In a packed press conference in Seoul, it announced the issuance of a preliminary casino license to LOCZ Korea, a joint venture of Las Vegas-based U.S. casino operator Caesars Entertainment and Indonesian conglomerate Lippo Group, for a $700 million project to build a casino resort on Yeongjongdo Island.
Despite the project’s relatively small investment amount, the decision drew much media attention because it is widely seen as a maiden move by Korea to join the red-hot race among Macau, Singapore, Malaysia, Japan and other Asian destinations to attract big-spending Chinese gamblers.
“A preliminary license has been issued to LOCZ Korea on March 18, after a review of its credentials and business plan here,” Kim Ki-hong, a director at the Ministry of Culture, Sports and Tourism, told the press conference. “A final permit will be granted if and when the consortium executes investment plans as stated and within the set time schedule,” he added.
|Officials at Midan City Development Co. present a miniature model of the envisioned Midan City, which the Korean government wants to develop into a gambling hub targeting Chinese tourists. (Yonhap)|
According to its plan, LOCZ Korea will spend 743.7 billion won ($696 million) until 2018 to build a casino resort featuring a 7,700- square-meter casino, hotels and dining spaces, and shopping and other commercial facilities.
It is part of the company’s 2.3 trillion-won project to establish a mega gambling complex there by 2023.
Foreign casino operators have been eyeing Korea after the government unveiled a plan to allow foreigner-exclusive casinos in the free economic zone of Yeongjongdo, and LOCZ Korea is the first to break through the country’s high entry barrier.
It was rejected once last year, along with Japan’s Universal Entertainment. At that time, the Korean government had cited their failure to meet financial stability requirements.
The casino industry is booming in Asia, with Macau raking in $45 billion in revenues in 2013, nearly seven times more than the revenue of Las Vegas. Chinese and other wealthy Asian gamblers are driving the growth, according to experts.
Korea wants to take a bite out of the lucrative pie by setting up a gambling hub on Yeongjongdo Island, dubbed Midan City, but it has no plan to open gambling up to its nationals, at least for the time being.
“The license issued today is only for a foreigner-exclusive business,” said the ministry official, when asked if there was any chance that the license could lead to a new casino for locals in the future.
“There is no discussion whatsoever about opening the market for Koreans to foreign operators. A social consensus is required for any talk of such a move,” he added.
Gambling is illegal for Koreans, except at the country’s only casino for local citizens ― Kangwon Land. Other than that, the country has 16 casinos catering only to foreigners.
To raise the competitiveness of Midan City against Macau and other Asian gambling destinations, the government plans to lower the entry barrier for foreign operators.
Among the envisioned changes are an introduction of a bidding system for the issuance of a new license and the easing of financial requirements. Currently, only those with a credit rating of “BBB” or higher are qualified to set up a casino in Korea. The government is considering lowering the bar, which has been cited as the major hindrance for foreign operators’ entry here.
By Lee Sun-young (email@example.com)