Hong Kong listed NagaCorp one of four companies currently creating casino resorts near Vladivostok in far eastern Russia.

NagaCorp

Primorsky in far eastern Russia wants to be the next big thing in Asian gaming. The region has received more than US$20 billion in government investment, from record setting bridges to the stunning Far Eastern Federal University campus that hosts the annual Eastern Economic Summit, a Vladimir Putin star turn that last September featured special guest leaders Shinzo Abe and Xi Jinping. Located 50 kilometers (31 miles) outside Vladivostok, a closed city under Soviet rule due to the Pacific fleet, now a gem of Russian tourism that borders on China with Korea and Japan short flights away, Primorsky Integrated Entertainment Zone has Tigre de Cristal open, and three more casinos in development. The Innovation Group’s Michael Vanaskie suggests the IEZ could become the next casino cluster on the East Asian map.

When Tigre de Cristal debuted in 2015, majority owner Summit Ascent was controlled and chaired by Macau casino mogul Lawrence Ho, chairman and CEO of Melco Resorts and Melco International. Ho sold out in late 2017, reportedly to focus on obtaining a casino license in Japan. Hong Kong-listed Summit Ascent’s current largest shareholder Taiwan’s First Steamship is considering selling its shares.

Dominant Macau junket promoter Suncity Group’s Hong Kong-listed arm owns 3.29% of Summit Ascent, with Suncity Executive Director Andrew Lo holding a board seat. Suncity’s point player on overseas investments, Lo characterizes the stake as a play on an “undervalued” stock, while expanding Suncity’s destination menu for its high rolling clientele.

Tigre de Cristal casino hotel blazed Primorsky IEZ’s gaming trail in 2015, when it was controlled by Lawrence Ho.

Muhammad Cohen

Next up in Primorsky’s Integrated Entertainment Zone, NagaCorp’s US$350 million integrated resort on a scenic inlet. Hong Kong-listed NagaCorp owns NagaWorld, the wildly successful integrated resort in Phnom Penh that’s helped put the Cambodian capital on the regional tourist map, especially with Chinese leisure travelers. Master resort architect Paul Steelman, following his Naga2 extension, designed the Primorsky property. The resort is on track to be completed by the end of this year, according to NagaCorp’s annual report, potentially opening sometime early next year. Primorsky fits NagaCorp’s playbook as a low tax jurisdiction with a diverse customer base and untapped China market potential.

NagaCorp founder, controlling shareholder and CEO Chen Lip Keong outlines in an email the “E’s of success” for Primorsky. Foremost, there’s the “Eastern point of Russia,” within reach of “critical mass feeder markets” Japan, South Korea and China’s Heilongjiang, Liaoning and Jilin provinces, with a combined population of 280 million and each with GDP in excess of US$200 billion. “This source of energy can be inexhaustible if the IEZ implementation is successfully carried out,” Chen says.

Add to that Vladivostok as a “European city in Asia” with historic heritage as well as novelty and a branch of Saint Petersburg’s renowned Mariinsky Theatre; “Environment, a little San Francisco” featuring hills, bays, blue ocean and dramatic bridges; “Ecology” with fresh air and unique wildlife on land, notably tigers, and sea; “Eating paradise” featuring seafood; and “Ease of entry” with relaxed visa requirements for 18 countries, including China.

Shambala is one of two Russian casino operators with resorts under construction in Primorsky IEZ.

Primorksy Krai Development Corporation

Two Russian companies also have casino projects rising out the ground. Diamond Fortune announced in February it’s taken a Japanese partner for Imperial, a US$270 million project that aims to opens its first phase by September next year. The company has a second IEZ plot in the zone that it can develop if market conditions warrant.

Last July,  casino operator Shambala announced that it was acquiring land for a US$125 million integrated resort, and it’s already started construction. Russia shuttered Shambala’s Azov City casino at the end of last year, closing that zone in a bid to boost gaming in Sochi, 692 kilometers (430 miles) to the south.

“Together with Tigre de Cristal, about 12 complexes are planned, including a hotel, a casino, restaurants, shopping areas and related tourist services,” Primorksy Krai Development Corporation Executive Director Igor Trofimov says. “To date, three sites remain free [in] the gambling zone, which we plan to commission this year and to work more closely on the development of the non-gaming sector and transport and engineering infrastructure.”

Without healthy relationships with the authorities–Chen’s E’s include “Encouragement” from the government to develop Russia’s far east–casinos rarely succeed anywhere.