Beijing tracking VIPs beyond China borders
Grand Korea Leisure, the gaming arm of the Korea Tourism Organization, announced last week it would not seek a gaming license on Yeongjong Island, off the western coast of Incheon. About 24 hours later, NagaCorp also withdrew from the running. Grand Korea Leisure operates three foreigners-only casinos in Korea under the Seven Luck brand.
“We have made the decision considering the shrunken demand from Chinese customers,” a Grand Korea official told CalvinAyre.com. “Also, attempts to form a consortium fell through. But there is still room for another try if there are opportunities down the road.”
GKL contends that Beijing’s anti-corruption drive has driven down patronage by Chinese gamblers, many of whom are reluctant to play in Macau and now also are afraid of being monitored in jurisdictions outside China. The company’s third-quarter net profit dropped 41.5 percent to 22.58 billion won (US$19.52 million) year-on-year.
According to the Asia Gaming Brief, 34 groups had initially lined up to bid on the licenses but that had already been whittled down to 17. Shortly after GKL withdrew, Cambodian gaming company NagaCorp issued a statement saying it, too, would not participate in the Request for Proposal issued by South Korea’s Ministry of Culture, Sports and Tourism.
In a particularly windy statement, NagaCorp said, “The company is of the view that the expected economic returns of such an investment do not meet the company’s benchmark in evaluating return on investments and is therefore not in line with its policy of selective expansion.”
Union Gaming saw the withdrawals as a bad sign for the proposed resort on Yeongjong. “GKL pulling out of the RFP calls into question whether adequate returns can be generated, given the … minimum investment of $850 million, with winning bidders likely north of $1 billion,” the firm said in a note. Also working against the plan: the planned casinos will be open to foreigners only, and there are “serious questions on the future of Chinese-originated VIP play.”
The remaining bidders have until November 27 to finalize their plans and submit their bids.
Some observers say it will only bring up the question of Korean locals gambling. Today, all but one of Korea’s 12 casinos are reserved for foreigners only. The one casino that allows Koreans to gamble, Kangwonland in the central mountains, is the most remote, yet also the most successful. Experts have suggested that Korea may implement an Singapore-style system, where locals must pay either a daily or yearly fee to gamble.
