Azov operators seek compensation
Under orders from the Russian government, the Azov City designated gaming zone has been closed.
The government first announced the closure plan in 2015. Last October, an edict signed by Prime Minister Dmitry Medvedev confirmed the “liquidation” of the district, which includes three casinos. The actual closure took place on December 29.
Meanwhile, the Krasnaya Polyana zone’s boundaries were expanded to include Sochi, site of the 2014 Winter Olympics, to help the city maintain and build on its tourism business. In 2018, Dmitry Anfinogenov, director of development for the zone, announced plans for a new casino called Boomerang in the adjacent Rosa Khutor resort; that casino recently opened with 204 slot machines and 20 gaming tables.
Anfinogenov called it “a large-scale project” to be developed in stages. “In the future, the company plans to open a sports bar on the first floor and an a la carte restaurant and night club on the second floor. The entertainment center may also include a karaoke and additional VIP-zones for punters on the second floor. The project also includes a mini-hotel complex. These are our plans for the future, and when they are realized, the entertainment center will function as a single organism.”
One other gaming hall is currently active in the region, the Bonus slots hall, which opened in December 2017.
The most successful of Russia’s gaming zones is the Primorye Integrated Entertainment Zone near Vladivostok in the Russian Far East. The PIEZ occupies 619 hectares (1,530 acres), big enough to host about a dozen properties in Phase I of the zone’s development; currently, however, only one is operational, Tigre de Cristal, operated by Summit Ascent Holdings, which opened in October 2015.
Among the developments now under construction in the PIEZ is NagaCorp’s Naga Vladivostok integrated resort. Phase I of the IR, with a casino, hotel and conference hall, should open sometime in 2020. Phase II will be complete two years later. Two other developments are also in the works, including Diamond Fortune Holdings’ Selena resort, also expected to open in 2020. The third project will be developed in the zone by CJSC Shambala.
Unfortunately for Azov City operators, the zone was exempted from legislation enacted last spring to compensate operators if the government closed one of the country’s gaming zones. Even so, Asia Gaming Brief noted that investors Royal Time LLC and Royal Time Group LLC have filed lawsuits with the Moscow arbitration court demanding RUB 5.9 billion (US$87.3 million) from the Russian Finance Ministry and the Department of Property Relations of Krasnodar Region.
Ironically, Shambala LCC, an Azov City investor, has filed a lawsuit seeking compensation for being excluded from compensation. Its lawsuit against the Krasnodar Territory administration, which seeks RUB 3 billion (US$44.7 million) in damages, will be presented in the Krasnodar Territory court on January 16.
AGB quoted Nikolay Oganezov, chairman of the subcommittee of the Chamber of Commerce and Industry of the Russian Federation, who blamed the shutdown on regional authorities, saying they wanted to quash competition in the vicinity.
“Initially, 2,000 hectares (almost 5,000 acres) were allocated for the gambling zone,” said Oganezov. “However, in the end, only three gambling facilities operated there. It turns out that the regional authorities were not interested in the development of fair competition between operators. If gambling operators had had fair access to this territory and received construction permits, there could already be a mini-town along the lines of the Kamskiye Polyany in Tatarstan, where 15 facilities operated in a small gambling zone.
“Moreover,” he added, “if there were 15 casinos in Azov City, it would be more difficult to close it.”
In related news, South Korea-based Dongnam Industry Co. has signed an agreement of intent with the Primorsky Krai Development Corp. to invest more than US$30 million into construction of a world-class 18-hole golf course in the PIEZ. The development on 80 hectares (198 acres) will include a four-star hotel with 100 rooms.
“In the future, the integrated resort Primorye will be able to attract a large number of tourists due to transport accessibility and the growing interest in the Far East from residents of the Asia-Pacific countries,” Dongnam Chairman Kim Ying-Tae told Inside Asian Gaming. “Creating entertainment facilities of the elite level will help attract relevant tourists to the gambling zone. For our project, the main target audience is foreign players from Korea and Japan, where golf is a very popular sport and entertainment.”
