MACAU ― Global investors are not very enthusistic about South Korea’s plan to allow additional casino-centered integrated resorts in the metropolitan Incheon’s Yeongjongdo Island area to promote the tourism industry.
The points of concern vary from the “foreigners-only policy” and Yeongjongdo’s rather isolated location to the looming competition with neighboring Japan which is seeking to legalize gaming for locals.
“What is more important (than building infrastructure) is to establish a regulatory body to promote transparency in the gaming industry,” professor Seo Won-seok, director of Kyunghee University’s IR Gaming Research Center, told The Korea Herald.
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| Bobby Soper (center), president of Mohegan Sun Tribal Gaming Authority, discusses Korea’s integrated resort business during the G2E 2015 global markets forum in Macau. (Bae Hyun-jung/The Korea Herald) |
Seo participated as session speaker at the G2E Asia 2015, the largest regional trade event for gaming and entertainment held in Macau this week.
Currently, the casino business in Korea is supervised by the National Gaming Control Commission, which also administers horseracing, track cycling and lotteries.
“But the casino industry, especially when it comes in an integrated resort format, has unique features that distinguish it from other categories of gambling,” he said.
Early this week, the Korean government announced that it would select two more operators to build casino-based integrated resorts, each projected to cost around 1 trillion won ($921 million).
In order to compete against rising gaming markets such as Singapore, the Philippines, and even Japan, it is crucial that Korea provides a legal framework and offers a good business environment for investors.
“Incheon provides a good location, being close to major Chinese cities and incorporating one of the world’s best international airports,” said Bobby Soper, president of Mohegan Sun Tribal Gaming Authority.
The company, which is the largest gaming operator in the eastern U.S. region, signed a memorandum of understanding last month, proposing to invest up to $5 billion in the Yeongjongdo resort project.
But several global investors and industry experts have expressed concerns about its location, pointing out that Yeongjongdo is not sufficiently connected to other key tourist spots.
“One does not go to London to stay at Heathrow, so it is natural that visitors (to Yeongjongdo) should want to experience Seoul as well, or turn to Jejudo,” said Grant Govertsen, managing partner at Union Gaming Research Macau.
“If the goal is to attract investment, the Korean government may have to alter its plan.”
Vitaly Umansky, senior analyst at Hong Kong-based investment research company Sanford Bernstein, pointed out that Korea is still averse to legalizing casinos for locals.
“The Korean government has significant concerns on legalizing gaming as the country is a highly addictive society,” he said.
“But if neighboring Japan is taking steps to legalize gaming for locals, that may act as a catalyst for the Korean gaming industry.”
By Bae Hyun-jung, Korea Herald correspondent (tellme@heraldcorp.com)
