Streetwise Professor

February 28, 2011

Bug or Feature?, or Bootleggers and Baptists Go To Russia

Filed under: Economics,Politics,Russia — The Professor @ 9:16 pm

In 2009, Russia banned casino gambling, except in some godforsaken places far away from where actual people live in any numbers.  Surprise, surprise, surprise: As a result, illegal gambling has exploded in Russian metropolitan areas, apparently with the connivance of “law enforcement” officials.  Recently, the Moscow Region Prosecutor and several deputies were suspended for suspicion of involvement in a massive gambling ring.

Russia Profile writes that the law actually increased corruption and the strength of gambling syndicates:

The law actually served to strengthen underground gambling rings, emboldening criminal elements and serving as a greater source of rents for corrupt police, said Evgeny Goroshko, a lawyer and representative of the Gaming Business Association. “Many illegal enterprises must function with the protection of the security services. And before they instituted a law like this one, they should have thought ten times – or as they say ‘measure twice, cut once’ – because we have an extremely corrupt system and everyone understood this perfectly. I personally thought ‘why is the government regulating the gambling business?’ Well, basically to shut down the legal sector and create an illegal one.’

RP further suggests that the investigation of the prosecutors was not the result of a sudden spasm of probity, but instead the consequence of conflicts between competing investigative authorities.

It’s no shock that the law has actually encouraged lawlessness and stoked corruption.  The fact that such a result was so predictable suggests that this was part of the plan.  I have been told by people who were involved in the “gaming industry” in Russia pre-ban that even legal operations had to pay to survive.  But “banning” the activity only enhances the authorities’ opportunities for personal enrichment.  Thus, it is more than plausible that this was a major reason behind the ban: that is, many of the ban supporters didn’t intend to reduce gambling, but to increase their take from it.

No doubt there were some in Russia who sincerely believed that banning gambling was a desirable social goal.  But just as bootleggers in the American South who profited from the banning of alcohol benefited from the well-intentioned efforts of Baptists to drive out the demon rum, the sincere opponents of gambling in Russia were played, and played well, by those who cynically saw the ban as an opportunity.

Keep this in mind any time you read about any campaign in Russia to stamp out a vice.  Not just in Russia, clearly (as illustrated by the Baptists and Bootleggers parable), but given the endemic corruption of legal structures in that country, the likelihood is far higher there that any anti-vice campaign is actually a cynical ploy.

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  1. […] Craig Pirrong, blogging at Streetwise Professor, posts “Bug or Feature?, or Bootleggers and Baptists Go To Russia.” […]

    Pingback by Streetwise Professor: Bootleggers and Baptists in Russia « Knowledge Problem — February 28, 2011 @ 11:43 pm

  2. So yes, it is very true that in Russia any law passed against anything is a welcome mat for corruption. Illegality=profit. At very high margins.

    But I am still heavily in favor of the closing of the casinos. They were a COMPLETELY predatory culture. Ugly mafioso, ugly cityscape, ugly businesses, corruption without borders. At least now they cannot ply their wares–and their women–openly in the center of the most glitzy districts of Moscow.

    Maybe a few Russian women will be saved by the casino closures. Because surely the organized prostitution of their own women was at least as big a money maker as the casinos and much much nastier. It was my observation that prostitution in Moscow was economically second only to the gas and oil industry. And prostitution was the handmaiden of the casinos.

    Every casino district in Moscow was accompanied by organized selling of women on a very, VERY huge fcuking scale. Obscene. Tragic. It literally made me cry. Human trafficking is a very ugly business. The casinos and prostitution were eating Moscow alive.

    So fcuk the casinos, fcuk the Georgian mafia, fcuk the Russian militsia, fcuk them all. If they want to stay in business it will be on a smaller scale, farther underground, with bigger police payouts reducing the profitability, and perhaps it will save a few–whatever few–Russian girls from selling themselves on the Novy Arbat.

    I’m in favor. One girl saved from the casino/sex slave trade is one girl saved. Every one of those girls is someone’s daughter.

    Comment by gardener1 — March 1, 2011 @ 3:00 am

  3. More on a desperate Putin’s efforts to once again corrupt the Orthodox Church and create a Holy Roman Empire complete with a Russian-style burka law:

    Comment by La Russophobe — March 1, 2011 @ 3:23 pm

  4. Only LaRussoliar would claim that one priest calling for women to dress more modestly in the work place equals a national campaign to impose the burka. Dear Prokofy, when was the last time you saw any Russian women on the streets of Russia? 1979, it looks like from your bio.

    Comment by The Other Ivan — March 2, 2011 @ 1:47 pm

  5. On a braying Russophile jackass like Ivanoliar would suggest that after the rise of a KGB president-for-life, the takeover of all major broadcast TV and newspapers, the eradication of local government, the obliteration of opposition political parties, the revival of the Soviet anthem and the murder or jailing of major opposition leaders (ALL OF WHICH THEY SAID COULD NEVER HAPPEN) it is not possible Russia could impose a burka.

    By making such utterly dishonest and inane remarks, folks like Ivan hasten the day when the burka, both literal and figurative (how many women are in the Russian Duma? how many hold major cabinet positions?) will arrive in Russia by encouraging those who would protect women’s rights to drop their guard.

    It’s simply an unquestionable fact that Putin is creating an Orthodox state, empowering priests to enter politics and providing state security to Orthodox leaders (but not leaders of other churches) — though Ivanoliar chooses to simply ignore all that. The Orthodox religion hates women (how many Orthodox priests are female, Ivanoliar?) and it will use its new power to oppress them in any way it can.

    Comment by La Russophobe — March 3, 2011 @ 7:17 am

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