COMPARISON OF THE FUTURE RUSSIAN GAMING ZONE RUSSIAN GAMING WEEK 5-6 NOVEMBER 2014 SOCHI OUTLINE OF PRESENTATION • INFORMATION GAMING ZONE OF RUSSIA • COMPETITION BETWEEN SOCHI GAMING ZONE AND OTHER GAMING ZONE IN RUSSIA • PLANING REVIEW • STRATEGIC CONSIDERATIONS • REPORT RECOMMENDATION RUSSIAN GAMBLING ZONE RUSSIAN GAMING ZONE • AZOV CITY • PRIMORYE KRAI • YANTARNAYA • SIBERIAN COIN • CRIMEA • SOCHI AZOV CITY GAMING ZONE The Krasnodar Territory invested a billion roubles in developing the infrastructure of the gambling zone, and the Rostov Region invested a further 170 million roubles. Three official casinos in Russia – "Orakul", "Shambala" and "Nirvana" – are opened and operate in the gambling zone "Azov-City" in the Shcherbinovskoye district of the Krasnodar region. AZOV CITY GAMING ZONE All three Russians casinos are located in AzovCity, a resort town situated on the Don River, very near the Azov sea. The first to open was the Oracul Casino, in 2010. Since then, two more casinos, the Shambhala and more recently the Nirvana casino, opened their doors. The opening of a fourth casino, the Crystal Casino, is planned for 2014. AZOV CITY GAMING ZONE In 2010, over 45 thousand people visited these gambling establishments; In 2011 – 122 thousand people there. In 2012 – 185 thousand people, and In 2013 – 254 thousand people. 300000 250000 200000 150000 Visitors 100000 50000 0 2010 2011 2012 2013 AZOV CITY GAMING ZONE During 5 months of 2014, 63,248 people visited the casino "Orakul"; 29,303 people visited the casino "Shambala", and 35,256 people visited the casino "Nirvana". 70000 60000 50000 ORAKUL SHAMBALA NIRVANA 40000 30000 20000 10000 0 2014 AZOV CITY GAMING ZONE The closest residential area to casinos is village MALCHANOVKA . There is a small Hotel ( 11 Room ) in the Casino Orakul . There are Hostels and Boutique Hotels , In town of Yeysk. Distance between Casino area and town of Yeysk about 70-80 km. Yeysk offers a variety of attractions, restaurants, open-air cafes, clubs, bars, and night clubs. The nearest airport is located In ROSTOV NA DANU 130 km away from the city PRIMORYE KRAI GAMING ZONE Primorye krai (region) (also spelled Primorsky, Primorskiy) is the farthest south-eastern region of Russia, located in the East of Asia, washed by the Japan Sea PRIMORYE KRAI GAMING ZONE It is planned that the first casino will be launched in the fourth quarter of the year by Melco International Development. It will be located on the shores of Myravynoy Bay near Lake Cherepashy and will be designed to accommodate 2,000 casino tables and slot machines. In addition to the casino, there are plans to build a hotel with 1,000 rooms. The total volume of investment in the project is estimated at $700m. In addition, another one billion rubles (US$30m) was invested by the Primorye government and was mainly allocated to the building of infrastructure. PRIMORYE KRAI GAMING ZONE It is planned that the total area of the Primorye gambling zone will be almost 620 hectares. It is situated on the north-west coast of Ussuri Bay, the north-eastern part of the Peter the Great Gulf and a popular recreation area in Primorsky Krai. The distance to the nearest airport is 25km, while to Vladivostok, the administrative centre of Primorsky Krai, it is 50km. PRIMORYE KRAI GAMING ZONE Primorye, has a total population of approximately 2 million, less the 0.6 million that domicile in Vladivostok. That means that approximately 1.4 million live outside the city area. While spread out over 64,000 square miles, all are within varying driving and bus distance—which is important, because Russian residents are allowed to gamble. Primorye is set to cover a huge area including China, Japan, South and North Korea. Primorye is the nearest point where casinos are allowed and it is an average of 1.5 hours of flight Today, there are direct flights from Beijing and Harbin to Vladivostok. YANTARNAYA GAMING ZONE «Yantarnaya» with the total area of 479.1 hectar in the territory of Zelenogradsk district of the Kaliningrad Oblast on the Baltic Sea coast within the boundaries of Krasnotorovka rural settlement near the villages of Okunevo, Povarovka and Russkoye. The offered set of services will meet the needs of visitors for entertainment and rest; it will ensure the year-round flow to the gambling zone of not only Russian visitors but also citizens of Germany, Sweden, Finland, Poland, Lithuania and other countries. SIBERIAN COIN GAMING ZONE The gaming zone “Siberian coin” is situated on the border of special economic zone “Biruzovaya Katun”, which is one of the four special gaming zones in Russia where organization and gaming activities are legally allowed. Such situation helps to significantly enlarge the range of touristic services on the regional Territory and to form a segment of exclusive gaming and entertainment services. Actually only 2 residents with the total amount of investment of 1 billion rubles are acting in the Territory of “Siberian coin” zone. The first gambling and amusement facility open its doors to visitors in 01.11.2014. SIBERIAN COIN GAMING ZONE • Favorable geographical position in the center of Russia, at the place of fusion of Western and Oriental cultures; • 5 million people reside in the nearby cities providing convenient commuting possibilities; • shared border with active special economic zone “Sky Blue Katun”; • location in the popular tourist destination of Siberia; • high quality and diversified wellness treatment services provided on adjoining territories; • availability of ready-for-employment highly qualified labor force; • project support guaranteed by Altai regional Administration SIBERIAN COIN GAMING ZONE Gambling zone «Siberian Coin» Special economic zone of tourist recreational type «Sky Blue Katun» SOCHI & CRIMEA GAMING ZONE Gambling zones in Sochi and the Crimea is a promising project. Sochi already has a number of good hotels where casinos used to operate before, and all they will have to do is to hang the sign “open” on the door. There are lots of accommodations with complete infrastructure in Crimea as well; casinos can open there in a day or two. SOCHI & CRIMEA GAMING ZONE Analysts suggest Crimea's budget could get a 25 billion ruble ($725 million) boost annually by establishing a gambling zone. And unlike all the previous zones, where all the infrastructure had to be created from scratch, in Sochi and Crimea everything is already done. SOCHI & CRIMEA GAMING ZONE Sochi's primary gateway is Sochi International Airport which is located in Adler district. It was totally reconstructed during the preparation to the 2014 Olympics. The new terminal was opened in 2010 giving the city a chance to become a major regional air hub. Crimea’s primary gateway is Simferopol International Airport is a major hub and had both domestic connections with Ukraine and several international flights. SOCHI & CRIMEA GAMING ZONE Sochi attracts over 4 million tourists Crimea attracts over 6 million tourists 6000000 5000000 4000000 Crimea Sochi 3000000 2000000 1000000 0 2012 2013 SOCHI GAMING ZONE +PLUS Fact #1 Sochi will host the event for at least the next seven years through 2020. Fact #2 After all of the athletic excitement of 2014 Sochi will take several years off from hosting international sporting events before bounding back onto the scene as one of the 11 Russian cities to host the 2018 World Cup. The First Olympic Stadium will once again have the eyes of the world on it as the world’s most popular sport descends on Sochi and ten other Russian cities. SOCHI GAMING ZONE +PLUS Fact #3 Winter tourism Fact #4 Summer tourism The creation of a gambling zones in Russia will attract additional investment to the region, create jobs and improve the tax base. Investment is expected to be at least millions and could reach billions. Many potential investors have already sent proposals to the authorities. An increase in tourism as well as the development of hotel businesses and catering can be expected.