casinodiary

War Impact on Russian Casino Zone

War Impact on Russian Casino Zone
LET Group Holdings will hold a shareholder meeting next month to discuss the sale of its Tigre de Cristal resort in Russia, partly due to concerns over sanctions related to the Ukraine conflict.
In 2015, Tigre de Cristal opened as the first casino resort in the Primorye Integrated Entertainment Zone (PIEZ) near Vladivostok, Russia.
Developed by Melco Resorts and Entertainment, the €158.6 million (£133.2 million/$172 million) resort was intended to be the first of 11 casinos planned for the area by 2023, with the goal of creating a mini Las Vegas in the Russian Far East.
In a 2012 feasibility study, Global Market Advisors estimated gaming revenues could reach €46.bn within a decade.
But the flagship resort stumbled out of the gate. In 2017, Melco founder and chairman Lawrence Ho divested of his majority share.

Pandemic, war, and a failed business deal

Further obstacles emerged: In 2019, the pandemic temporarily shut down the casino and slowed growth in the Russian casino zone. Now, the ongoing conflict between Russia and Ukraine is disrupting long-term plans.
Now LET Group Holdings and subsidiary Summit Ascent Holdings are looking to sell Tigre de Cristal at a bargain price.
In January, LET was on the verge of finalizing a deal to sell 100% of its shares in casino operator G1 Entertainment to the Russian company Dalnevostochniy Aktiv for €107 million. This proposed sale led to the resignation of five out of six Summit Ascent board members in protest, leaving only chairman Andrew Lo. In February, however, the prospective buyer withdrew from the deal.
On 15 August, Lo will preside over an extraordinary general meeting (EGM) to develop a new sales strategy for the resort.

Sanctions due to the war are troubling.

According to the Council on Foreign Relations, following Russia’s initial invasion of Ukraine in February 2022, the United States imposed a wide range of sanctions aimed at isolating the superpower and diminishing its economic and military strength.
Since then, the US, UK, European Union, and other nations including Australia, Canada, and Japan have enacted over 16,500 sanctions against Russia. These measures include restrictions on imports and exports, freezing €328.5 billion in currency reserves, and suspending travel.
LET shareholders are understandably eager to divest the company's Russian assets. They argue that retaining casino operator G1 Entertainment could introduce significant uncertainties and risks. They also express concerns about potential sanctions "on these assets or LET Group and its subsidiaries" from countries opposed to the war.

Two casinos are either open or under development in the Russian casino zone.

In addition to Tigre de Cristal, only one other casino resort is currently open in the PIEZ: Shambala. That resort debuted in 2020. Both resorts have suspended Phase 2 developments.
As of last fall, a third resort project was still in the works from construction and project management firm Asia-Invest Group. But plans by Cambodian operator NagaCorp to join the Primorye casino cluster were tabled after the Ukraine invasion.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top