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. Last Updated: 07/27/2016

Gambler Ritzio Shelves Plans for IPO

VedomostiOne of Ritzio's gaming halls in Moscow, where legislative proposals being considered could ban gambling altogether.
Ritzio Entertainment Group, which runs the Vulkan chain of gaming clubs, has shelved plans for what would have been Russia's first listing of a gambling firm in London due to expected legislative changes to curb the booming business, banking sources said Wednesday.

Ritzio, which has declined to comment on its plans for an initial public offering, had hired Credit Suisse and Renaissance Capital to advise on the listing it was planning for 2006, according to bankers who had valued it at $2 billion to $4 billion.

An unwelcome spotlight has fallen on the industry after President Vladimir Putin in January called gambling an addiction "no less serious than dependency on alcohol and drugs."

The Duma proposals call for a complete ban on gambling in some cities including Moscow, the doubling of taxes per slot machine and casino table, a ban on gambling in residential areas and an increase in the minimum size of gaming outlets to weed out minnows.

There are currently no federal laws regulating the gaming industry, but a version of the Duma proposals is expected to become law later this year.

Analysts expect the new regulations to affect the valuation and the size of the company and its business.

"The uncertainty in the ... gambling industry is quite overwhelming at the moment," said one investment banker, who spoke on condition of anonymity. "Ritzio is not an IPO-able asset."

Cyprus-based Wolf Investments Ltd. controls 60 percent of Ritzio, which as of May 2005 ran 681 gaming halls equipped with 30,000 slot machines.