The Wall Street Journal
September 9, 2013,
HONG KONG — Cambodia casino operator NagaCorp Ltd.
3918.HK +3.90%
is set to join Macau mogul Lawrence Ho in Russia with its own $350
million project near the Chinese border as gambling firms turn to
Vladivostok to lure wealthy Asian players.
NagaCorp said Monday it
agreed to invest in a casino-resort venture on the outskirts of the
Russian port city with at least 1,000 hotel suites, 100 gambling tables,
500 slot machines and conference, dining and entertainment facilities.
Its shares were up 3.8% at 6.91 Hong Kong dollars (US$0.89) in afternoon
trading following the announcement Monday, outpacing a 0.4% rise in
Hong Kong's benchmark Hang Seng Index.
The news that a second major casino operator had signed a deal to
build in Russia was a boost to the country, which had previously rarely
been on the radar of gambling executives and bank analysts because of
concerns over corruption and a lack of clarity surrounding the country's
regulatory structure for casinos. However, companies have been
reconsidering the opportunity because of Russia's comparatively low
gambling tax rate and its proximity to Northeast Asia.
But NagaCorp's project in Vladivostok will take several years, and
details of the venture are still unclear. The company, which has a
monopoly casino license in the Cambodian capital of Phnom Penh, said the
resort may not begin operations until 2018. It said it would establish a
local unit to apply for a casino license "in due course" and that it
expects it will take up to two years to obtain the necessary
construction permits for the venture.
NagaCorp, which saw its net profit rise 20% to $62.9 million for the
six months ended June 30, added that it intends to presell hotel suites
within the resort to both Russian and foreign buyers, particularly those
from Northeast China, South Korea and Japan.
Details of the Cambodian casino operator's plan follow the July announcement from Summit Ascent Holdings Ltd.
0102.HK +4.29%
and Melco International Development Ltd.
0200.HK +0.42%
— firms backed by Macau's Mr. Ho — that they have agreed to take a
controlling stake in an initial phase of a casino-resort project in
Vladivostok set to open in 2014. The firms, which say their partners
already have a casino license, say that phase will cost $130 million and
comprise about 120 hotel rooms, 65 gambling tables and 800 slot
machines.
The projects aim to attract Chinese high rollers, who
have transformed Macau into the world's largest gambling market. The
Chinese territory's US$38 billion in gambling revenue last year was six
times that of the Las Vegas Strip.
Following tremendous success in Macau and Singapore, casino operators
are on the lookout for the next big gambling hubs. The Philippines is
trying to build its version of the Las Vegas Strip in Manila — a project
in which Mr. Ho is also participating — while operators continue to
court governments in Japan, South Korea and Taiwan to pave the way for
more casino licenses.
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