G A M I N G & L E I S U R E S P R I N G 2 0 1 3 7 0 2 . 5 4 7 . 4 5 4 550

In the Fall 2012 G&L issue,we reviewed the generalstate of affairs for the overallcasino gaming industry inthe Russian Federation.With this issue, we’re tak-ing a closer look at one ofthe four special gambling

zones created by Russian Federal Law No 244.Mr. Lenar Kashapov, Director of Azov-CityGambling & Resort joins us for this discussion.

G&L: The non-profit “Association of theGambling Zone of Azov-City” was created in2009. What are the objectives of theAssociation?

Lenar Kashapov: According to Russian leg-islation gambling organizers are required tocreate a noncommercial organization repre-senting their interests. Federal Law No 244contains this provision and further stipulatessuch organizations could also have part ofmanaging functions at the gambling zones.There is an annual investment forum in Sochi(Krasnodar region) where the cooperationagreement between Azov-City Gambling &Resort and the Administration of Krasnodarregion (regional governmental body) wassigned in 2009.

The main functions of our association are: • Lobbyism • Industry standardization • Attracting investments

To meet the first target we negotiated withthe government about infrastructure expan-sion: constructing roads, power lines andtreatment facilities. To meet the target forindustry standardization we developed build-ing norms and standards for casino buildings.At the time we didn’t have such norms forgambling facilities, so we discussed legislativeand regulatory acts with the parliamentariansand requested changes in legislation. Onbehalf of the members of the association wenegotiated with the largest consulting firmsand also potential partners about investmentsand operating casino resorts in future.

Russia is a unique country and the experience,contacts and knowledge we have are aninvaluable treasure for the development ofRussian gambling industry. Moreover, in thefuture we are planning to work for develop-ment and promotion of all four gamblingzones in Russia, so we permanently collect the

information and negotiate with the authori-ties of the regions that have gambling zones –Kaliningrad territory, Altay and Primorskiregions. I think there are no people in Russiawho have more information and contacts ingambling zones beyond our group.

G&L: Located in Krasnodar Territory inRussia’s Southern Federal District, how isAzov-City positioned for in-bound tourism?

Lenar Kashapov: To have a strong position forin-bound tourism we have to continue toexpand our facilities. We have only two casinosat gambling zone Azov-City at present. Theyare not very attractive for international tourists.People from Vladivostok, Tyumen, Ulan-Ude,Stavropol, Novocherkassk, Moscow, and St.Petersburg visit our casinos. In whole about 80cities in Russia and abroad visit our casinos.The largest group of visitors comes from neigh-boring Rostov-on-Don and Krasnodar.

We recognize that the Azov-City gamblingzone is situated in a distinctive region ofRussia, so we have no doubt it will be inter-esting for foreign tourists. You could not seesuch nature and bright expressions of Russianculture in other Russian gambling zones.Kuban (another name of Krasnodar region) isthe native land of the famous Cossacks.

Situated on the Black Sea, the coastal city ofSochi will host the Winter Olympic Games in2014. It boasts an innumerable quantity of

Bill Healey

AZOV-CITY, KRASNODAR REGION,RUSSIAN GAMING ZONE

INTERNATIONAL GAMING

Lenar Kashapov l Director of Azov-CityGambling & Resort

From the point of view of expected profit, Azov-City is a fascinating project.Azov-City is the first gambling zone in Russia and it seems that it

will evolve into the first Russian casino-resort destination with a criticalvolume of tourists and gamblers.

Spring13_G&L.qxd 3/10/13 2:16 PM Page 50

51S O U R C I N G V E N D O R S ? U S E T H E G H R C ! W W W. G A M I N G A N D L E I S U R E M A G A Z I N E . C O M

ancient historical destinations interspersedwith fields of sunflowers and wheat. All thesefeatures will be used to breathe the spirit ofRussia and the region into the non-gamingfacilities in Azov-City. We already have visi-tors from China, Turkey, USA, Ukraine,Europe and are sure that soon we will seetourists from Israel and Arabian countries.

When the authorities of Krasnodar region repre-sented the Azov-City gambling zone investmentproject in 2009 they declared that the airport,seaport, and a high-speed highway would be con-structed. They also planned to construct resortfacilities for elite leisure: hotel complexes, yacht-clubs, aqua-parks, marines, golf clubs, horse-rac-ing, and other lifestyle facilities for the up-scaleleisure and entertainment market. The regionaladministration estimated a stream of visitors upto 6 million persons per year from the countrieslocated within a two hour flight.

G&L: As with Las Vegas, Azov-City has beencreated in a lightly populated area far fromcities of any significant size. Are there paral-lels between the two gaming regions?

Lenar Kashapov: Of course, everybody istrying to find these parallels. But what arethey? I cannot answer. There were many otherfactors that helped to develop Las Vegas.

I think Russian casinos will have their ownidentity because Russian gamblers have theirown distinct mentality and behavior.Gambling in Russia has its own history, butit is not very long. For example, Americansvisit Las Vegas for rest, entertainment andfun, for Russians, a trip to casino is a chanceto win. The Russian gaming market wasaimed mainly at local guests even when itwas at its peak, only a few people here under-stand it as a tourist activity.

From the point of view of expected profit,Azov-City is a fascinating project. Azov-City isthe first gambling zone in Russia and it seemsthat it will evolve into the first Russian casino-resort destination with a critical volume oftourists and gamblers. From the point of viewof business organization; independent foreigninvestors with western technologies and men-tality will not be able to develop projects hereon a stand-alone basis, it will be necessary tohave a local partner. Authorities wish to avoidthe risk that foreign investment would over-whelm the domestic Russian investment.

The gambling industry in Las Vegas was ini-tiated by gangsters, but according to Russiangambling legislation people with criminalrecords cannot be engaged in business. LasVegas was built up chaotically, but Azov-Cityhas committed to a regional developmentplan through legislation; land use and devel-

AZOV-CITY, KRASNODAR REGION, RUSSIAN GAMING ZONE

Co

urt

esy

of

iSto

ck

Spring13_G&L.qxd 3/10/13 2:16 PM Page 51

G A M I N G & L E I S U R E S P R I N G 2 0 1 3 7 0 2 . 5 4 7 . 4 5 4 552

opment rules. The highway in Las Vegas wasbuilt without much ado, but authorities inKrasnodar region are trying to manage withlocal roads. And at last the gambling industrygives us a head start; there are a lot of profes-sional investment companies and gamingoperators all over the world, so we continue tolook to them for their experience.

As to location, I cannot say definitely, we aresimilar to Las Vegas or not. The first part ofgambling zone Azov-City is situated at theCoast of Azov Sea where the surrounding ter-ritory is quite large, and there are many peo-ple who wish to live and work here.

G&L: Oracul Casino was the first to open inAzov-City. Is there planned expansion of theOracul Casino?

Lenar Kashapov: Royal Time Group is theowner of Oracul, the first Russian casino.Oracul was created with the declared intent ofsignificantly boosting this new resort-city inthe south of Russia, where gambling isplanned to be only a smart part of the region'sentertainment offerings.

The first 1500 square-meter gambling facili-ty was opened in 2010, and has since expand-ed to 4000 square-meters. The Casino Oraculis presently building a hotel complex whichwill be the biggest part of resort. I think theconstruction will take about 15 more months.Investors and partners trust Royal TimeGroup, so I suggest financing would not be aproblem.

The most difficult thing in Russia is main-taining a dialogue with authorities.Gambling is a new industry in our countryand we recognize it is very important to havea correct economic calculation. To plan itsstrategy, Royal Time constantly consults withauthorities.

G&L: A mixed-use tourism project “GoldenSands” is being billed as the Leisure Capital ofRussia. What is the status of development,and what offerings are intended within thisproject?

Lenar Kashapov: The coordination of suchan initiative in Russia is very long process. Itis necessary for authorities to make changes to

various standard and legal acts. Moreover it isnecessary to find infrastructural capacities,develop and coordinate the general plan ofland using at the new location. And at last itis necessary to find a lot of money which theregional authorities do not presently have.This project is developing slowly and it has tobe changed due to bureaucratic procedures.Construction processes at the new site couldbring more difficulties.

We support regional authorities in this initia-tive; moreover we have ordered and developedthe land use concept of the Golden Sands. Weare watching the developments and as soon asa clear light is shed upon the situation, wewill immediately publicize the progress alongwith government authorities.

G&L: Some people have considered illegalgambling facilities in the cities as the maincompetitors of the gambling zones. How wellare the authorities controlling these illegalgambling facilities?

Lenar Kashapov: That is a shadow businessand I cannot answer objectively “How well arethe authorities controlling illegal gamblingfacilities?” I’m studying gambling in Russia,but even my knowledge is not enough to esti-mate volumes of illegal market.

Struggling against illegal gambling is differ-ent in different regions of Russia. In someregions government and law enforcementbodies are focused on other important issues,and therefore the struggling against illegalgambling is not prioritized. In other regions,

the fight against illegal gambling is underpersonal control of the Governor.

According to official data the Office of thePublic Prosecutor closed more than 40,000illegal gambling facilities and more than 450illegal casinos all over the Russian Federation.But you should consider that law enforcementbodies often close the same gambling facilitymany times. There are also some facilities thatare difficult to enter since they are undersomebody’s protection.

But on the other hand the gambling zone isvisited mainly by VIP gamblers who don’tlike to be arrested. If you visit an illegal casi-no in Russia such arrest and prosecution isvery possible. The elite will go to legal casi-nos to enjoy better service and entertainmentprograms, complete with an opportunity towin the prizes guaranteed by the govern-ment. I am absolutely sure while illegalgambling is prospering, the development ofRussian gambling zones will be extremelyslow.

G&L would like to thank Mr. LenarKashapov for his time in discussing the sta-tus and future of Russia’s Azov-CityGambling & Resort.

Based in Bali, Bill has been consulting,installing and supporting solutions in the glob-al golf and leisure industry since 1982. He hasbeen involved with over 1000 systems installa-tions in 40+ countries from North America toAfrica to Asia & Australia.

INTERNATIONAL GAMING

Spring13_G&L.qxd 3/10/13 2:16 PM Page 52