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Insight RUSSIA


RUSSIA'S SOCHI MAKES PLAY AS WOULD-BE GAMBLING MECCA


Sochi, home to the 2014 Winter Olympics, is gearing up to be a new gambling hub for Southern Russia, after receiving approval from President Vladimir Putin earlier this year, but some experts are dubious about its chances of success.


The problem in finding the right location, coupled with political tensions and competition from both neighbouring countries and other Russian gambling zones may all hinder development. Putin signed the bill creating a gambling zone in Sochi and in the newly annexed Crimea in July. Gambling was banned in Russia in 2009 apart from in the specially designated areas, where progress so far has been slow.


However, authorities are determined to cash in on the newly built infrastructure that was put in place for the Olympic games. In November, they organized Sochi Gaming Week, gathering experts in the gaming industry to discuss the zone's future. US -based casino company Century Casinos CEO Peter Hoetzinger said in a recent interview that it is ready to invest in the new zone, but first wants to find Russian partners and make joint investments The company operates 30 casinos worldwide.


"We have operated in the Colorado gaming zone situated within an hour drive of Denver next to the Aspen and Beaver Creek ski resorts. This experience opens up big opportunities for us in Russia," Hoetzinger said.


The exact number of gaming licenses was not announced and neither was the location of the new zone, but gaming expert Leonid Obozniy believes that the authorities should not set limits and should create the right conditions for healthy competition among investors.


Russian officials were optimistic, with the deputy head of Russia's Union of Tourism Industry Yuriy Barzykin predicting that the first casino will be opened in Sochi in spring 2015.


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Michael Boettcher, President, Storm International


"We must remember that the competition with neighbouring countries, where gambling is well developed (such as Georgia, Armenia, Belarus), may create certain problems for the development of gambling in Sochi. Ideally, a casino should be situated in the centre of Sochi, on the basis of five star hotels.”


However, much of the debate centred on the best location to create a gambling hub, especially given no purpose built resorts are planned. Most of Sochi’s infrastructure was created to support the Olympics, with total spending of about $51 billion.


Barzykin said the best place for opening a casino would be the Krasnaya Polyana ski complex, about 42 miles from the centre of Sochi and 25 miles from the Sochi International Airport, to which there is a new rail link that was built for the games.


"There are completed infrastructure and accommodation facilities, five star hotels, at which premises future casinos may be opened," he said. Authorities have said that new gambling facilities will most likely be located in existing premises, with Zhanna Grigoryva, a


representative of the Sochi administration, noting there will be no new large scale construction projects in the city.


"This city is already a year round world class resort. The plans to develop the gambling zone do not include construction of new facilities, most likely it will involve reconstruction of the existing ones," she said.


Michael Boettcher, president of Storm International which manages gaming and entertainment facilities, agreed that a casino should be opened in a place with the highest concentration of five star hotels, like Krasnaya Polyana with its Marriott and Rixos hotels.


However, he also noted the ski resort location was not ideal. He pointed to the seasonality of the resort, the instability of the legal framework, a


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