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Gambling companies find loopholes to save business: LTV's De Facto

In Rīga, a transitional period comes to a close, during which gambling companies had to close their halls at the historic center of Rīga. For a large part the authorization has already expired, some may still work for a few months. However, in four and five-star hotels, gambling may still be organized, and businesses are attempting to convert the gambling hall into a hotel, Latvian Television's broadcast De Facto reported on November 13.

The company "Alfor" has decided to save the game room at the center by installing a four-star hotel above it. The local government has doubts as to whether the certificate regarding the status of the four stars has been obtained fairly and the police have started testing on it, reports LTV.

The gambling business turnover is nearing pre-pandemic levels this year. But while gambling businesses online earn even twice as much as in 2019, gaming-hall revenues haven't recovered.

Data from the lottery and gambling monitoring inspection show that nine halls have been closed in Rīga last month.

The main reason is the decision taken by the City Council five years ago to cancel permits to offer gambling at the historic center if the hall is not in hotels of four or five stars. The company Olympic used the exception when opening new rooms at Radisson Blu Hotel on Kuģu Street and the Grand Kempinski Hotel on Aspazijas Boulevard.

A different solution is sought by the company “Alfor” partly owned by businessman Jānis Zuzāns, who manages the game halls of the “Fenikss” brand. To preserve the halls in Riga, at the intersection of Brīvības and Dzirnavu streets, the company decided to rebuild the floors above the hall into a four-star hotel.

The construction permit for Alfor was less than a year and a half ago. The hotel had not yet been finished when the gambling room had to be closed. Although the hotel was not finished, Alfor in April asked the Riga City Council for new authorization to organize gambling at this address.

As a justification, Alfor submitted a certificate issued by the Latvian Hotel and Restaurant Center that the hotel above the game hall corresponds to the status of four stars.

The Riga City Council refused to grant the permission. "I can assure all the residents that our legal administration is looking at these submissions very carefully and that we are also looking at these sites in nature. And as they surveyed the place in nature, they made sure that the four-star hotel wasn't working there. It's a place where real [construction] work is ongoing. We had a question in the committee, how could the company get this statement that there was a four-star hotel?" said Riga Vice Mayor Linda Ozola.

For four-star hotels, mandatory criteria include, for example, a high degree of cleanliness, a lobby with seats, and a beverage service, the minimum number of different furniture in the room and the list of hygiene accessories that are required to be in the bathroom. The certificate's publishers say that four stars can also be awarded before the hotel is completed, but the certificate will only be valid when the hotel starts.

One fully fitted model room for each type of room is sufficient to demonstrate compliance with the criteria.

“All types of rooms that are supposed to be, they were prepared. Plus we could also see what has been purchased, what level of cosmetics products, what level of equipment will also be purchased,” said Santa Graikste, board member of the Latvian Hotel and Restaurant Center.

However, the certificate presented to the City Council does not state that it is not valid. The local government has only learned about it after correspondence with the hotel association. They believe that it is misleading because the documents submitted by Alfor have suggested that the hotel is already in service and that the game room may also be working. This is why the city council have turned to a number of institutions.

The State Police has commenced an inspection of what has happened.

Alfor'sr representative denies any deception and says that a misunderstanding has occurred rather. The company hadn't known the certificate wasn't yet valid. In addition, at the time of filing, Alfor believed that the hotel could be opened more quickly. She also said that there is currently no clear procedure for obtaining a permit for a game room in a still-unfinished hotel.

“This is the first time that a game room permit in Riga City is requested in a newly built hotel, such as here. There's no process here yet. We submitted a permit, and wanted to see what the local government expected us to obtain it. […] I see, they are very cautious. It is understandable, given how sensitive the city is, and we also understand it,” said Alfor spokeswoman Līva Biseniece.

The ban on gaming halls at the center has not yet encouraged entrepreneurs to open new drugs in the suburbs, but there is a different trend. This year, 50 applications have been submitted to the City Council to open sports betting facilities. If the council permits, the number of sports betting in the capital could triple.

In most cases, the City Council has postponed its decisions on the granting of permits to the beginning of next year. In the meantime, representatives of the municipality will see the places. Ozola said the municipality is looking forward to a new legal basis allowing not to give permits.

The departing Saeima, with a single vote majority, included a provision in the new Law on Local Governments that only the City Council can decide on the authorization or prohibition of gambling. The law will take effect January 1. Riga has turned to the Ministry of Environmental Protection and Regional Development after explaining whether the new law will give any additional powers. The Ministry is preparing the reply, but it told LTV that nothing is changed by the new law.

The Saeima Legal Office has also pointed to the fact that the amendments to the law do not substantially change anything. Meanwhile, the author of the new rule, Viktors Valainis of the Union of Greens and Farmers, believes the ministry's lawyers are making mistakes. In his opinion, the Gambling Law has already made it clear enough that municipalities can ban gambling and the new law merely highlighted it.

The answer regarding the possibility of the municipalities banning gambling will rather be given a decision of the Constitutional Court in the case regarding the decision of the Council of Ķekava not to allow gambling in the territory. Court spokeswoman Dita Plepa told LTV that the ruling is scheduled for April next year.

The amount of gambling addictions in Latvia is indicated by the number of persons who have requested that they be banned from games rooms. An active ban in the register of Self-Withdrawn Persons is for approximately 24 400 persons. However, it should be noted that these are only those gamblers who have been able to recognize the problem.

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