>> JURISDICTIONAL UPDATE:

CYPrus the Mediterranean’s new Casino Market By Alexia C. Couccoullis

very important market in the games of chance sector opens with the to be created within the next years in new casino that will be built within the next years in the Republic of Cyprus constitutes a significant part of ACyprus. This undoubtedly constitutes a very interesting development the current government’s plans aiming in the Eastern Mediterranean gaming market that will change the landscape to stimulate the Republic’s recovering of this market as we know it. Eurozone economy. However, the casino project is expected to be successful. Cyprus experienced a financial crisis expected in 2017 with an als o expected Cyprus passed legislation legaliz - in 2013, with many of its top banks left increase in tourism revenue. ing casino gaming in 2015, thus creat - insolvent, and it was forced to negoti - Cyprus did not have any casinos in ing a license for a single main casino ate a painful bailout with international the past and the previous government resort, as well as “four smaller satellite creditors. However, since then it has re - had vowed to never allow a casino for projects and slots parlors.” Under Law covered, with the imposition of austerity social reasons; however, the financial 124( l)/2015, casino gambling in Cypru s measures in exchange for a loan of 10 crisis of 2013 prompted the current was regulated with the establishment billion Euros from the IMF and the government to perceive the casino sec - of a National Gaming and Casino EU. The Cypriot econBomy yJ agsroewn Bbyacigtaorlu apsi ,a G wleany nt oL iagthtrta,c tM ianrvye sTtmraenn ta. ndS uKpaerlv iRsiuotnl edCgoem mission (NGCSC) 2.8% in 2016 and a similar growth rate is Therefore, the casino complex that is with seven (7) members. Under the said

22 AMERICAN GAMING LAWYER • AUTUMN 2017 law only one casino will open in a period not ternational, the US’ Hard Rock (initially) and exceeding 15 years from the date of issuance local firm CNS Group to build the casino re - of the first casino resort license. The casino sort at Limassol. license allows for the operation of a casino resort Melco, one of the oldest companies in for thirty (30) years, with a monopoly for the , is owned by billionaire business - first fifteen (15) years; therefore, no other man Lawrence Ho. The company has until casinos will be allowed to open within the first now concentrated on , Hong Kong and fifteen (15) years. the . On the other hand, Cyprus The integrated casino resort license shall Phassouri (Zakaki) Limited (“CPZL”), is a concern the development, operation and main - member of the CNS Group conducting real tenance of an integrated casino resort as a whole estate, telecommunications, dairy, large scale and not for the casino alone, under conditions, farming, export and mining in Cyprus and so considered necessary by the NGCSC. The li - on; it also owns hotels in Greece and the AKS Alexia C. Couccoullis censee’s annual license fees are due each year; Annabelle Beach Resort in Crete. Alexia Couccoullis is a graduate for the first four (4) years following the date Melco International Development Ltd of Athens College . She continued of grant of the license the fee amounts to assumed the majority stake of 70.74% share - studying at the Legal Faculty of €2,500,000 and after the first four (4) years holding of the integrated casino resort project the National and Kapodistrian and until the eight (8 th ) year it amounts in in Cyprus, with the agreement to purchase Hard University of Athens and attended the University of €5,000,000. Rock’s interest in the project company. Accord - London, Institute of Advanced It is possible that VLTs may also be licensed ing to a Melco press release, the company Legal Studies, where she was and the state lottery may be privatized. Any per - initially held 35.37% of the project company; awarded MPhil in 2011 Alexia son can supply gaming machines or gaming test however, it has agreed with Hard Rock to pur - Couccoullis is a member of the services to the casino, and the operator is per - chase its interest, completion of which is subject Athens - Greece and Nicosia - Cyprus Bar Association. In 2011 mitted to be supplied with gaming machines to the approval of the Cypriot government. The she was accepted as a member of or gaming test services if that supplier of remaining 29.26% belongs to CPZL. the International Masters of gaming equipment or gaming test services The acquisition of Hard Rock’s stake by Gaming Law (IMGL). holds a valid gaming supplier license from the Melco International Development Ltd took She specializes in interna - NGCSC or is exempted from this require - place only a few hours after the agreement on tional, commercial and invest - ment arbitration, certified by the ment by the latter. the operation of the casino was signed. Accord - Institute of Advanced Legal Moreover, the casino resort operator shall ing to the consortium, the casino plans will Studies, University of London. be permitted to develop and operate up to four not change and the completion of the project She is also Harvard Law School (4) satellite casino premises not counting the will be accelerated. According to chief gam - educated. Furthermore since casino resort, with a maximum of fifty (50) ing officer, of the consortium of Melco Inter - 2012 she is nominated as one of the 100 Arbitrators for the Athens gaming machines in each of them and five (5) national Development Ltd, Seminole HR Chamber of Commerce and gaming tables in one (1) of them. The satellite Holdings LLC, the Cypriot Government was Industry. She is an Accredited casinos will be placed in different districts of informed about the acquisition through NGCSC Mediator and a Mediator Cyprus selected by the operator and at loca - at a meeting called by the consortium immedi - Trainer by the International tions different from the district where the ately after the end of the ceremony following Mediation Institute (I.M.I) and certified Negotiator. casino resort is located; moreover, the satellite the signing of the agreement. According to She speaks English, casino premises will be operated in support of the chief gaming officer, of the consortium of German and French. the operation of the integrated casino resort. Melco, the consortium did not inform the gov - Two years after the entry into force of ernment earlier as the decision to buy Hard the said law, on Monday, June 26, 2017, Rock’s stake in the casino was finalized a little Cyprus signed a “landmark deal” for the con - before signing the deal. According to the chief struction of what is perceived as “Europe’s gaming officer of the consortium of Melco: biggest casino”, or better, an “integrated “...we went directly ensuring the successful im - casino resort, the only one of its kind in Eu - plementation of the project and this develop - rope.” In order to accomplish this grand ob - ment is part of a larger Melco global jective, Cyprus backed proposals from a restructuring.” He also stressed that th e invest - consortium of Hong Kong-based Melco In - Continued on next page

AMERICAN GAMING LAWYER • AUTUMN 2017 23 >> JURISDICTIONAL UPDATE: CYPRUS

of the financial crisis in March 2013, Anastasiadis’ Government, defying the opposing views, proceeded to set a high-rise vision with the creation of an integrated casino resort, which is the leading in Europe and one of the best worldwide.” The casino will include 136 gam - bling tables, 1,200 gambling machines and the adjoining luxury hotel will have a 500-room capacity, a health spa and 1,500-seat concert hall. The luxury hotel will also have the capacity for expansion, a conference hall spanning 6,000 square meters (64,580 square feet) that may ac - commodate audiences of 1,500, and a wellness centre covering 4,000 square Apart from the casino resort that will be ready by 2019 meters. “This opens the road to realizing or 2020, an interim casino will operate in Limassol and one of the largest infrastructure projects “ that has ever been done in our country,” four (4) smaller satellite casinos in Nicosia, Larnaca, Famagusta said the Minister of Energy. and Paphos will operate in early 2018. The President of the Republic expressed his contentment with regard ” to the completion of the procedures for the casino operation “with professional - ism and absolutely transparent proce - Continued from previous page should be satisfied that th e acquisition dures.” An announcement was issued ment in Cyprus “is a top priority for would not affect the course of the proj - congratulating the inter-ministerial com - Melco” and that with the existence of ect. Noted that under the applicable law mittee and the committee guiding the only one casino manager, the decision- the shareholder of the integrated casino procedures “that have succeeded in making process and the pace of imple - resort operator company will be able to bringing in a credible way within a short mentation of the project will be faster transfer, dispose of or convert any part time the necessary procedures enabling without varying the consortium’s of his stake if the stake proposed to be us to see a vision of decades for our plans. The director of the CNS Group transferred is equal to or greater than ten country today to be fulfilled.” described this development as “very pos - percent (10%) of the equity and/or total The President also said that the itive,” agreeing with the chief gaming of - votes attached to all voting shares in the casino would constitute the island’s ficer of the consortium of Melco that it operator following written approval by largest ever tourism-related invest - will speed up the process. the NGCSC. ment that will attract holidaymakers According to director of the CNS The contract was signed at the all year long. This of course is very Group, in the coming days the consor - Filoxenia Conference Centre among important as tourism constitutes 20% tium will formally submit an applica - the NGCSC and chief gaming officer of Cyprus’ economy and according to tion for approval of the shareholding of the consortium of Melco who also the Minister of Energy the casino change of the consortium to the said that the resort would be built by “…will enrich our tourism product, at - NGCSC, with the Chairman of the lat - late 2019 or by the first half of 2020. tracting an additional 300,000 tourists ter saying that the change in the share - The Cypriot Minister of Energy, annually and contributing significantly holding structure of the joint venture Commerce, Industry and Tourism said to combating seasonality.” This would is subject to approval by the NGCSC, that the resort will cost more than mean that such a development would adding that so far there is nothing partic - 500,000,000 Euros to build and will increase the number of tourists visit - ularly worrying about the operation. “We also will create 4,000 new jobs during ing Cyprus by 10%, i.e. from 3 million have to look at the reasons for the acqui - construction and another 4,000 jobs to 3.3 million. It is also expected that sition and decide accordingly,” he said and once it is up and running. He also said visitors of the casino-resort will mainly concluded, noting that the NGCSC that “only three months after the peak come from Europe, Russia, Israel, the

24 AMERICAN GAMING LAWYER • AUTUMN 2017 Middle East and Asia/China. casino sector out of the Republic. How - form our duties and responsibilities in Apart from the casino resort that ever, the Minister of Energy referring to good faith always aiming at making this will be ready by 2019 or 2020, an interim the government’s main strategic aspira - ambitious project a success.” casino will operate in Limassol and four tions for the development of an inte - The casino tax will amount to 15% (4) smaller satellite casinos in Nicosia, grated resort casino type said that the of the gross income from games and will Larnaca, Famagusta and Paphos will first goal was to “limit casino gambling be paid monthly; moreover, according to operate in early 2018 (the satellite casino in a controlled manner so as to protect Finance Minister Harris Georgiadis the in Nicosia, the capital of the Republic, vulnerable groups of the population…it casinos would bring in €100,000,000 in will probably begin operating within is no accident that the minimum age for taxes every year. Given that in 2015 the 2017). According to the chief gaming gambling was set at 21 years.” Moreover, Republic’s GDP was 17.6 billion Euros officer of the consortium of Melco the casino operations will be overseen by an additional income of 100 million “…gaming is something that you entrust the NGCSC; its Chairman said during Euros will amount to a considerable in - to an operator that has world-class sys - the signing ceremony that its mission crease of 0.5% of its GDP. tems in place to ensure that you get the will be to make sure the operation of the It seems that a new era has begun type of economic development that casino does not fall under criminal influ - in Cyprus and new developments will you’re looking for.” However, despite ence or exploitation; moreover, the most definitely follow. I believe that in general estimates, no timeline has been NGCSC will also make certain that Cyprus it will be once again established given yet as to when exactly the main games in the casino are conducted hon - that if gambling is allowed and prop - resort will be available to the public. estly and that the operator complies with erly regulated any society may benefit Until now, opposition from the the terms of the license; moreover, it will with the increase of tax revenues and Greek Orthodox Church and misgivings monitor any negative social conse - the simultaneous protection of minor p among several Cypriots regarding the quences. He added that the NGCSC and problem gamblers. social dangers of gambling kept the “…shall exercise our authority and per -

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