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Hungary’s state owned lottery buys Tropicana Hungary’s Tropicana casino in Budapest is now 100 per cent state owned with state lottery Szerencsejáték snapping up the rest of the rights to run the venue. SzRt-Service, a subsidiary of Szerencsejáték, became its owner by acquiring a minority stake in Belvárosi Kaszinó from Las Vegas Casino, held previously by Hungarian-born film producer Andy Vajna, for HUF245m (E 885,000). Szerencsejáték had previously held a 74.5 per cent stake in the company. The transaction has made Szerencsejáték the sole owner of Belvárosi Kaszinó which operates the Tropicana casino in the capital. The deal was completed on 1 January. The Tropicana reported a HUF 176m loss in 2009 with revenue dropping from HUF 2.7bn to HUF 2.1bn. Vajna’s other casino in the capital, called Las Vegas, saw GGR drop from HUF 4bn to HUF 3.2bn in 2009.


Kazakhstan’s casino zones struggle to make ends meet


Anyone who believed back in 2007 that making the small town of Kapchagai one of Kazakhstan’s two licensed centres for casinos would transform it from a dead factory town would have been hugely disappointed. Twelve casinos may be in operation, but as Gambling Compliance’s Richard Orange reports, players and more importantly profits aren’t easy to find.


meanstoanend KAZAKHSTAN


Whilst mirroring the banning of Russian’s casino industry to predetermined gambling zones, much more hope was pinned on Kazakhstan’s chance of success with a 2007 gambling law that specified two towns, Kapchagai, and Schuchinsk, on the shores of Lake Burabay near the capital Astana, as legal gambling centres. Given the high stakes the Kazakh elite, newly enriched by an oil and mining boom, were willing to wager at the 130 casinos that operated in Almaty, investors were inter- ested. However, the town’s smokeless chimney and deserted porcelain factory still make more of an impres- sion than any of the 12 or so casinos that have opened their doors since the Kazakh government handed out the first licenses three years back. It has not helped that many of the new casino owners, including those of the Flamingo, the first to open in October 2008, decided to


renovate unattractive old industrial premises rather than build new gaming palaces. “Everybody was expecting


Kapchagai will be a casino city like Las Vegas,” laments one veteran of the Kazakh gambling industry who runs one of the new casinos. “But the investments were not done so professionally. I was


very disappointed with the investors, because I was expecting a recreational region, with bowling, hotels, and aqua parks, but Kapaha- gai hasn’t become that.” At the start of 2007,


Almaty’s deputy mayor announced that a joint venture of Chinese Talented Dragon Investment and Hong Kong’s Shun Tak Holdings, were poised to invest $10bn in Kapchagai’s City of Mira- cles resort, which would include a 600m sky- scraper named the Miracle Tower. South Korea’s Rehoboth Group, he added, had pro- posed a US$20bn investment in a resort called Zhana Ily. Then, in the summer of


2008, Eighth Wonder, pro- moted by Mark Advent, who helped develop Las Vegas’ New York New York Casino in the mid-1990s, signed a memorandum of understand- ing with the Kazakh govern- ment to build a giant resort complete with golf courses, conference centres, hotels, and casinos, which would see Eighth Wonder invest US$3bn on the first stage alone. Then the economic crisis hit Kazakhstan, and instead of becoming a new lakeside resort town, an hour’s drive from Kazakhstan’s commer- cial capital Almaty, it has relied on the same committed players as before. The veteran casino opera- tor estimates that of the 12 casinos opened, only about five are actually making a profit. One of them, the


14 February 2011 • europecentraleast&cisnews


Riviera, shut down earlier this year. Another, the relatively luxurious Moulin Rouge, was never granted a license and sits empty.


Sun City shut down, but


recently reopened. The Prince casino, which is owned by a prominent member of the Kazakh President’s family is the most well-conceived, with a swimming pool and the look of a Roman palace. Others include the Altyn


Alma, the Princess, the Esper- anza, (which also has a pool), The Palace, the Zodiac, and the Marina Club. The veteran casino opera- tor estimates that all 12 casinos rely for their income on no more than 3,000 cus- tomers, with the more popular ones bringing in a maximum of 250 customers a day, but often less than 50. The average daily spend is


only about US$1,000, but some players will spend upwards of $150,000. With a tax of $8,000 per table per month and additional taxes on profits, turning a profit is not easy, especially given the promotions that casino com- panies are launching to draw in their customers. The Prince Casino has a $600,000 lottery promotion this month, for instance, and all the major casinos have cars outside, which customers have a chance of winning. The other resort


of


Schuchinsk is faring slightly better. Its picturesque moun- tain landscape, and its clear,


natural lake mean it makes more sense as a recreational resort, and power and money in Kazakhstan is shifting towards Astana. Five casinos have opened, and two luxury five star hotels are under con- struction but no high profile international investors have yet invested in either resort, at least not publicly. The Flamingo is believed to be backed by the former owners of Moscow’s Europa casino. The backers of Moscow’s Golden Palace Casino were behind the Orion, along with a Kazakh company, but are believed to have quietly sold out a few months ago when profits did not meet expectations. The Moscow-based Alsart


group too recently aban- doned its plans to invest in Kapchagai. Lyubov Loginova, chair- man of the board of directors at Alsart, said: “The main diffi- culty and problem of the Kazakhstan market is the high level of corruption and crimi- nals. To have business there means that you have strong lobby in the government or have some family relations with ‘big people’. Alsart has no plans to invest in Kaza- khstan business preferring to concentrate upon more civi- lized countries.”


Other Russian casino oper-


ators, hit by Moscow’s 2009 casino ban, are building new casinos. The Shangri- La casino is being developed by the owners of the Moscow casino of the same name. The


Cosmos casino, built in an old Texaco building, and the Aladdin casino, are also believed to be backed by Russian operators. With four other casinos under construction: The Carlton, the Astoria, the Pyramid, and a second Altyn Alma, the veteran operator believes that next year profits will be even harder to come by. He believes that the market is only big enough for five, or at most seven, casinos, and predicts a spate of clo- sures over the next few years. There is, though, still hope


for a step change in Kapcha- gai’s dreams of becoming Central Asian Las Vegas, or ‘Kaz Vegas’, as it is known among international busi- nessmen in Almaty. Mark Advent, at least, has


not yet given up on his venture. “Our present status is that


we will start construction this spring on our first phase, which will be about 3,000 hotel rooms, three casinos, and a new airport as well,” Advent said this month when contacted in New York. “It will be called the Oz


International Airport.” “My company, the Oz Company, has a very discreet consortium of partners, and we’re very much in full throt- tle. We’ve been planning this since we began three years, ago. Nothing’s changed and we’re more bullish on Kaza- khstan than ever before.” When he opens, he says, all the other casinos would have


their temporary licenses stripped away, leaving his Oz resort, built on 11,500 hectares of land, with a gaming monopoly. The resort, he believes, will rank among the top five gaming resorts in the world, drawing in gam- blers and tourists from China, the Middle East, India and the former Soviet Union. He said the first phase


would be open by the end of 2012, and that he would be making a major announce- ment within a month or so. Advent’s track record since the opening of Las Vegas’s New York New York Casino in 1996 does bring some cause for doubt. He failed to open a San Francisco-themed casino in Las Vegas, he failed in his bid to open a huge casino in Sin- gapore, and in 2007, he exited the East Village project he had promoted in Las Vegas before construction started. “For three years they’ve been starting construction ‘next spring’, but still they haven’t opened,” scoffs the veteran casino operator. “It’s nonsense. Do not believe that.” He claims that existing casinos in Kapchagai have ten- year licenses, rather than the temporary licenses Advent claims. He also doubts whether Kazakhstan can draw gamblers from beyond its borders. “If I’m an Arab guy who likes gambling, I’m going to go to London, Monoco or Macau,” he says. “If I’m a Chinese person, I’m also going to Macau.”


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