Making the News

Expert Online 2.0

Originally Published:Thursday, March 27, 2008

According to the results of the study by BDO Unicon Consulting (Moscow) and Spectrum Gaming Group (USA), the location of the Azov City gambling zone in the south is not conducive to attracting the necessary investment in it. The site is located far from the nearest major town (about 100 km from Rostov-on-Don) and the necessary infrastructure does not exist there.

The Difficult Road to the Game
The results of a comprehensive study conducted in the Rostov Region "with the aim of objectively assessing the creation of a gambling zone and the potential of a tourist and recreational complex" will be presented tomorrow in Rostov-on-Don.

By Alexander Popov
Expert Online 2.0

By the decision of Russian President Vladimir Putin all gambling establishments must move from the cities to four specially designated zones in the Altai territory (Siberian Coin), the Kaliningrad region (Amber), the Primorye territory and on the border of the Krasnodar and Rostov regions (Azov City). The government has already issued the necessary orders for the first three zones, effectively giving the start to the implementation of these projects.

Analysts were skeptical about the gambling zones from the very publication of the law. For example, the Russian Union of Industrialists and Entrepreneurs proposed postponing the deadlines for the relocation of gambling establishments by five years. Others specialists point out that while there may be a large influx of players to the Kaliningrad zone in Europe, it is hard to imagine who will fly to cold and distant parts of Russia to play poker or try their luck at roulette.

According to the results of the study by BDO Unicon Consulting (Moscow) and Spectrum Gaming Group (USA), the location of the Azov City gambling zone in the south is not conducive to attracting the necessary investment in it. The site is located far from the nearest major town (about 100 km from Rostov-on-Don) and the necessary infrastructure does not exist there.

The second minus is the general situation with gambling in Russia. Each of the gambling establishments contacted by Spectrum Gaming Group expressed concerns about investing in Russia because of the instability of the laws on gambling, corruption, the lack of quality or transparent regulation in the gambling business, and the certainty that organized crime is involved in the gambling industry.

At the same time, they note the great potential of Azov City. According to Spectrum Gaming Group, the southern gambling zone could receive 24.1 million visits a year, contain 43,540 hotel rooms, and make 1.7 billion dollars in annual gross income from the gambling business. However, the development of such a scenario is likely to take decades.

The analysts recommend the authorities part with their illusions that businesses will inevitably begin to invest in the gambling zones immediately after they are set up. That will not happen. Therefore, in the first phase, the authorities should assume all of the obligations for constructing and financing the infrastructure of the southern gaming zone.However, as the researchers rightly noticed, the authorities should not be greatly concerned for the fate of the gambling zones. If none of the private investors wish to develop a remote resort zone with gambling establishments, the government of the Rostov and Krasnodar regions will be able to independently build and manage the site.

In this case, the analysts advise officials it will possible to hire a third-party company to manage the resort zone for a minimum number of years, offering it a percentage of the gross profit from the principle activities of the resort. "Such an agreement could facilitate the emergence of international companies in the Russian market that have concerns about the investment return, changes in the laws on gambling, corruption and the protection of property. If successful, this could contribute to the development of private property at private gambling establishments," note the researchers.

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