As much as they endeavor to control it, Pacific Rim countries are finding themselves having to cede more and more to their citizens' appetite for gambling -- to say nothing of the valuable tourist magnet it provides. South Korea is a relatively young nation, having been created in 1945 out of territory over which the Chinese, Japanese, and Russians had fought for decades. Nonetheless, its casino industry is one of the most robust in Asia, trailing only Macau and newcomer Singapore.
Despite a push from the right wing to ban gambling in South Korea, a 2007 study showed that tourism doubled in tandem with an expansion of the country's casino offerings. It also allows online poker and -- in keeping with the region's fever for lottery-style gambling -- has five national lotteries.
Seoul has an ambivalent stance toward casino gambling by its own citizens, however. This is permitted only at one casino, Kangwon Land Resort, in a relatively isolated area a three-hour ride from the capital city.
"Our feeling is that Korea does not have a mature culture that could enjoy gambling simply as a leisure activity. We block Koreans from casinos, because the fallout would be too big," said Director of Tourism Kim Jin-Gon, rationalizing the country's policy toward opening casinos to all. The official posture is that casino gaming exists primarily to entice foreigners, not consume domestic wealth. To that end, Koreans can only visit Kangwon Land 15 times a month and wager no more than $280 a visit.
While they’re powerful draws for Japanese and Chinese tourists (especially Chinese whales who feel Big Brother looking over their shoulder in Macau), South Korean casinos are quite small by American standards. The biggest (Kangwon Land excepted), 7Luck Casino at Seoul's Millennium Hilton, has 142 slot machines and 58 tables and most tourist-oriented casinos are much smaller.
That’s about to change, however. Mohegan Sun has teamed with two Korean partners to launch a megaresort called Inspire, to be built adjacent to Incheon International Airport. In addition to 1,500 slot machines and 250 table games, it will have a Paramount Studios adventure park, three hotel towers, and a plastic-surgery center. (South Korea is one of the Pacific Rim's destinations of choice for cosmetic surgery.) All of this will cost $1.6 billion and will have to make its investment back entirely on the tourist trade.
Two other billion-dollar "integrated resorts" are slated for the airport, one developed by Japanese company Sammy Sega, the other a joint venture partly backed by Caesars Entertainment. However, a cone of silence has descended over the Caesars project since the company went bankrupt.
A couple of the major Macau players -- Melco Crown Entertainment and Galaxy Entertainment -- were initially among the 34 applicants for the three concessions, but both pulled out along the way. Representatives of Las Vegas Sands have scouted the port city of Busan as a possible megaresort site and CEO Sheldon Adelson has offered an unprecedented $10 billion investment -- provided that South Korean law is changed so that locals can patronize the casino. MGM Resorts International is also interested in the Korean market, but attaches the same condition as Adelson, arguing that current South Korean levels of casino play aren't conducive to the large-scale projects that are becoming MGM's signature.
One potential compromise would see locals pay an admission fee to patronize a casino resort. Singapore tried this as a deterrent, but Adelson has been making out like a bandit over there anyway. Another proposal recently floated in Seoul, less pleasing to international investors, would be to break Kangwon Land's monopoly and create a second locals-only casino, but this would also be remotely located and the idea hasn't gained much traction.
Since it has the biggest head start, Inspire will be the acid test as to whether megaresort-sized casinos can flourish in South Korea on tourist-only business. MGM and Sands presently don't think so, although MGM President Bill Hornbuckle says that if locals are permitted to play, South Korea is the last really big casino market waiting to be tapped, other than Japan. Considering Adelson's track record of successful investment in the Far East, we don't think he'd be willing to wager $10 billion on South Korea if the numbers weren't promising.
