Cyprus Mail
Business Cyprus

Grand casino project aimed at foreign investors

By Angelos Anastasiou

ALTHOUGH ONE of the stated objectives of licensing the first casino resort complex in Cyprus is to attract foreign investment, this in no way excludes Cypriot investors who may submit proposals, the government said on Saturday.

The “integrated casino resort policy outline” which was released in full on the commerce ministry’s website on Saturday predicts the creation of a “world-class complex that will include not only a hotel resort and casino, but also a combination of sights and activities,” so that it can be “classed as a top-tiered casino resort in Europe, and one of the finest in the world”.

One of the stipulations of the bill is that the hotel that is to be part of the complex “will exceed requirements for a five-star hotel […] and offer a minimum of 500 luxury rooms”, the description on the website said.

The outline includes the aim of attracting foreign investments to Cyprus, but the government spokesman on Saturday denied this meant that the government’s preference would be for a foreign investor to land the job.

“There is absolutely no such preference,” said Nicos Christodoulides, before qualifying his denial. “Our understanding is that even proposals from Cypriot investors will most likely include joint ventures with international firms, which is where foreign capital would come from. But if a Cypriot concern can raise the money to go it alone, there is nothing to stop them.”

This does little to explain quite how the goal of attracting foreign capital would be achieved if Cypriot investors secured the casino deal, but the government insists it had no intention of favouring foreign investors at the expense of Cypriots.
“Everything else notwithstanding, that would be illegal,” the government spokesman said.

After the release of preliminary details on Friday, Christodoulides said that the government’s aim was to select and license a casino operator within less than a year. The duration of the licence will be 30 years, with the government pledging to refrain from issuing another licence during the first 15 years from the day of licensing.

The government-sponsored bill lays out the rules under which the casino resort will be administrated, as well as the mandate of the National Gaming Authority (NGA) that will be tasked with overseeing its operations.

The lengthy document provides for the strict supervision of the casino’s operation, and affords the gaming authority extremely broad oversight and control powers.

The choice of venue, long an issue of heated debate among municipalities clamouring for the lucrative privilege of hosting the casino and various groups who perceived its existence as a threat to their interests, has been left to the casino resort’s licensee, although the NGA reserves approval rights.

This provision likely represents a compromise solution by the government, aiming to appease dissenters and fend off criticism by local authorities who will be left out.

“This was the plan all along,” Christodoulides told the Sunday Mail. “It was never a matter of whether the government decides or not. The party investing the money gets to choose the site.”

The hoteliers’ association PASYXE last year tabled a proposal to license one casino per district, which would help tackle the issue of political turf wars over location. Such a decision would also help avoid a concentration of new tourists to the casino area.

“Our only objection to the bill related to the fact that we had proposed one casino per district. But the government decided to license only one, so that’s what we have,” PASYXE chairman Haris Loizides told the Sunday Mail. Along with the one-per-district proposal, PASYXE had reportedly also proposed to restrict the size of the resort’s hotel. Still, the association appears fully deferential to the government’s plan.

“We do not oppose the hotel provisions,” Loizides said. “This is a free market and anyone who wants to build a hotel, however big, is free to do so, whether a casino is involved or not.”

In addition to the main casino resort complex, the government bill allows – but does not require – the licensee to operate up to four smaller gambling establishments, which may include up to 50 electronic gambling machines, but no table games. These will be licensed on proviso that they are constructed in each of Cyprus’ districts other than the one hosting the main casino resort.

The casino itself must offer at least 100 gaming tables and 1,000 electronic gaming machines. If the administrator wishes to operate more than 200 tables or over 2,000 machines he must file a request with the NGA.

According to the bill’s provisions, the project will offer permanent revenue streams for the government to the tune of an annual ‘licence fee’ set at €2.5 million for the first four years and €5 million annually for years five to eight. From then on, the bill allows the NGA to amend the licence fee as its own discretion every four years, in order to “support its operating cost”.

A further ‘revenue tax’ of 15 per cent will be levied on gross revenues from the casino’s gambling operations. In the bill, gross revenues are defined as all gambling income minus winnings paid to customers.

After detailed proposals are invited by interested investors, a shortlist of the three most attractive ones will be submitted to the Council of Ministers to choose from. Once a licence has been issued, the government has pledged that all permits and related decisions will be issued and communicated to the licensee within no more than three months.

The casino may be open 24 hours a day, seven days a week, but its administrator will need to submit a timetable laying out hours of operation for NGA approval. Only persons 21 and above will be allowed to gamble.

Gambling facilities will be excluded from the smoking ban law, so smoking and consuming alcoholic beverages will be allowed in gambling establishments.

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