Japanese gamblers contribute mightily to the bottom line of foreigners-only casinos in nearby South Korea. But a new report suggests that operators in Korea are not unduly concerned about the prospect of Japan casinos slated to open in the next few years.
Christopher Jones, vice president of corporate finance for Mohegan Gaming and Entertainment, told GGRAsia there are plenty of customers to go around.
“There are over 700 million people and some of the largest cities in the world, all within three hours of both Korea and Japan,” Jones told the news outlet. “So from a market perspective and overall proximity and convenience, we believe there is ample demand to support the development of integrated resorts in South Korea and Japan.”
The U.S.-based tribal casino operator is developing a casino resort project in Incheon, close to the country’s main international airport serving the capital city of Seoul and home of Paradise City, a joint venture of Paradise Co. and Japan’s Sega Sammy. Phase I of Paradise City broke ground in April 2017.
The US$1.6 billion Phase I of Mohegan Sun’s Inspire Entertainment Resort is set to open in late 2021; the company plans to invest an additional US$5 billion over the next 20 years. Yet another foreigners-only casino called the Jeju Dream Tower is also underway on the island of Jeju.
A May report by Union Gaming Securities Asia stated that current rates of economic growth in Asia do not warrant the billions already planned for new casinos in the region. But Jones said, “We see our Korean operations holding a number of advantages over other regions in Asia. From our perspective, we don’t see the supply contemplated for the region as having an adverse impact on the overall return on investment of Inspire Korea.”
A spokesman for Paradise Co. said, “As the market grows, it is expected that there will be more demand for visiting Korea for gaming purposes. If Japan’s Sega Sammy will be selected as a casino operator in Japan, we will be able to continue expanding the Japanese market through cooperation with Sega Sammy.”
Professor Lee Choong-Ki of the College of Hotel and Tourism at Kyung Hee University, South Korea, believes Kangwon Land, the only casino in South Korea that serves locals, will be more adversely affected by the opening of the Japan market than South Korea’s foreigner-only casinos.
“Japan integrated resorts will have an impact on Korean outbound tourists since they are a major source market for the Japanese tourism market,” he said. Of South Korea’s 17 casinos, only Kangwon Land serves Korean nationals.
Lee added that problem gambling is a touchy subject among South Koreans and could keep the government from letting locals enter and play at casinos.
“Korean people are so sensitive to problem gambling and thus the Korean government may not be willing to liberalize additional domestic casinos or IRs,” Lee said. The Korean government “would not take any action unless a large number of Koreans visits Japan IRs, resulting in strong market impact when they are opened.”
Jones, meanwhile is hopeful that Inspire may one day open its doors to locals. “We are developing the Inspire Entertainment Resort, a Northern Asian destination, providing a world class casino to non-Koreans and a truly unique non-gaming experience for Korean nationals. Said another way, we are not focused on the Korean market, with an expectation that locals will eventually be allowed access to our casino,” he said.
South Korea’s foreigner-only casinos posted strong revenue growth in 2018, gaining 34 percent over the prior year, according to the National Gambling Control Commission. Foreigners-only revenues amounted to KRW1.625 trillion ($1.373 billion), up from KRW1.207 trillion the prior year. Revenues at Kangwon Land fell 8 percent to KRW14 billion.
The figures showed a marked improvement from the prior three years when revenue for the foreigners-only properties, which include those run by Grand Korea Leisure under the Seven Luck brand and Paradise Co. under the Walker Hill brand, had been largely flat. Visitors to foreigner-only casinos in 2018 rose to 2.8 million from 2.2 the prior year, while at Kangwon Land fell to 2.8 million from 3.1 in 2017.
