Posted : 2014-04-07 16:49
Updated : 2014-04-07 19:59

Korea bets on casinos to boost economy

This is an artist's rendering of a casino resort to be built on Yeongjong Island by LOCZ Korea, a joint venture company run by U.S. casino operator Caesars Entertainment and Indonesian conglomerate Lippo Group. Incheon Metropolitan City, which governs the island under the city's free economic zone, is among several provincial governments that plan, or are considering building, integrated resorts.
/ Courtesy of Incheon Free Economic Zone Authority

Experts say locals should be allowed to ensure success

By Yi Whan-woo

Provincial governments are betting on the construction of casinos to boost their economies in accordance with the Park Geun-hye administration's creativity based economic paradigm.

However, experts forecast that the casinos might not be able to compete against rivals in Macau, Singapore, the Philippines and Japan.

In a telephone interview with The Korea Times this week, officials from at least five local governments ― Incheon, Busan, North Jeolla Province, South Jeolla Province and Jeju Province ― said they already plan or are considering building multi-leisure complexes that cater to casino customers.

Their prospects for building Las Vegas-style casinos became even more encouraging after the Ministry of Culture, Sports and Tourism issued a preliminary casino license to LOCZ Korea on March 18. LOCZ Korea is a joint venture between U.S. casino operator Caesars Entertainment and Indonesian conglomerate Lippo Group that plans to build a $700 million casino resort on Yeongjong Island.

The island is a part of the Incheon Free Economic Zone. It estimates that the resort would create up to 35,000 jobs once it is built and generate revenue of 2.7 trillion won ($2.55 billion) within three years of operation.

The city government said in a press release the Yeongjong Island resort would attract Chinese gamblers, who accounted for 47 percent of the 2.7 million gamblers at 16 foreigner-only casinos nationwide in 2013.

The other provincial governments have a similar view of the upcoming casino resorts.

"Our study shows that over 80 percent of multi-leisure complexes' revenue comes from casinos," said Byun Keun-se, a deputy director at Saemangeum Development Agency. He cited a study conducted by North Jeolla Province, which ran the agency until September before the Ministry of Land, Infrastructure and Transport took over.

"Lands in three districts are available for the construction of casino resorts under the law that defined the purpose of Saemangeum, a landfill," he said.

A South Jeolla Province official claimed the land designated for casino resorts in the province is also competitive enough to draw Chinese gamblers as well as investors.

"Our land is located by the West Sea, which visitors from the eastern part of China can easily access," said an official at an investment promotion team of the province, asking his name not to be revealed.

According to the official, parts of the landfill districts are in Yeongam, which hosted the Korean Formula One Grand Prix from 2010 to 2013. The South Jeolla Province initially planned to host the event for at least seven years in a row, but the event came to a halt owing to the low revenue and increasing license premium required by Formula One Management, the company in charge of promoting the annual racing event.

A tourism development division official at the Busan City Government said the port city is thinking about developing land in Dongbusan, a landfill site designated for leisure purposes.

Gyeonggi Province said it is also considering including a casino in its initial plan to build a Universal Studios resort in Hwaseong. The plan has been postponed since 2012 because of difficulty in finding developers.

"For us, it's important to find ways to attract investors, and a casino resort can be a solution," an official of the province said on condition of anonymity.

Jeju Province runs eight of the 16 casinos nationwide. It said it plans to build up to four additional ones, considering that the resort island has been popular among Chinese visitors for years.

Skepticism prevails

A leisure industry expert questioned the benefits of making Korea a casino industry hub.

"Only a few casinos in Seoul and those in Jeju make revenue among the 16 foreigner-only casinos," Korea Leisure Industry Institute President Seo Chun-beom said. "And I wonder who would be willing to visit casinos in the inner parts of Korea unless they have business there."

An economist at Hyundai Research Institute echoed the view.

"A key factor to consider in building a casino resort is proximity, meaning whether it can be easily reached by gamblers," Hyundai's senior researcher Kim Pil-soo said.

"I highly doubt that other than those in Incheon, Jeju and Busan, casino resorts will be lucky enough to succeed."

He said the fact that the casinos are for foreigners only supports his argument.

"Shanghai will open Disneyland next year, so would the Chinese really come to the Universal Studios in Hwaseong? I don't think so."

Kim also raised the possibility that the Chinese government will restrict tourists from visiting Korea for gambling purposes even if the casinos here will be attractive enough to Chinese gamblers.

"Even in Macau, the Chinese controls the number of tourists entering the city to spend their money at casinos.

"The only way to attract gamblers is to allow locals to come and play. In that case, the government will have a series of social problems related to addiction to gambling."

The Ministry of Culture, Sports and Tourism said it currently has no policies that control the number of casinos.

"We thoroughly review applications for casino operation and give a permit license to those who meet the requirements, but there is no law that limits the number of casinos in the country," a deputy director at the ministry's tourism policy division said, asking his name to be not revealed.

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