Russia’s bid to attract more foreign casino capital to its Primorye special economic zone is falling on deaf ears.
A auction launched by the federal government in July that offered up three separate plots of land for casino developers has not resulted in a single bidder, despite the deadline being extended from late August to September 28, GGRAsia reported this week.
Primorye offers some of the most competitive tax breaks in the world for casinos and its proximity to China provides the prospect of hundreds of million potential customers just a short flight away, and yet it still has only one casino resort, Tigre de Cristal.
Could its proximity to North Korea be putting investors off?
The Primorye, or Primorsky Krai, casino development area is situated on Russia’s south-east coast and shares a wide border with China and a small border with Kim Jung Un’s hermit kingdom.
Military Build Up
In April, regional media outlet primemedia.ru reported that trains loaded with military equipment were heading towards the Primorye region in response to the escalation of hostilities between the US and North Korea.
“The movement of military equipment means that authorities of our country are keeping up with the situation, and take appropriate measures,” Stanislva Sinitsyn, a Russian “military veteran” told the UK’s Evening Standard.
“If the situation worsens, especially related to military events, the armed forces of all the neighbouring countries obviously monitor it more closely, and we are no exception. It is not the first time that North Korea has broken the peace in the region, that’s why this situation deserves attention.”
In the event of a pre-emptive US nuclear strike on North Korea, contamination would spread to Primorye, according to the Standard, and while that eventuality may be unlikely, it could be enough to dissuade investors from plowing hundreds of millions of dollars into the region as a viable tourist destination.
Macau casino mogul Lawrence Ho took a gamble on Primorye when he invested in the $900 million Tigre de Cristal, but earlier this month he chose to limit his risk exposure by selling a large block of shares in the resort’s developer Summit Ascent Holdings, according to a filing to the Hong Kong Stock Exchange.
The only other developers committed to Primorye, NagaCorp and Diamond Fortune Holdings Ltd, have dragged their feet on their projects, to the frustration of the Russian government.
Last July, an impatient Kremlin announced it would take over control of activity in the region. It created the Primorsky Krai Development Corp to oversee further development and to preside over the land auction, but with little apparent success.
“We have not received applications yet [for the land auctions] but our headquarters are staying in touch with investors and companies,” a Primorsky Krai Development spokesperson confessed to GGRAsia on Monday.