Locals gaming in Korea likely — but not imminent
The Covid-19 pandemic may be a trigger for South Korea to rethink its foreigner- only casino policy, as the country’s casinos struggle with a lack of tourism revenue.
That was the view shared by two experts on Asia Gaming Brief’s latest webinar session, which studied investment opportunities in the Korean gaming industry.
“This Covid is giving us a hard time and because of the situation I think maybe it’s time to rethink about South Korea’s foreign-only casino model,” said Nicholas Kim, investment director at the Incheon Free Economic Zone, which is home to Korea’s first IR.
The full-length recording of the AGB Webinar can be found here.
However, Kim conceded that the issue is highly complicated and the government will first need to put in place detailed regulation to govern the industry, so any potential investors will need patience.
“I think it will definitely come. It’s a matter of time,” he said. “Every industry in our
country is growing up very rapidly. It’s a natural course of development, but I don’t see it in the near future.”
Kim stressed that he was offering his personal opinions on the issue and not speaking on behalf of the government during the session, which focused on a wide range of topics in Korea.
Jeff Heo, director of strategic planning of Gaming Korea, also pointed to the difficulties being experienced by the casinos on Jeju island, suggesting that the government should think about allowing Korean tourists to enter, with the introduction of restrictions such as an entry fee, or limited monthly entrance.
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There is currently only one property that allows locals to gamble — Kangwon Land — in a remote corner of the country. It was permitted under a special act to help to create jobs and rejuvenate the economy in a former mining community and now makes almost as much annual revenue as all the other casinos in Korea combined.
A few years ago, the Korean market was seen as one of the most promising in Asia, attracting interest from some of the biggest names in the industry. Tourism inflows were strong, especially from China, with its brand rising internationally due to the K- pop phenomenon.
Seoul’s international airport in Incheon is one of the biggest transport hubs in Asia and is just a few hours flight from Japan and China. However, a spat with China over the deployment of a U.S. missile system in 2017 highlighted the risks inherent with relying on tourism, with visitor numbers from China plunging 60 percent that year after Beijing banned tour groups to the country.
Last year, numbers had recovered, with South Korea attracting 17.5 million visitors,with 34.4 percent from China and 18.7 percent from Japan before the Covid-19 . Jeju Dream Tower is pressing ahead with construction and is expected to open later this year. The building, at 38 storeys, will be the tallest on the island and is a joint venture between Lotte Tour Development and Hong Kong-listed Greenland. However, it’s still waiting for permission to transfer its existing license from a casino at the Lotte hotel to the new property. The Jeju government now requires a social impact assessment to be carried out before allowing transfers.
Heo said the assessment works on a point system, with an operator needing to score above 600 points out 1000 to qualify. Jeju is also now reassessing its casino licenses every five years. The full-length recording of the AGB Webinar can be found here.