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S. Korea opens casino market to foreign operator

March 18, 2014
This view shows LOCZ Korea’s casino resort to be completed by 2023 in Yeongjondo, home to Incheon International Airport. (Yonhap)

This view shows LOCZ Korea’s casino resort to be completed by 2023 in Yeongjondo, home to Incheon International Airport. (Yonhap)

By Do Je-hae

The government gave initial approval Tuesday for U.S. firm Caesars Entertainment to open a mega resort-casino with Indonesian property developer Lippo Group, paving the way for Korea’s first international casino brand.

Caesars, known for its casinos on the Las Vegas strip in Nevada, will build an integrated resort that includes hotels and resort amenities, live entertainment venues, a standalone convention center and a foreigners-only casino on Yeongjong Island near Incheon International Airport.

Tourism authorities granted preliminary approval for the first part of a project valued at around $2.2 billion. LOCZ Korea, a joint venture between Caesars and Lippo Group, hopes to open the integrated resort in time for the 2018 Winter Olympics in PyeongChang.

The decision comes after the ambitious project suffered a setback last June when the Ministry of Culture, Sports and Tourism rejected it, saying that the joint venture failed to meet the qualifications related to its credit rating. “The bidders have since improved the credit standing and increased its investment for the initial part of the construction” said Kim Ki-hong, director-general of the ministry’s tourism bureau during a briefing in Seoul.

The ministry estimates that more than 890 billion won in tourism revenue will be generated from new visitors and the creation of more than 8,000 jobs during the construction period from 2014 and 2018.

During the briefing, there were several questions about the possibility of running an “open casino,” allowing Koreans to enter the gambling site. Current legislation prohibits Koreans from entering casinos.

“We are not considering changing the current stance on open casinos,” Kim said.

While Korea has over 16 “foreigner-only” casinos which cater primarily to Chinese tourists, they are just gambling dens and do not offer the range of amenities that the Caesars has in mind for the new casino.

The first phase of the Caesars-Lippo venture will include the construction of a casino, hotels, residential buildings, the convention center and shopping mall by 2018.

Incheon was jubilant about the news of the venture’s approval, which is expected to increase its profile as a tourist destination along with another foreign casino project that is underway.

Sega Sammy, the video game and pachinko machine company, and Paradise, had already received approval for their plans to build a separate, 1.9 trillion won casino resort in Incheon by 2017.

“Along with the Paradise project, the LOCZ venture will turn Yeongjong Island into Korea’s Marina Bay Sands,” Incheon Mayor Song Yong-gil said. “Our city will become the nation’s Mecca of service industries.”

“Foreign visitors to South Korea have grown significantly, and we look forward to creating a world-class destination to further support Korea’s economic growth and tourism goals,” said Gary Loveman, Caesars Entertainment chairman, CEO and president, in a statement.