Jackpot delusion might hide serious social consequences
Korea has finally jumped into the ''casino wars" gripping East Asia, by opening up its gambling market for foreign operators.
It's not hard to understand why the government does not want to lag behind its regional rivals, as Macau, Singapore, Malaysia, Vietnam, Taiwan, Japan and even the Russian Far East are tapping into this lucrative service sector. If anything, Korea is a late starter.
But that should not be a reason for Seoul to bend its rules and hurriedly give a go-ahead to LOCZ Korea, a U.S.-Indonesian partnership, sending a wave of controversy throughout the industry.
Above all, the Ministry of Culture, Sports and Tourisms needs to provide more plausible answers as to why it gave approval to the applicant, which it turned down only nine months ago citing poor credit standing. The ministry did so by even sharply lowering the initial investment requirement from the original amount.
Also, the ministry has yet to convince critics that it can prevent the so-called eat-and-run scenario ― an earlier-than-expected withdrawal of investment by handing over a business license after garnering quick profits. Nor should the nation ignore the possible influx of foreign speculative funds and a supply glut in a still narrow domestic market, as three or four more foreign operators are reportedly preparing to advance here.
Yeongjong Island, home to Incheon International Airport, a regional transport hub that has 147 cities with populations of more than 1 million within two hours of flight, is an attractive site for building integrated resorts complete with casino and tourism facilities. If so, there should be few reasons for Seoul to allow only foreigners to do gambling business there, leading to controversy about ''reverse discrimination" against local competitors.
The biggest problem of all is the government's eventual granting of entry to Koreans in the proposed casino, which will start as a foreigner-only facility.
Ministry officials deny such a possibility any time soon, saying it will require a national consensus. Yet letting locals into the casino will only be a matter of time if the government is set to turn the island into the ''Las Vegas of Northeast Asia." Foreign operators will certainly call for allowing locals entry, as Macau and Singapore are doing now. In Korea, too, the revenue of Kangwon Land, the only casino for locals, is larger than those of the 16 foreigner-only casinos combined.
If and when mega casinos are open to Koreans, the negative social consequences such as bankruptcies, family breakups and suicides, will be tremendous, not least because of Koreans' weakness for speculative games as illustrated by the boom of betting on horseracing, boat racing and professional cycling.
Officials estimate the proposed casino would generate tourism receipts of 890 billion won by 2020, creating 8,000 jobs between 2014 and 2018. Yet critical reports calculate the ''social cost" could be up to four times larger than those economic effects. President Park Geun-hye's fight with the underground economy will become more difficult, too, as gambling is often accompanied by other criminal activities, such as drugs and prostitution.
True, if you can't beat them, join them. Nor can one deny the need for promoting service industries and creating jobs. Before trying to turn the free economic zone into a free gambling zone, however, the government should also think about the nation's crumbling manufacturing base.
Korea has finally jumped into the ''casino wars" gripping East Asia, by opening up its gambling market for foreign operators.
It's not hard to understand why the government does not want to lag behind its regional rivals, as Macau, Singapore, Malaysia, Vietnam, Taiwan, Japan and even the Russian Far East are tapping into this lucrative service sector. If anything, Korea is a late starter.
But that should not be a reason for Seoul to bend its rules and hurriedly give a go-ahead to LOCZ Korea, a U.S.-Indonesian partnership, sending a wave of controversy throughout the industry.
Above all, the Ministry of Culture, Sports and Tourisms needs to provide more plausible answers as to why it gave approval to the applicant, which it turned down only nine months ago citing poor credit standing. The ministry did so by even sharply lowering the initial investment requirement from the original amount.
Also, the ministry has yet to convince critics that it can prevent the so-called eat-and-run scenario ― an earlier-than-expected withdrawal of investment by handing over a business license after garnering quick profits. Nor should the nation ignore the possible influx of foreign speculative funds and a supply glut in a still narrow domestic market, as three or four more foreign operators are reportedly preparing to advance here.
Yeongjong Island, home to Incheon International Airport, a regional transport hub that has 147 cities with populations of more than 1 million within two hours of flight, is an attractive site for building integrated resorts complete with casino and tourism facilities. If so, there should be few reasons for Seoul to allow only foreigners to do gambling business there, leading to controversy about ''reverse discrimination" against local competitors.
The biggest problem of all is the government's eventual granting of entry to Koreans in the proposed casino, which will start as a foreigner-only facility.
Ministry officials deny such a possibility any time soon, saying it will require a national consensus. Yet letting locals into the casino will only be a matter of time if the government is set to turn the island into the ''Las Vegas of Northeast Asia." Foreign operators will certainly call for allowing locals entry, as Macau and Singapore are doing now. In Korea, too, the revenue of Kangwon Land, the only casino for locals, is larger than those of the 16 foreigner-only casinos combined.
If and when mega casinos are open to Koreans, the negative social consequences such as bankruptcies, family breakups and suicides, will be tremendous, not least because of Koreans' weakness for speculative games as illustrated by the boom of betting on horseracing, boat racing and professional cycling.
Officials estimate the proposed casino would generate tourism receipts of 890 billion won by 2020, creating 8,000 jobs between 2014 and 2018. Yet critical reports calculate the ''social cost" could be up to four times larger than those economic effects. President Park Geun-hye's fight with the underground economy will become more difficult, too, as gambling is often accompanied by other criminal activities, such as drugs and prostitution.
True, if you can't beat them, join them. Nor can one deny the need for promoting service industries and creating jobs. Before trying to turn the free economic zone into a free gambling zone, however, the government should also think about the nation's crumbling manufacturing base.
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