Armenia Weighs Up Its Gaming Zone Strategy

by Andrew Gellatly
June 17 2009

As the Russian Federation’s casinos prepare to close rather than
relocate to poorly executed and remote gaming zones, the republic of
Armenia has also taken steps towards adopting gambling enclaves of
its own.

The Government of Armenia decided last week to amend their 2003 law
titled, "On prize games and gambling houses", to ensure that casinos
and slot halls are banned from the capital Yerevan and allowed only
within administrative territories of Tsahkadzor, Djermuk and Sevan.

According to reports from Armenia’s Arka news agency, the Prime
Minister of the Republic Tigran Sarkisyan explained that, as of
January 1, 2013, casinos and slot halls would operate in Armenia only
in Tsahkadzor, Djermuk and Sevan, "and nowhere else".

Reports further suggest that the new draft, which will be considered
and voted on by the National Assembly in the coming months, specifies
that casinos and gaming activities may only be organised in hotels and
facilities with more than 125 guest rooms, but concedes that gambling
venues may also be located nearby Yerevan’s Zvartnots International
Airport, the main international airport which already has a number
of slot halls close by.

Arka noted that Sarkisyan stated, "If investors present to the
Armenian Government a programme with a cost exceeding $100m the
National Assembly will give the Government an opportunity to approve
it and to allow construction of such a complex."

Armenia’s casino market is far less developed than Russia’s – as
of 2006 there were 18 casinos and 51 gaming halls in Armenia –
with the state receiving just 700m Armenian dollars (£1.158m)
in gaming taxation, but while the population of Armenia is small,
with barely one million living in the capital Yerevan, the country
stands out among former Soviet republics by virtue of its uniquely
wealthy ex-patriot community.

Some of Armenia’s larger casinos, including the Shangri La Yerevan
casino which opened in April 2008, are already seeking to attract
spend from the diaspora community, who return to the country during
summer months.

Armenia has, in the past, experimented with a number of different
casino development strategies, but the new policy is a largely
untried strategy.

A previous gaming law, dating from 2000, called for casinos to be
located no less than 50km from the Yerevan administrative border or
10km from the borders of regional cities, while Armenia’s current 2003
gaming law, which came into effect in January 2004, was written with
the intention of creating a workable separation between communities and
gambling facilities, but appears not to have brought about the levels
of investment outside of the Capital Yerevan that had been hoped.

The new proposal, although not yet signed into law, looks to once
again redraw the government’s policy, tethering gambling activities
to areas of tourist visitation, and calling for significant investment
for the construction of each gambling facility.

The initiative evidently draws from the Russian Federation’s playbook.

Following the passage of Vladimir Putin’s draconian 2007 federal
gaming law Russia instituted the idea of four separate gambling zones
isolated from the capital. In Russia’s case the zones were selected
to be in Kaliningrad, the Altai Highlands, Primorye and Kransnodar.

None of those zones have subsequently been developed and on July
1 this year Russia’s formerly thriving casino industry faces an
enforced shut-down, with no alternative locations to move to within
the Federation’s borders.

While Armenia’s policy goal may be to bring more tourists to their
regions and take gambling away from urban areas, the consequences
are far from certain.

Michael Boettcher, chief executive of Moscow-headquartered Storm
International, which operates the Shangri La Yerevan, Armenia’s largest
casino, told GamblingCompliance, "The policy of the Russian gaming
zones has opened a can of worms in Eastern Europe, so much so that
other countries are starting to believe that they can each have a
‘Las Vegas’ of their own."


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