Tigre de Cristal cuts gaming capacity, but rolling volume gains

Summit Ascent Holding’s Tigre de Cristal has slashed its gambling capacity just 18 months after opening due to competition from illegal gambling and a lack of appetite amongst locals for casino games.

Tigre de Cristal, which is the only operating facility in the Primorye gaming zone near Vladivostok, has cut its gaming tables by half and has done away with its poker room, Betting Business Russia reported, citing an interview with Craig Ballantyne, director of local operating company G1 Entertainment.

When the casino opened in November 2015 it comprised 67 gaming tables and 651 slot machines. “It soon became clear that the attendance and revenue indicators did not meet initial expectations. As a result, the number of slot machines was reduced from 651 to 477. The significant investment in our marketing activities, made in 2016, did not help improve the situation. Amid the increased number of visits (mainly due to our entertainment activities, not related to gambling), the volume of sales on the local market and revenues have decreased,” he said.

Consequently, the company took measures RUSSIA to reduce operating expenses “to ensure the profitability of the enterprise and its selfsufficient development.” The number of slot machines was cut to 319 units, and the tables, to 55 units. “At the same time, especially recently, the number of gaming tables for our foreign VIP clients is increasing, despite the existing administrative and legal barriers,” he stressed.

Ballantyne pointed to rampant illegal gambling as a problem for investors in the zone, with gaming rooms being organized in private apartments or at commercial enterprises, while rooms with slot machines are often disguised as internet cafes. “Illegal gambling is widespread in Primorsky Krai. Such institutions, especially poker clubs, create a negative impact on legal business, despite all the marketing efforts undertaken by us. I note that the presence of approximately 8-9 illegal poker clubs in Vladivostok confirms the overall demand for these services,” he carried on.

“To reduce the company’s operating expenses (staff salaries, tax deductions) and prevent losses, Tigre de Cristal was forced to temporarily remove all Texas Holdem game tables from the gaming halls. It should be noted that at the time of opening 10 such tables were installed in the casino. In April 2016, we decided to reduce their number to six. Four tables remained in the hall until  February 2017. The number of players eager to support a single legal poker club has become insufficient. Therefore, the decision to remove poker tables did not cause much impact on the attendance.”

Primorye was considered as the most promising of Russia’s designated gaming zones, mainly due to its proximity to the northern Chinese and Korean and Japanese markets. The head of the Primorye Territory tourism department Konstantin Shestakov recently said that about 30 percent of the visitors to Tigre de Cristal are currently foreigners, though visitation is growing, helped by efforts to improve access and infrastructure.

Summit Ascent chairman Lawrence Ho said the company remains confident in the region’s growth prospects and said there is strong foreign investor interest in the zone. The Russian government is close to finalizing a simplified visa regime, which should help tourism arrivals from the summer of 2017.

The company said its own rolling chip volume has picked up strongly since it introduced two fixed-room operators in June 2016. It plans to open the first part of its own Phase 2 resort in 2019.

There are plans for three other gaming developments including a project from Hong Kong-listed Nagacorp.

The company recently said its resort remains “broadly on schedule for operation by 2019.”

In a commentary in its annual report, Chairman Timothy McNally wrote that the company has established an office in the city center and a number of key personnel have been appointed to monitor various aspects of the project. Piling work began in 2016.

The company agreed in 2013 to invest not less than $350 million in a resort project under the name of Primorsky Entertainment Resort City. It will join Summit Ascent Holding’s Tigre de Cristal, which opened in 2015. Other projects are planned by Royal Time Group and Diamond Fortune Holdings, though the Royal Time resort has reportedly been delayed.

Representatives of the Chinese investment company Zhonghe Linhai (Harbin) have also expressed the desire to become investors in the Primorye gambling zone.

According to local authorities, a working meeting between Zhonghe Linhai president Wang Wenli and representatives of the local administration took place during a recent visit of the Chinese delegation to the region. The Chinese businessmen are reported to have said that Primorye is of great interest as a platform for long-term investment.