Shambala CJSC Plans $128 Million Casino in Primorye Krai
Shambala CJSC, a Russian casino developer, announced it will spend $128.6 million to build a 172,200-square foot integrated casino resort in the Primorye Krai near the Russian Far East port city of Vladivostok. The casino will operate in the Primorye Integrated Entertainment Resort zone, one of four such casino-friendly zones spread throughout the Russian Federation.
Shambala CJSC recently won a license to build the casino near Vladivostok, which is with a few hour ride via railway to Manchuria and northeast China. The state-owned Primorsky Krai Development Corporation bestowed the license on Shambala.
The casino is planned for two parcels of land which Shambala purchased in early May. The two parcels include one piece of land which is 26.6 acres and second, smaller 7.1-acre plot.
Shambala previously owned a casino in Azov City in the Krasnodar special administrative region for casinos.
After the Russian annexation of Crimea, the government shut down three thriving casinos in the area. Russia’s Finance Ministry paid all three operators $100 million apiece for their troubles, then suggested they would be given licenses in the Sochi region, which is another casino-approved zone of Russia. In September 2017, Russia announced that Shambala had been approved for the Vladivostok area.
Igor Trofimov: 10 Primorye Casinos
Igor Trofimov, the Primorsky Krai Development Corporation’s interim director, announced the purchase on May 6, stating, “At present, ten sites with a total area of 150.2 acres remain free on the territory of the Primorye Integrated Entertainment Resort. We plan to hold several auctions in which all of the lots will be exhibited in turn.”
Mr. Trofimov recently stated that Russia’s government planned to offer licenses and sell plots of land to 8 other potential operators. At the time, he was discussing Shambala CJSC and Tigre de Cristal as two potential operators. Two more potential developers have materialized after Trofimov’s comments.
Tigre de Cristal and Summit Ascent Holdings
At present, one casino operates in the Primorye Integrated Entertainment Zone: Tigre de Cristal. The casino is located 31 miles from Vladivostok. The Tigre de Cristal casino opened in October 2015 under Lawrence Ho’s ownership.
In December, Lawrence Ho sold Summit Ascent Holdings, the Hong Kong-listed casino company which owns Tigre de Cristal, to a Taiwanese real estate firm. The Taiwanese firm owns real estate throughout China and presumably would market to Chinese customers, much like Lawrence Ho did.
Lawrence Ho Sold Russian Holdings
Lawrence Ho recently said he wanted to divest himself of the Russian casino, because he wanted to focus on Japanese casino development. He said that the Russian casino market was not as profitable as he had hoped, while the regulatory framework was complicated. Lawrence Ho also noted the possible increase in taxes on Russia gaming interests, which could prove troublesome.
That has not stopped NagaCorp, which recently announced it would invest in a $12 billion railway link between Vladivostok and Northern China. NagaCorp is the Cambodian casino company which owns NagaWorld Phnom Phen, the only casino in Cambodia’s capital city. NagaCorp has a 70-year monopoly on casino licensing in Phnom Phen.
NagaCorp is flush with cash, as it also recently built an additional to NagaWorld Phnom Phen. When it did so, the company said it planned to build NagaWorld into a world-class casino-resort. The Russian casino will be named Naga Vladivostok.
Selena World Resort and Casino
A fourth Primorye Krai casino might join the others in 2019. Diamond Fortune Holdings, another Russian casino interest, plans the $900 million Selena World Resort and Casino for the Vladivostok area.
That would leave 6 more casino licenses for the Primorye Integrated Entertainment Resort zone. No gaming experts have discussed other potential developers. Melco Entertainment is owned by Lawrence Ho, so Melco is out of consideration. So is SJC Holdings, which is owned by other children of Stanley Ho — Lawrence Ho’s father.
Galaxy Entertainment Group (GEG), the third major Chinese casino company, has shown no inclination to build in the Russian Far East. Galaxy Entertainment is planning a Philippine casino on Boracay Island, while GEG is rumored to be interested in bidding on a Japanese casino license. No US casino companies seem interested in a Russian casino venture, so it is expected that the investors likely would be Russian gaming groups.