Moscow Casino Ban Forces Storm to Open in Costa Rica

Storm International, Russia’s largest casino company, will open gambling venues in Costa Rica and Armenia this year and may abandon its home market because of restrictions, Chief Executive Officer Michael Boettcher said.

Russian President Vladimir Putin is forcing casinos out of Moscow and St. Petersburg to reduce gambling, exiling them to four regions outside the two biggest cities. The industry’s revenue has swelled to as much as us$7 billion a year in Russia, Boettcher said, after a 10th straight year of economic expansion.

“If the law doesn’t change, we’ll leave Russia,” said Boettcher, a 60-year-old Briton who said he founded Moscow-based Storm 16 years ago with two blackjack tables and a roulette wheel. “Most staff, certainly the management, will come with us,” he said last week at his Jazz Town casino in Moscow.

A law that takes effect July 2009 permits gambling on Russia’s Pacific coast, in the Baltic enclave of Kaliningrad, Siberia’s Altai region and around the Azov Sea in the south. The areas are too far from Moscow to draw gamblers, Boettcher said.

Putin compared dependency on gaming to alcohol or nicotine addiction in 2006, the year the law was passed. Gambling mushroomed after the Soviet Union collapsed in 1991, with casinos appearing in Russian cities and slot machines installed in Moscow’s underground rail network.

Storm is aiming for 12 percent of the us$172 billion world gaming market by 2030, Boettcher said.

The company plans to open a renovated casino in the Armenian capital of Yerevan by May and will invest $300 million developing a hotel, concert and exhibition halls, a shopping center and restaurants. In Costa Rica, the company is refurbishing a hotel and building a casino, both scheduled to open by July.

Emerging markets are more attractive than developed nations because they have fewer rules governing gaming, the CEO said. Developing countries have drawn companies from Ladbrokes Plc, the U.K. owner of about 2,600 betting shops, to Queenco Leisure International Plc, which plans a Cambodian casino.

Storm’s revenue has risen by as much as 25 percent annually in the past seven years and climbed 40 percent in 2007, Boettcher said, without giving figures. The company has five Moscow casinos including Jazz Town, which has its own music club, 30 gaming tables and a leather-furnished VIP room.

“It’s not just a matter of openings,” said Boettcher, Storm’s sole owner. “It’s the GDP growth. Salaries are growing astronomically. In 1992, it was all bandits. People have changed.”

Storm will turn its Moscow properties into stores, offices or hotels and is diversifying into business jets and yacht- chartering for millionaires in the Russian capital.

The casino owner, which is also building a resort in Sochi, the host city of the 2014 Winter Olympics, has no plans to borrow money, sell a stake or go public, the CEO said.

(Bloomberg)

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