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New Japanese casinos no risk to South Korean industry

Sat, Jul 20, 5:29am by Staff Writer

The first wave of Japanese casino resorts could start opening from mid next year, but it wouldn’t damage the prospects of large-scale gaming resorts in South Korea, people involved with such investments told GGR Asia this week.

Japan is a significant contributor to South Korea’s mostly foreigner-only casinos according to data.

Japan is going to allow locals to use its casino resorts – venues to be known as integrated resorts or IRs, but the national government has pledged to impose an entry levy and monthly visit limits on locals.

South Korea by contrast, only allows locals to gamble at Kangwon Land, a remote upland resort several hours by road from the capital Seoul.

A number of investment analysts have cited the inability of the new large-scale South Korean resorts to offer gambling to locals as a limiting factor for their earnings.

Mohegan Gaming and Entertainment’s vice president of corporate finance Christopher Jones said that there was such a large pool of foreign players close to South Korea that the prospects for such resorts remained strong.

“There are over 700 million people and some of the largest cities in the world, all within three hours of both [South] Korea and Japan.

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,” Mr Jones said.

United States-based tribal casino operator Mohegan Gaming and South Korean casino operator Paradise Co Ltd are respectively investing in and developing casino resort projects in Incheon, close to the country’s main international airport serving the capital, Seoul.

New Korean project to open in 2021

The US$1.6 billion first phase of Mohegan Sun’s casino report project in Incheon, dubbed Inspire Entertainment Resort, is set to open in the final quarter of 2021.

A total capital commitment of $5 billion has been mentioned for multiple phases over two decades.

The initial part of phase one of Paradise City launched in April 2017.

On the South Korean holiday island of Jeju, the promoter of another scheme, Jeju Dream Tower – a resort with a foreigner-only casino – is aiming to complete the construction of the high-rise portion by the end of this year.

Regional competition to South Korea’s new resorts is coming from beyond Japan. A May report by brokerage Union Gaming Securities Asia Ltd, stated that current rates of economic growth in Asia did not justify the US$65 billion already earmarked for new casinos in the region – two-thirds of the money for existing gaming jurisdictions, and the balance for Japan’s nascent market.

But Mohegan Gaming’s Mr Jones said, “Specific to Korea, our operations will have a couple years to develop before facing the opening of Japanese operations, which should allow for the development of a regionally-diverse mix of customers in Korea.”

He added, “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],” the Mohegan Gaming executive said.

Mohegan Gaming has also expressed interest in the Japan market, saying it would like to invest between US$3.5 billion to US$4.5 billion to develop a casino resort on Japan’s northernmost main island, Hokkaido.

Paradise Co Ltd, which is a long-standing operator of mid-size casino hotel complexes in South Korea’s foreigner-only casino sector, has in recent years upped the stakes via partnership with a Japanese firm to build a larger-scale venue.

Paradise City at Incheon is a venture with a unit of Japanese entertainment conglomerate Sega Sammy Holdings Inc.

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