Russia to decide on Crimean gambling zone by August

A de

cision regarding the establishment of a fifth Russian gambling zone in Crimea will be made by 1 August, the region's acting prime minister Sergey Aksoyonov has said.

In a bid to improve the region's economy Russia plans to transform the disputed territory into a special economic zone - with tax breaks for firms located there - and one of the only places in the country where gambling is not outlawed as it has been elsewhere since 2009.

On Friday at the International Economic Forum in St. Petersburg, Aksoyonov said: "We will listen to specialists. We are interested in partners, including those who have experience in business like this and who can propose a model ready to use, so that we do not have to experiment on the Crimean republic. I think we will take the decision no later than by 1 August."

He added that Yalta, a Black Sea resort city in Southern Crimea, has been earmarked as a potential site for the gambling zone, although even here gaming establishments would be limited to a certain area.

Russia's plans for the disputed territory first came to light when local sources revealed that Russian government ministries had been given until mid-April to submit plans for casino and hotel projects in the area.

Bloomberg reported that officials had first discussed the proposal at a March meeting led by deputy prime minister Dmitry Kozak.

Confirmation of Russia's intentions came shortly afterwards when President Vladimir Putin presented a draft federal law that would legalise casinos in the peninsula.

Since separating from Ukraine and becoming part of Russia on 16 March - a move not recognised by the international community - Crimea has been reliant on the state, which is preparing to cover the region's $1.5bn worth of deficit.

While Putin introduced the 2009 ban to curb gambling addiction in the country and more recently rejected a proposal from prime minister Dmitry Medvedev to allow gambling in Sochi during this year's Winter Olympics, the need to reform the region's economy seems to have forced the president's hand in regard to Crimea.

It is thought a Crimean tourism and entertainment complex could bring in an extra 600,000 visitors annually, boosting the region's budget by one billion rubles, according to the Russian Regional Development Ministry.

Rustam Temirgaliev, the territory's deputy prime minister, is confident a gambling centre in Crimea "stands a good chance" of rivalling sites in Macau, Monaco and Las Vegas and would receive a lot of interest from investors.

Crimea would become the fifth region in Russia designated for gambling and along with Krasnodar would be the closest to Moscow, although still about 900 miles from the capital.

The other regions of Kalingrad, Altai and Vladivostock are a longer distance from the capital. Krasnodar currently houses the only operating resort, Azov City, which opened in January 2010, although construction is underway elsewhere.

Preparations for the construction of a bridge between the Crimean peninsula and the mainland have begun but are expected to take years to complete.

Pyotr Kuznetsov, a pioneer of gambling in Ukraine, told Forbes that not only does the region lack the necessary infrastructure but that it is "unrealistic" to think the region could attract the required volume of investment.

He added that the territory's current gambling facilities, consisting of casinos in major cities and coastal gambling machines, were mainly used by holidaying Ukrainians who were unlikely to visit the area now it has been claimed as part of Russia.

Furthermore Kutnetsov noted that it is cheaper for citizens of Moscow and Kiev to fly to casinos in Croatia, the Czech Republic or Bulgaria.

He said: "As an entrepreneur, I do not plan to do business on the peninsula. I see no prospect of creating effective gambling in Crimea."

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