Green light for foreigners-only Korean casino
SOUTH Korea gave a preliminary green light for a large-scale foreigners-only casino complex to a consortium that includes Caesars Entertainment, seeking to draw in wealthy Chinese gamblers and their tourist dollars.
Shares of members of the consortium surged during Asian trade, with Hong Kong-based property developer Lippo jumping 35 per cent and Singapore's OUE gaining 6 per cent.
While frowning on gambling for its own citizens who have access to only one casino, South Korea has 16 small foreigner-only casinos.
A shift to big glitzy integrated resorts that include hotels and other amenities is being driven both by South Korea's desire to develop its tourist industry as well as foreign capital eager to cash in on the country's proximity to China.
The complex, to be located near the country's main international airport on Yeongjong island, is set to compete with one planned by Genting Singapore and Chinese property developer Landing International Development on the island of Jeju.
South Korea's Paradise, one of two companies that dominate the country's foreigner-only casino market, has also teamed up with Japan's Sega Sammy Holdings in planning a separate casino resort.
However, South Korea's government noted that the approval was preliminary and not a guarantee of a gaming licence, with the government reserving the right to withdraw it if conditions are not met.
The entire development is expected to cost around 2.3 trillion won (S$2.7 billion) and will be built over several phases, the companies said in a statement.
The granting of the preliminary licence comes after the government rejected in June a bid from the consortium, as well as a separate one from Japan's Universal Entertainment.
At the time, a government source said that the consortium's bid was rejected due to concerns about Caesars' credit rating. Moody's Investors Service lowered its ratings on the company and assigned a negative outlook in April, citing adverse gaming revenue trends.
This time, however, a separate government source said the consortium was the first to receive preliminary approval among several parties interested in setting up a casino in Yeongjong island as it was the only one that satisfied the government's requirements on investment size, funding plans and credit ratings.
Universal, headed by Japanese billionaire Kazuo Okada, has not re-applied for a licence.
Many Asian countries, including the Philippines and Vietnam, are building large-scale casino resorts, hoping to attract Chinese gamblers and imitate the success of Macau, the world's casino capital which rakes in seven times more in annual gaming revenue than Las Vegas. Japan is also looking to legalise casino gambling.