Moscow – A Russian law forcing gambling out of Moscow and St. Petersburg from July next year will deter investment in the industry and should be relaxed, the country’s Industrialists and Entrepreneurs Union said Friday.

Plans to restrict gambling to four regions of Russia are prompting local operators to expand outside the country, the Moscow-based union said in a March 5 statement on its web site.

The permitted areas – Russia’s Pacific coast, the Baltic exclave of Kaliningrad, Siberia’s Altai region and around the Azov Sea – aren’t attracting international chains, the organization added.

Union President Alexander Shokhin wrote to Finance Minister Alexei Kudrin last month, asking that the government allow gambling everywhere, while limiting casinos and slot machine halls to tourism and hotel areas, according to the statement. Such measures would reduce the number of gaming outlets by more than 70 percent while preserving jobs and providing sufficient tax revenues for regional budgets, the union said.

Gambling has mushroomed in Russia in the past six years after the relaxation of licensing rules led to a proliferation of slot machine halls in bars, on the streets and in subway stations. The industry’s 600,000 workers would be reduced by more than 10 percent by 2009 if the law is kept in its present form, according to the union. Tax revenue from the industry reached 31 billion rubles (USD 1.3 billion) in 2006, the statement shows.

Moving all gambling to four regions may also lead to the opening of illegal casinos, according to the union. About a quarter of Russian gamblers would attend such institutions, it said, citing research by the state-run All-Russian Center for the Study of Public Opinion, or VTsIOM.