Enclave of Red Magic

The Enclave of Red Magic was a Thayan enclave found in the subterranean city of Skullport deep within the Undermountain. Although the enclave was "officially" sponsored by Thay's Guild of Foreign Trade, it was in fact a not-so-covert extension of the will of the Red Wizards.

Connected to the Thayan embassy within the Castle Ward Waterdeep via a non-visible portal, the enclave acted as a "legal" means for the Red Wizards to engage in the sale of magical items, weapons and even slaves within the city of Waterdeep. This key dynamic was kept secret from the Guild of Foreign Trade, as the Thayan bureaucracy was sure to shut down the operation.

As of 1372 DR, the Lords of Waterdeep were aware of the operations within the embassy and enclave, led by the ambassador of Thay, Ethur Anszim, his agents, and the Red Wizards of the enclave. The city's noble families saw these dealings as a threat to their financial interests within the undercity and the Watchful Order of Magists and Protectors saw the Thayans as infringing upon their sale of magical items.

History
Throughout the years, Thay has repeatedly tried to open an enclave within the city of Waterdeep proper, in order to access the natural wealth found in the North. At every attempt, they were rebuked by the city's Lords, on the grounds of the enclaves' three laws. Because Thayan enclaves were considered sovereign land of the nation of Thay, and as such were free to engage in slavery, the Lords flat-out rejected allowing any part of their city be considered part of another country, and would not stand for the sale of people as slaves.

Following years of talks that went nowhere, the agents of Thay took a new approach around 1369 DR following the events of Halaster's Higharvestide. After reviewing city records of the event, the Thayans noted a portal between the Lower Heart ward of Skullport and the Castle Ward. Late in the following year, the Thayan agents convinced the Lord of bones, Shradin Mulophor, about establishing an enclave within the subterranean city. Simultaneously, other representatives of Thay were successful in establishing an official embassy within the Castle Ward.

While the embassy was considered sovereign territory of Thay, exempt from Waterdeep's laws, the Red Wizards were careful not to conduct their business within its walls. Anyone who sought do trade with the Red Wizards were directed to a back room within the embassy, whose archway was, in fact, the portal to Port of Shadows. Anyone unaware of this gateway would simply think they went from one room to another, unaware they were no longer in Waterdeep proper. Any "illicit goods" that were outlawed within Waterdeep's realm, would be delivered to the buyer after they had left the city's walls.