Analysts are buoyed by the prospect of South Korea getting its first Las Vegas-style casino, but believe the government’s ban on access by its citizens will keep the market from growing as large as it might.
“Today it’s a foreigners-only market,” said Grant Govertsen of Union Gaming Research Macau. “The gaming market in South Korea generates roughly $1.3 billion, while Singapore’s comes in slightly over $6 billion and Macau’s at $45.1 billion. Until regulations are changed to allow locals to gamble, South Korea will pale in comparison, and it doesn’t look like that is going to happen any time soon.”
Earlier this month, the government reversed itself and granted tentative approval for a casino at a multibillion resort Caesars Entertainment wants to develop in partnership with Indonesian conglomerate Lippo Group. The resort will be located in a special economic zone surrounding the country’s main international airport near the port city of Incheon just east of the capital of Seoul.
Caesars initial application for a license was rejected last year, reportedly over official concerns about the company’s industry-high debt load of $20 billion-plus.
The country is home currently to 17 mostly small casinos, only one of which, a government-backed venue in the remote northwest of the country, permits Koreans to enter. The existing market is not of sufficient scale to attract the tourism the administration of President Park Geun Hye wants to help boost the sagging economy and rebalance it away from its historical dependence on exports.
Chinese visitors make up one-third of tourist visitation to South Korea today, and the government wants to grow that by 50 percent to 10 million visitors by 2020.
Aaron Fischer, who heads consumer and gaming research at CLSA Asia-Pacific markets, said the Caesars project represents a strong step in that direction.
“The big difference between this project and South Korea’s existing casinos is that this is a major step up in investment. If companies spend enough money they can create an attractive destination that includes a premium offering of hotels, shopping, restaurant and gaming.”
But like Govertsen he doubts whether the market will ever rival Macau or Singapore.
“If it was the first of 10 projects similar in terms of the size of investment then, yes, you could see the market expanding significantly, especially given its proximity to China, but we are not there yet,” he said.
