The Chinese bet $165m on Azov-City gambling zone

11 Feb '10
Oleg Kouzbit, Online News Managing Editor

The Azov-City gambling zone in Southern Russia, saluted as $2bn ‘Russian Las Vegas’, seems to be gaining investor confidence once again after months of losing it. Gambling operators from China’s Macao have reported plans for $165+m gambling and entertainment/sports projects in the area. Despite the opening of the zone’s first large casino and coming on top of a smaller Moscow investment announced at about the same time, attracting 6 million visitors a year to Azov-City still seems like a long shot.

Earlier this week Marchmont reported Chinese plans to build $165+m worth of gambling and leisure facilities in Russia’s southern official gambling zone, the so-called Azov-City.

Unspecified companies permanently operating in one of China’s largest gambling areas, Macao, purportedly want to build several casinos, malls, and an all-season winter sports complex in the Krasnodar regional part of Azov-City (the entire zone is located on both sides of the Krasnodar-Rostov regional border).

Timeframes have yet to be announced.

One of the ‘Big-4’

The history of Azov-City dates back to January 2008 when the RF government issued a decree restricting any gambling in Russia from July 1, 2009 to the country’s four exclusive gambling zones.

The gambling zone in southern Russia was dubbed Azov-City. The other three are in the Far East (Primorsky), Southern Siberia (Altay), and the North-West (Kaliningrad).

Azov-City is located 250km away from Krasnodar, 120km away from Rostov, and borders the Azov Sea coast. Tenders for 15 sites were offered between November 2008 and mid-2009. Another tender was planned for December 2009 but then moved back to Q12010 because of ‘poor business planning for the sites to be auctioned.”

High hopes, no luck

As the project kicked off in late 2008, Krasnodar and Rostov regional officials were upbeat about the ‘ritz and glitz’ of their $2bn ‘gambling paradise,’ hailing it as a “successful challenger of Vegas, Macao or Atlantic City” capable of drawing “up to 25 million tourists a year.”

Six months into the project, though, the ‘paradise’ looked a lot like Gilligan’s Island. Last summer, with a July 1 “official opening day” approaching, all authorities could celebrate was bringing in water, gas, electricity, some water treatment, and completing just four out of 11 kilometers of roads they had promised, the regional portal reported.

It was enough for some investors to throw in their cards. Austria’s ASATI, originally hailed as a ‘golden resident’ of the Krasnodar part of the project, dropped out in June 2009. It followed Casino Austria, which also bailed out citing “Russia’s legal haziness and no clear prospects for the gambling zone operation.”

Tatarstan to the rescue

On the bright side, however, unlike the other three national gambling zones, which are still in their early infancy, Azov-City finally has Russia’s first legal casino—Tatarstan-based Royal Time opened its Oracul for business on January 30.

Livekuban quoted a company spokesman on the opening day as saying by this summer the firm was planning to also open a 300-game-machine hall and a hotel, and by 2017 three more stages were envisioned as part of the overall $150m investment. Royal Time plans to have up to 500 visitors a day.

Viva ‘Las Vegas’?

The announcement of the Chinese’s $165m investment came just a day after Moscow’s Kimberly Land unveiled its summertime entertainment and sports facility for Azov-City.

However Kimberly’s project is a only a modest $1.2m and calls for construction of 30 cottages, sports sites, a movie theater, café, stable, carting lanes, and a small marina.

Last year some analysts questioned whether the whole idea of a ‘home-bred Monaco’ ever made sense, given Russian economic and legal realities.

Azov-City planners have also toned down their grandiose estimates. Until the zone is built-out the dream of a ‘Russian Las Vegas’ able to handle 6 million visitors a year supported by a workforce of 30,000 still seems like a long shot.
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