By Janet Parker

Hotel and leisure group Sun International said on Wednesday that it might take longer than originally planned to begin a hotel and gaming operation near Moscow due to a raft of restrictive gaming laws recently passed in Russia.

However, Sun International CE David Coutts-Trotter said the process was still evolving and the group remained interested in what he called a "high-potential leisure market".

In October, the group announced its plans to build a casino complex with Russian Belaya Dacha Group near Moscow.

At the time, Coutts-Trotter said plans for the project were at an advanced stage, but that a decision depended on how gambling legislation in Russia evolved.

Last month, the Russian parliament passed a new law that will impose high cost and capital restrictions on gaming establishments, effectively driving gaming out of the big cities. And in 2009, four remotely situated gaming reservations will be created and no casino will be permitted outside them -  in the Kalingrad region, on the Baltic Sea; the Primorye and Alta regions, on the Pacific; and a region on the Black Sea shore, incorporating territory of the Rostov and Krasnodar regions.

Coutts-Trotter said on Tuesday the legislation would, as intended, get rid of illegal operators and keep the gaming law alive, but it would effectively kill the industry for a while. Expansion would continue, but in a slower, more regulated way.

"As happened in SA, and elsewhere, the first step is to deal with the proliferation, especially in Moscow city, of thousands of virtually unregulated gambling outlets. Closures have already begun and by mid-2009 this process will be complete. The new legislation also aims to encourage investment in remote rural areas, and thus gambling will in due course be permitted in very remote zones".

However, the Moscow region accounted for more than 50% of Russia's gambling market, and legal, regulated gambling in that market seemed likely in the longer term, he said.

Analysts canvassed yesterday expect Sun International to deliver strong growth for its year to end-June -  well within the 30% to 35% growth target it indicated in its latest trading update. The group is due to report next month.

Business Day