Casino resorts are popular destinations for Israelis. It is estimated that over 40.000 Israelis visited the Turkish controlled areas of Cyprus in 2007 to take part in casino gambling. This number has steadily increased over the past years, making the gambling tourism from Israel a very lucrative business.
Until recently, the granting of a casino license in the Republic of Cyprus was not permitted. This however has changed since July 21 this year, when the Law to Regulate the Establishment, Operation, Function, Control and Supervision of Casinos and Related Matters of 2015 (the “Law”) was enacted by Parliament, providing for the operation and regulation of a casino and casino games in the casino, to establish the Republic of Cyprus Casino Gaming Commission (“CGC”), and to authorise and regulate an Integrated Casino Resort (“ICR”) in the Republic of Cyprus.
On September 18, the Ministry of Energy, Commerce, Industry and Tourism announced the commencement of the competitive procedure for the selection of the single licensee for the Cyprus Integrated Casino Resort. Under the law, there are no restrictions on the nationality of the candidates, which means any person can apply for a license. The deadline for the submission of applications is December 18, 2015.
In accordance with the Law the ICR Licensee shall have exclusivity for a period of 15 years, during which time the Government undertakes not to grant another casino license in the Republic of Cyprus. In addition, the license term will be for 30 years with a right to renew for a further 12 years from the date of expiration.
Under the terms of the license, the casino must hold a minimum of 100 tables and 1,000 gaming machines. The casino operator may expand the number of tables to a maximum of 200 and may install up to 2,000 gaming machines without any further consent from the government. The license further provides for the operating times of the casino, which will be 24/7.
In addition, the operator will have the option to develop, over and above the ICR, up to four satellite casino premises, in districts other than the one in which the ICR will be located. Each will be licensed for the operation of up to 50 gaming machines per location. One of these locations may exercise an additional option to operate up to 5 gaming tables. Each satellite casino premises will be individually approved and licensed by the CGC following an application by the operator and demonstration of their contribution to the objectives of the law. The satellite casino premises must be operated by the ICR operator in a way considered supportive of the operation of the main resort.
The gaming duty rate will be 15% of gross gaming revenue and cannot be increased during the exclusivity period. No deductibles will be allowable against gaming duty (other than an allowance for free play) and a single rate will be applied to all casino gaming activity, including casino games and gaming machines.
The casino operator will be permitted to advertise the Casino resort both within and outside Cyprus in accordance with the requirements of the Regulations and Advertising Law.
The selection procedure will be in two phases to select a candidate capable of and willing to develop and operate an ICR in the Republic of Cyprus. The purpose of the first phase is to pre-qualify candidates for participation in the second phase, based on overall financial stability, experience in developing and operating ICRs, understanding of the Cyprus market, and vision for the project. In the second phase, an RFP process will be conducted requiring the pre-qualified candidates to submit their comprehensive proposals in order to choose the preferred candidate who will, subject to ratification by the Council of Ministers, be issued the ICR license by the Casino Gaming Commission (“CGC”).
This is a great opportunity for the Israeli tourism industry to take advantage of the close proximity of Cyprus to Israel, and of the new lucrative market that Cyprus now has to offer.
Yaniv Habari is the founder of Y. Habari & Co. LLC, a boutique corporate and commercial law firm based in Cyprus.
Published by Globes [online], Israel business news - www.globes-online.com - on October 12, 2015
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