MOSCOW CASINO BAN FORCES STORM TO OPEN IN COSTA RICA, ARMENIA
Maria Ermakova, [email protected]
Bloomberg
Feb 21, 2008
Feb. 21 (Bloomberg) — 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 $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.
Jazz Town
Storm is aiming for 12 percent of the $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.