Things are looking up for Lawrence Ho’s Tigre de Cristal casino near Vladivostok, Russia. Mr. Ho’s Summit Ascent Holdings held a soft launch for the first of many casinos to come in the Primorye Integrated Entertainment Zone that includes the seaside Turtle Lake or Lake Cherepashye in October last year and officially opened for business a month later. The hotel was booked for months in advance by foreign visitors before it even opened, and Russians were left to travel unknown and not well-marked roads only to be faced with a long drive home when they were done gambling.

Early estimates predicted footfall on the casino floor to become 80% Russian, while 80% of revenues were forecast to come from foreign, mostly Chinese gamblers. Without junket operations in place and some Chinese gamblers’ aversion to Siberian winter, the pioneering venue, located within 3 hours of millions of potential Chinese, Korean, and Japanese customers closed out their first year with a loss of about $11 million. The percentage of mass gaming customers visiting the casino may be as high as 80% right now according to some reports.

In March, Summit Ascent, which owns 60% of the casino’s controlling company and recently took control of the board with four of seven members, said they had made about $1.8 million for the three months (before interest, taxation, depreciation and amortization).

Even though the late winter launch may have kept high rollers at bay, a more important consideration may have been the lack of organized junket operations. Tigre de Cristal reported rolling chip revenue of about $33 million for November. A more recent filing shows an uptick to nearly $53 million each month for March and April. “Rolling Chips” are used by casinos to measure  VIP game play. The term relates to the non-negotiable chips VIP players purchase. The chips are wagered and winnings are paid out in cash chips, sometimes referred to as redeemable chips. Rolling chips are used to track VIP play in financial reports but also as a way to determine commissions owed to junkets and room promoters.

According to a report on GGRAsia yesterday citing a Daiwa Securities Group analyst, “Summit Ascent has recently signed with one mid-size junket operator who will begin operation in May 2016, and plans on signing on two more junket operators in the coming month,” the outlet reported. This action alone could see Tigre de Cristal’s rolling chip revenue skyrocket, along with increased profits.

With the coming of warmer weather the casino can also expect an increase in mass gaming footfall with Chinese tour groups flocking to the casino en masse. Vladivostok’s designation last year as a free port could see Chinese tour buses coming in over the land border. According to reports, Russian authorities plan to begin implementing relaxed visa requirements as early as July. Foreign visitors  will be able to apply for a visa online a few days before departure and have it granted upon arrival. Tigre de Cristal is located about 30 miles from Vladivostok International Airport.

Although Russia’s Ministry of Finance may have leaked in February that they plan to levy ten times the current gambling tax rate, that action is yet to affect Tigre de Cristal who pay slightly more than $100 per month on each of their electronic gaming devices. The tax news, if true, would be puzzling for many reasons, not the least of which is the massive investments being committed to building integrated gambling resorts in several regions of the federation – those billions of dollars are coming into Russia mainly because of the attractive tax regime and other economic incentives offered.

At least four other projects have broken ground immediately adjacent to and within walking distance of Tigre de Crystal and other areas such as Kalingrad and Sochi are seeing development as well with the Magic Crystal Casino opening in the Amberland area just two weeks ago.

 

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