* Vladivostok casino zone offering near zero tax rate
* First phase scheduled for 2016 completion
* Up to 12 casino-resorts anticipated for region
* Revenues forecast at $2 billion to $7 billion
By Farah Master
HONG KONG, July 12 (Reuters) – A Russian territory hoping to
lure global casino titans to set up large-scale resorts has
unveiled initial guidelines that offer companies more lucrative
terms than Macau and Singapore, intensifying the race to secure
investments in Asia’s expanding gambling industry.
Russia’s move to attract international companies comes at a
time when other Asian countries, including the Philippines and
Vietnam, are developing casino resorts to boost tourism
revenues. Taiwan’s Matsu island group also voted recently to
allow casino resorts.
Home to the port city of Vladivostok, Russia’s Primorsky
Territory, a mountainous region bordering China and Korea, is
planning to develop 12 casinos with the first phase of a
three-part rollout to be completed by 2016 and a planned total
investment of about $2 billion.
In a document made public on Thursday, state-owned Nash Dom
Primorye, the developer, invited companies to bid on the
project, promising favourable lease terms and effectively zero
taxes on gross gambling revenues in exchange for creating jobs
and developing the area’s tourism industry.
Macau, the world’s gambling capital, has a 39 percent tax on
gross gambling revenue, while Singapore taxes gambling revenue
at around 15 percent.
Companies bidding for the Russian project should focus on
generating inbound tourism from East Asia, specifically South
Korea, Japan and greater China, the filing said. Operators in
locales like Macau and Singapore will still provide tough
competition, but the Russian region could attract gamblers from
northern China who won’t have to travel as far.
Vladivostok, which has been undergoing a facelift ahead of
hosting the APEC summit in September, is two hours by plane from
Seoul and Tokyo.
Revenues from the tourism zone, which will include luxury
hotels, a yacht club, shopping malls and sporting venues for
skiing and golf, could hit $2 billion-$7 billion once the zone
is complete, industry analysts have said. That would compare to
Singapore, which earned $5.7 billion in gambling revenue in
2011, they said.
Russian nationals will be able to legally gamble in the
zone, which means the market will be much larger than in
countries such as Vietnam, where only foreign passport holders
can gamble.
The zone, which can accommodate about five large resorts,
will give operators control of the land until 2025 under terms
that can be extended.
There is no maximum restriction on the amount of allowable
casino gambling space, but the government wants companies to
ensure that non-gambling revenues make up a large proportion of
total revenues on a model similar to Las Vegas, a resort
destination popular with conventions.
Casino operators will be allowed to compete on the extension
of credit to gamblers, according to the Request for Concepts
document. Bidders are also being asked to suggest how junket
companies, who act as a conduit in bringing in wealthy high
rollers, should be regulated.
“At present, there is no legislation in the Russian
Federation that regulates junkets and junket licencing,” said
Marina Lomakina, general director of OJSC Nash Dom Primorye.
“However, we envision that in the future the integrated
entertainment zone will be closer to that of Las Vegas than to
the stricter controls that we see in Singapore.”
Russia was using a process similar to that used by Singapore
to select casino companies and would implement “strict
international standards” against money laundering and illegal
money lending similar to those of Las Vegas, Macau and
Singapore.
The deadline for submitting proposals is Sept. 21. The
government will then review the bids and start discussions with
potential investors by the end of October.
