplus of 30.5 billion rubles, or 0.3 percent of economic output, in the first two months of 2014, according to Finance Ministry data.

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Russia may direct at least $2.8 billion of emergency budget reserves this year to subsidize Crimea and the port city of Sevastopol, home of Russia’s Black Sea Fleet, two other people with knowledge of the plans said earlier.

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Customers play roulette at the Oracle casino in Azov City, Russia. Close

Customers play roulette at the Oracle casino in Azov City, Russia.

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Photographer:vKonstantin Zavrazhin/Getty Images

Customers play roulette at the Oracle casino in Azov City, Russia.

‘Without Delay’

The government may use 100 billion rubles to 130 billion rubles of an anti-crisis cushion written into the budget, which includes Russian pension savings, the two people said. The amount may swell to 260 billion rubles to raise state pensions and salaries to Russian levels, one of them said.

President Vladimir Putin, facing the weakest economic outlook since 2009 and first-quarter capital outflows that may exceed the level for all of last year, defied the U.S. and European Union’s threats of sanctions to absorb Crimea, a predominantly Russian-speaking region. Putin last week ordered Crimean pensions to be increased “without delay.”

Should the gambling area in Crimea be created, it will be part of a special economic zone, which give tax breaks to companies located within, according to the people. Prime Minister Dmitry Medvedev ordered ministries to develop roadmaps for Crimea’s development after a March 24 meeting. His spokeswoman Natalya Timakova declined to comment any plans being considered.

Economic Stimulus

Ilya Djous, a spokesman for Kozak, declined to comment if there’s an order for ministries to work on proposals to create a gambling zone. Medvedev put Kozak in charge of coordinating work on Crimea.

“All proposals to stimulate the economy are under consideration,” Djous said by phone yesterday. “They will be known when a decision is made.”

Russia banned gambling across the country from 2009, except for designated areas in four regions -- Krasnodar, near Crimea in the southwest; the Kaliningrad exclave between Poland and Lithuania; Altai, on the border with Kazakhstan and in Vladivostok on the Pacific coast. The only operational resort is Azov City in the Krasnodar region, with construction under way elsewhere.

The curb on casinos grew out of an anti-vice campaign that included measures to curtail smoking and underage drinking.

Putin rejected a proposal to bring gambling to Sochi as a source of quick income after the Black Sea city hosted the Winter Olympics. Sochi should remain a family resort, the president told its residents last month.

To contact the reporters on this story: Evgenia Pismennaya in Moscow at epismennaya@bloomberg.net; Ilya Arkhipov in Moscow at iarkhipov@bloomberg.net; Yuliya Fedorinova in Moscow at yfedorinova@bloomberg.net

To contact the editors responsible for this story: Hellmuth Tromm at htromm@bloomberg.net; Balazs Penz at bpenz@bloomberg.net; John Viljoen at jviljoen@bloomberg.net Torrey Clark, Paul Abelsky

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