The expansion of its indoor facilities is an effort to attract more indoor concerts as well as conference and exhibition business.
The southern side of the venue will see two additional halls added for conferences and exhibitions while the poker room, formerly used by casino operators, will become another hall for event organisers.
Plans are also in the pipeline for a further £500,000 project later in 2010 to construct an entrance to the on-site hotel and add a bridge across the top of the concourse to enable guests to dine in the casino's former restaurant.
"We have always intended to expand the Ricoh Arena because we needed an indoor auditorium and the additional halls three, four and five will have retractable walls which will allow us to target a whole new market," said Ricoh Arena chief executive Daniel Gidney.
"In the past we have had to turn down bookings for weddings, conferences and exhibitions because the E.ON Lounge was being used for corporate hospitality on Coventry City match days and we couldn't always confirm bookings because of the potential changes to the club's fixture list."
Ricoh Arena is also home to Championship football side Coventry City.
The work by Birmingham-based contractors Ibex Interiors is due to be completed before June 2010.
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