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RUSSIA
Primorye project seen advancing despite crisis
The Primorsky Krai Development Corp (PKDC), which is responsible for management of the Primorye gaming zone, expects a key project to move ahead this year, despite the outbreak of the coronavirus and remains upbeat about the region’s longer-term prospects.
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Russian entrepreneur Maxim Smolentsev, who formerly operated two casinos in the Azov City zone, began work on the Shambhala casino project in 2018. The Shambhala Company is now finishing construction, with a view to press ahead with a planned opening in May this year.
The RUB8 billion project will involve an entertainment project with a 270-room luxury hotel, a casino, nightclub, restaurants and entertainment venues. The project will open in two phases, with the first stage involving the casino to coincide with the beginning of the tourism season in the region. The casino will have 32 gaming tables and 650 slot machines. The first stage of the resort will spread over an area of about 38,000 sq.m.
Primorye is one of the four original designated gambling zones in remote areas of Russia, which were established after President Vladimir Putin banned gaming in 2009.
It is viewed as having the most potential of the hubs, given its close proximity to the northern Asian markets of Mainland China, Korea and Japan. About 420 million people live within a two-hour flight.
It also has an advantage over many other gaming jurisdictions in Asia, boasting the lowest tax rate, paying a levy per unit and table rather than as a percentage of gross gambling revenue as is the norm in most other markets. While the charges in Russia vary between RUB50,000 and RUB250,000 per table and between RUB3,000 to RUB15,000 per machine, the rates in Primorye are RUB125,000 per table and RUB7,500 per machine.
However, the vision to create a Macaustyle gaming hub has been slow to materialise, with Summit Ascent’s Tigre de Cristal the only property currently open, more than a decade after the zone was established.
NagaCorp, which operates the NagaWorld casino in Cambodia, was scheduled to open a $350 million resort last year, but that has been pushed back to 2021.
Others such as Diamond Fortune’s Selena resort, which has been renamed to Imperial, were set to open this autumn but there are some delays, PKDC said without elaborating.
Still, the corporation says overall the development has met its expectations, with investment agreements totaling RUB74 billion. “Rome wasn’t built in a day”, the Corp’s Head emphasized. It concedes that visitation to the area has been hit by the disruptions from the coronavirus, but the crisis hit during the quieter winter months.
“The gaming zone in Primorye is mainly focused on the Chinese audience; after all, the Chinese are the most gambling nation on earth. At the moment, the flow of punters from China has decreased, which affected attendance, but it is not possible to talk about serious financial losses,” PKDC General Director Olga Sun- Zhaiu told AGB. “The same casino is visited by Russian players, Koreans and Japanese,” she said referring to the Tigre de Cristal.
“In general, we hope that the situation will soon stabilize and Primorye will again fully resume its relationship with China.”
Summit Ascent opened the Tigre de Cristal in November 2015. Phase 1 covers about 36,000 square metres, with a 121-room luxury hotel. It’s operating about 21 VIP tables, 35 mass and 335 slot machines. The company has delayed the opening of the second phase of the resort to amend design plans after SunCity Group became a major shareholder, buying a 24.66 stake from Taiwan’s First Steamship Company and its chairman.
“After the closure of flights with northeast Asia, the gambling zone in Primorye lost customers, most of which were citizens of China. Accordingly, this affected the attendance of the Tigre de Cristal in early 2020,” said Executive Director, LLC G1 Entertainment Stylianos Tsifetakis. “Winter is always a low season for us, therefore, this situation did not affect us as noticeably as if it occurred during the peak summer months.”
He added it’s too early to give any firm forecasts of the fallout, but the company expects the flow of guests to Tigre de Cristal to snap back quickly once air traffic in Northeast Asia normalises.
In the short-term, the gambling zone has been reorienting its efforts to attract Russian visitors, though says this is a temporary measure. The PKDC noted the project was designed to target foreign inflows into the gambling zone, especially from Asia Pacific.
The PKDC estimates that the gambling hub once built out will create tens of thousands of jobs and additional revenue for the region through taxes. Eventually, there will be 12 hotel complexes with casinos.
There are also large-scale plans for nongaming entertainment on a 619-hectare site on Muravyinaya Bay. It has already signed an accord with a Korean company to create an 80-hole golf course. There are further plans for a water park and ski slope, as well as cultural, entertainment and sports facilities.
Bookies ask for aid, casinos close
Russian bookmakers, struggling with the mass cancellation of sporting events, have asked the government for aid, while the country’s casinos have extended their lockdown.
The bookies have asked for tax and rates relief, including foregoing their mandatory annual contribution of 5 percent of their betting revenue – with minimum payments of RUB15m (US$190k) per quarter – to local sports leagues. The companies are also seeking alternatives, with Fonbet taking bets on the new eWBSS Heavyweight Legends virtual boxing tournament, while Liga Stavok is taking wagers on FIFA 2020 virtual soccer.
Meanwhile, Russia’s casinos are to remain closed as the pandemic deepens. The properties were among the last of the world’s casinos to shut their doors.
Summit Ascent executive director quits over strategy
Summit Ascent executive director, Eric Landheer, quit the company due to differences of opinion with the board over strategic business development.
The operator of the Tigre de Cristal said it had received Landheer’s resignation letter on March 23 and had decided to use its discretion to terminate his employment by giving him payment in lieu of notice.
He now holds no position within the group. According to his resignation letter, Landheer said he disagreed with the company’s future investment plan and allocation of financial resources.
He also disagreed on the business development plan and the timing of its implementation, as well as corporate governance matters in relation to future or potential actions of the company.
