E: How many gaming venues were in Kazakhstan before the law came into force?

LL: In 2007, the Kazakh gambling market was presented by 132 casinos, over 2000 slot shops, 53 betting shops and one totalizator.

E: What are the statistics of the current Kazakh gambling market?

LL: At the moment it is impossible to give any statistics. The fact is that after the law came into force operators were given only three months to move out from the cities to the gaming zones.

A number of gaming venues was closed, some of them were turned into discos, cafes and restaurants, and a lot of gaming venues went underground. As a result, official information on gambling venues disappeared from the official statistics: they do not have official web sites, there is no information about them neither in events guides, nor in search engines.

According to the official statistics as of early November 2008 ten licences were issued for betting shops, four licences for totalizators, and one for casinos!

E: How many casinos operate legally today?

LL: On October 1, 2008 the first and so far the only legal casino, Flamingo, was opened. By November 11, 2008 the second legal Kazakh casino Moulin Rouge was supposed to be opened in the city of Kapchagai. But it does not operate at the moment and there is no any additional information on it.

Taking advantage of legislative loopholes - the new law does not explicitly prohibit games without cash prizes - some operators have not moved the slot machines to the gaming zones but pay out non cash prizes instead, say in the form of consumer goods: mobile phone pay cards, etc. Nevertheless, these loopholes are under revision; in September 2008 a new law draft was presented to the Parliament, and operators are most likely to be confined with their business to these two gaming zones.

E: What other gaming activities are popular in Kazakhstan?

LL: After the law came into force many analytics predicted a rocketing of the instant lottery business. The largest Kazakh lottery operator is "National Lottery RK". Indeed, at first, some growth could be noticed but later the interest subsided. It can be explained by the absolutely different nature of emotions and the game itself. From the very beginning, instant lotteries have been popular with people with low incomes while casinos appeal to those with a higher income.

Online casinos are expressly prohibited by the legislation, though despite the ban, there are still some illegal Kazakh online casinos.

Bingo is regulated in the same way as lotteries and does not make a considerable part of gambling in Kazakhstan.

The only totalizator in Kazakhstan is in Almaty. Races take place only once a month, or once every two months, gambling activity being rather seasonal (May is the peak month).

Betting shops are rather popular in country, there are currently 53 betting shops in Kazakhstan. The main betting operators are Gol+Pass and Olymp.

There are several Kazakh online poker websites operating, however, the demand is low.

E: What about the development of the gambling zones?

LL: Currently there are two casinos built in Kapchagai. According to our information another two casinos are being built there.

The development in Schuchinsk will begin in March 2009. According to Kazakh Vice Minister for Tourism and Sports, Kairbek Uskenbayev: "The main part of the work is done, all the necessary infrastructure like power supply, heating and water supply, sewerage are planned in the Budget. "

He added that the location of zones are defined and the business plan is ready.

Speaking of Kapchagai zone, Mr. Uskenbayev said: "In summer 2008 the memorandum with Eighth Wonder - American owner of the biggest casinos in Las Vegas - was signed. They visited Kazakhstan twice and on 30 November are supposed to present the business plan." On 6 July, the Kazakh government signed the protocol of intent on developing the international tourist centre on the shore of Kapchagai reservoir in Almatinsk region. The protocol was signed by RK Sport and Tourism Minister Temirkhan Dosmukhambetov and Marc Adventon Chairman of Directors Board of Eighth Wonder International Limited.

According to the Ministry of Sport and Tourism, on the shore of Kapchagai reservoir they plan to develop an international tourist centre which will consist of golf courses, conference hall, restaurants, entertainment centers, shopping malls and sport venues.

"The development will be realized in three stages. The first stage is planned for a one-year run, the second for three years, the third stage is for 10 years," said the Sport and Tourism Minister. According to him within first year it is planned to complete the design work, the construction itself will begin in the following years.

According to the Ministry, Eighth Wonder International Limited will invest more than $3 bln on the first stage of development.

E: How are Kazakh gamblers reacting to such conditions?

LL: As we said before after the law came into force, many casino didn't stop operating, just went underground operating in the black market for their regular, "closed circle" clients. Many owners of Kazakh casinos decided to move the gambling venues not to Kapchagai but to the capital of nearby Kyrgyzstan, Bishkek. Thus, the owners of Kyrgyz casinos flooded Kazakh gamblers profited from this situation greatly. Every week, Kazakhstan looses hundreds of thousands of dollars which Kazakh gamblers leave in Bishkek casinos and millions of Tenges as taxes that could be paid by owners of Kazakh casinos to the local budget.

E: Is the Kazakh market interesting for Alsart? Are you considering entering this market?

LL: We consider Kazakhstan market as a market with a huge potential. To prove our serious intentions we have opened a representative office in Kazakhstan, to be ready for the peak in demand for gaming equipment during the next few years. We offer equipment for bingo halls, betting shops and we sell and lease slot machines.

Moreover, Alsart Group is considering the investments in the Kazakh gaming zones, in 2009 we plan to open a chain of bingo and betting shops with an average space of 50-200 sq m, joined with sport bars.

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