From Wall Street Journal
Macau mogul Lawrence Ho is set to become Russia’s first well-known casino operator, as China’s northern neighbor enters the fray competing for the Asian high rollers who made Macau the world’s gambling capital.
A company controlled by Mr. Ho signed an agreement to open a casino on the outskirts of Vladivostok, a person familiar with the deal said. The planned casino-resort in Primorye—a vast eastern region bordering China and Korea—is scheduled to open in the second half of next year. It will be one of the first in Russia after the country in 2009 banned casino gambling outside four special zones, the person said. The company is still discussing the size of the project, the person said.
The news is a boost for Russia’s casino industry, which is seldom on the radar of casino executives and investors because of concerns over corruption and a lack of clarity about the country’s regulatory structure for gambling.
But some analysts said that Russia’s proximity to northeast China, low tax rate and relatively low required minimum investment are reasons enough to take the plunge. Analysts estimated that companies might need to spend only a couple of hundred million dollars to enter the Russian market, compared with the billions that casino operators shell out on new resorts in Macau.
“A lot of people don’t realize that Vladivostok is an Asian casino opportunity that happens to be in Russia,” said Dean Macomber, president of U.S.-based Macomber International Inc., which has done consulting work on the Russian casino industry.
Gambling revenue in Primorye was forecast to reach about $1.2 billion a year initially and rise to as much as $5.2 billion over the following decade, according to a report prepared last year by U.S.-based Gaming Market Advisors for the regional government. The firm estimated that taxes would amount to just 3% to 7% of revenue, far below Macau’s 39% rate.
Mr. Ho has been looking for investment opportunities beyond Macau, the only place in China where gambling is legal. Mr. Ho’s father, Stanley Ho, monopolized gambling in Macau until the government opened the territory to international operators more than a decade ago.
