Gambling Industry in 2015: A Troubled Year

Gambling Industry 2015 in Russia

First, let's discuss Russia.

Tigre de Cristal

The opening of the first high-level Russian casino called Tigre de Cristal was surely the most outstanding event in the field of gambling in 2015. The soft start of Tigre de Cristal took place on October 8. Over 30 thousand persons have already visited the casino since that period. All the rooms in the hotel are booked until March 2016.

According to Konstantin Shestakov, the Director of the Department for Tourism of Primorsky Krai, this casino has already positively impacted tourism in Primorye. For example, Primorye was attended by almost 365,000 foreign tourists in 2015. This figure exceeds by 18.5% the results of 2014. The number of tourists from China increased: 61% of 365 thousand tourists were from China.

It is expected that China, South Korea, and Japan will be Primorye's main sources of gamblers.

Primorye

Eight casinos are planned to be built in the Primorye gaming zone. After their construction, Primorye will be expected to be able to compete with Las Vegas and Macau. At least three objects are currently being built. The building of the Primorye gaming zone will be finished by 2022.

The complex will include the following facilities:

• 16 hotels,
• 8 casinos,
• 10 villas,
• several restaurants,
• a yacht club,
• ski slopes,
• theaters,
• and full-fledged entertainment centers.

The prospects are brilliant!

Crimea

A location for the future gaming zone has already been chosen: a parcel of land in Gaspra whose area reached 16.8 hectares was exempted from the site plan of Yalta. The first legal casinos will appear on the territory of the former sanatorium of the Border Service "Pearl."

The minimum size of investments for investors was determined. It reaches 500 million rubles, i.e., organizations that want to run the gambling business in Crimea will have to invest at least five hundred million rubles in the project. Only after that, will they be able to receive permits and licenses.

At the moment, there is information about only one investor. It was provided by the Head of the Yalta’s Department of Architecture and Urban Planning Vladimir Prystupa:

An investor who offered to create here a gambling zone appeared.

However, his name is unknown.

Sochi

Dmitry Kozak, Deputy Prime Minister, said:

We hope that this will happen in the summer of 2016. The gaming zone in Sochi was created to support the infrastructure of the mountain cluster in summer since there were no problems in winter.

Gorky Gorod in Krasnaya Polyana is supposed to be the basic territory for the gaming zone. The new project will replace Azov City. Kurort Plus Ltd will develop the gambling zone in Sochi.

However, Vneshekonombank (VEB), the main creditor of Krasnaya Polyana, found this company not good enough, and its administration blocked the deal of purchasing 96.91% of the NAO Krasnaya Polyana shares. The refusal was motivated by Resort Plus being a little-known dark-horse candidate. It had been created three weeks before the auction took place and was its one and only participant.

Other investors have not yet displayed an active attitude, although the variant with the opportunity for investors of Azov City to participate in the project of Sochi is possible. This is supposed to compensate for the presumptive closure of the Azov City gambling zone. The question is whether investors are willing to act against their best interests repeatedly.

Azov City

The first operating Russian gaming zone was sentenced to be closed in 2015. The government decided that two gaming zones in a single region are too much. Azov City was supposed to be closed as soon as the gambling zone in Sochi started its operations.

However, casinos in Sochi will not appear soon, and Azov City keeps bringing immense revenues: in 2015, the Ministry of Finance in the Krasnodar Region obtained 204.9 million rubles of taxes from activities of casinos in the gaming zone. Then the members of the Ministry of Finance took thought and started studying the opportunity to gradually limit the activities of Azov City after the opening of the gaming zone in Sochi.

The department spokesman said:

Since the new gambling zone activities cannot start immediately, Azov City will provide services for some time. However, it will be closed.

Sad news, indeed!

Anyway, the Azov City gaming zone keeps operating and even growing. The construction of a new complex with a total area of 19,000 square meters, which has lasted for four years, is finally over.

The soft opening of the new Shambala Casino was celebrated on December 25. The building, whose area is 6,000 sq.m., has 750 slot machines and 30 tables. The complex also includes a five-star hotel, 4 restaurants, SPA, and a conference room.

The Azov City gaming zone, located in the Krasnodar Krai, started its operations in 2010. Currently, it offers four casinos: Oracle, Nirvana, and two orders of Shambala.

Siberian Coin

Altai Palace was opened in this gaming zone in the autumn of 2014. More than 17,000 people attended it in one year. The budget of the Altai Krai obtained roughly 30 million rubles as taxes. We are looking forward to seeing the other achievements of Siberian Coin.

It should be noted that Altai Palace Casino does not operate at full capacity since this gaming complex should have been fully launched by autumn 2015. However, the casino was not fully opened. Investors promise that Altai Palace will have been put into operation by the summer of 2016.

A helipad was built in the Siberian Coin gaming zone. Perhaps the gambling complex was not constructed in time due to this helipad. Eugene Kosych, a general manager of Altai Palace Casino, reported:

The construction of the helipad was appropriate - Kosych said. – There were four flights from Novosibirsk and one flight from Kemerovo. I am satisfied with such a result. This service is available for VIP customers willing to spend a larger sum than the price for the flight while gambling. This service is paid for by the casino. The flight from Novosibirsk costs 500 thousand rubles.

Customers seemed to be VIPs if the casino was ready to build a helipad and pay for five flights.

Yantarnaya

The first phase of construction of the Yantarnaya gaming zone is in Kulikovo, located on the coast of the Baltic Sea. The Russian authorities prepared a surprise for this gaming zone at the beginning of the year.

According to the Resolution of the Government, its area was reduced five times, i.e., from 4.79 million square meters to 995,100 square meters. This was a forced decision since only one investor bought the land lot of 99.5 hectares. It was a group of companies Building Technologies Comfort. It is a subsidiary enterprise of the Royal Time Group.

The first building of the gambling complex, Amberland, was under construction for a year. It is a modern hotel whose area reaches 18 thousand square meters. It offers restaurants, entertainment centers, and casinos.

The opening of the first casino should have taken place in December 2015. However, the investor was forced to postpone the opening for six months. The reason for the delay was a change in the foreign exchange rates, which affected the procurements of building materials.

Despite the postponement, the complex is being constructed: more than one hundred persons work daily. At the moment, metal parapets and towers on the roof of the main building are being installed. Workers are also installing equipment and ventilation duct systems, the masonry of exterior walls, and interior cubicle divisions. Employees are actively working on installing sewer pipes and laying water supply pipes, and construction of fire-fighting pumping stations,s and boilers. At the moment, the building looks like this:

Fifteen casinos, an amusement park for children and adults, golf courses, and a green park area will be opened on the territory of the Yantarnaya gambling zone. Hotel complexes, private villas and apartments, recreation and retreat centers, spa centers, and other resort facilities will be built. This project will be launched by 2018.

Gambling 2015 Worldwide

Now, let's talk about gambling in other countries.

Ukraine

Six years have already passed since gambling was banned. However, the Ukrainian government is going to revive it. In late November, the Ministry of Finance of Ukraine offered a draft law, "On Gambling in Ukraine." It provided the legalization of casinos and betting offices. The Ministry of Finance will also limit the locations where they can be opened significantly.

The government offers to allow the opening of casinos only on the territory of airports and four-star and five-star hotels with at least 200 rooms in Kyiv and 100 in other cities and towns. Thus, only 26 casinos can be opened in the current year.

• It is offered to establish an annual license fee of 1 million euros in Kyiv.
• This sum will reach 600 thousand euros for cities whose population exceeds 500 thousand.
• The annual license fee for the other towns will be 300 thousand euros.
• The annual license for online casinos will cost 1,500,000 euros.

According to approximate estimates of the Minister of Finance Natalie Jaresko, the legalization of gambling will increase revenues to 5 billion hryvnias annually. Experts agree that legalizing gambling is necessary, and Ukraine must do it. Yet, government offers are far from perfect and have numerous corruption risks.

Macau

The gambling market of Macau dropped to a five-year low in 2015, and casino revenues decreased. This happened due to the recession in the Chinese economy and the government's reform program, which destroyed the gambling business based on high rollers.

• Macau Gaming Inspection and Coordination Bureau reported that casinos had collected $28.93 billion in 2015.
• This figure was reduced by 34.3 percent compared to 2014.
• A decrease in revenues of the gambling industry in Macau has been observed two years after a record of $45.2 billion was established in 2013.
• It happened for the first time since 2010 that the income of the casino industry could not reach $30 billion.

Revenues of the gambling industry in Macau have been dropping for 19 months. Monthly drops started when the Chinese government began to fight against corrupt officials. This negatively affected the junket business, attracting high rollers to Macau.

Grant Govertsen, a founder of the Union Gaming Group, which is located in Macau, told investors that he could not notice signs of improvement in the gambling market in the current year:

We still believe that the gambling industry will face even tougher challenges in 2016 than those that were observed in 2015. According to our estimates, the regulatory pressure from the government will only increase.

However, other experts believe that 2016 will become the last unprofitable year in Macau. For example, Fitch Ratings Service Agency predicts that the revenue decline in the gambling business in Macau will be "moderate." Alex Bumazhny, an analyst of Fitch, said:

Investors in the gaming sector in Macau play a long game. If the revenues of the gambling business in Macau stabilize in the next year, we will see the long-term potential of the gambling industry in Macau. Infrastructure projects were frozen. However, as soon as they are finished, the region will become more affordable for the mass market. It may take two or three years to reach the suitable return level. Fitch believes that the growth prospects of the gambling market in Macau still depend on the policy and tourism infrastructure.

There are rumors that such major corporations as Las Vegas Sands Corp., Wynn Resorts Ltd., and MGM Resorts International are going to open multi-billion casino resorts this year:

• Wynn Resorts postponed until June the opening of Wynn Palace in Cotai. It cost $4.1 billion;
• Las Vegas Sands will open The Parisian with an artificial Eiffel Tower. This complex will cost $2.7 billion;
• MGM Resorts International is expected to open MGM Cotai in the year's fourth quarter. It will cost $3.1 billion.

The United Kingdom

We can assure you that 2016 will be a year of radical changes in the gambling industry in the United Kingdom. The current task is to become competitive in the gambling market. It is very difficult, so many giants have decided to unite their efforts.

Paddy Power and Betfair made this decision. Ladbrokes and Gala Coral joined it. As a result, the two most powerful companies appeared: Paddy Power Plc Betfair and Ladbrokes Coral. They can compete with William Hill, the leading company in the gambling world of the United Kingdom.

To sum up, we want to offer a quote from Global Betting and Gaming Consultants:

The total profit from gambling dropped in 2015. This was related to the gambling market in China, especially with the recession in Macau economy.