Inside Asian Gaming

INSIDE ASIAN GAMING | August 2008 6 are not hurting.Their revenue has also gone up 10-15% since we opened.” T.H.E. Hotel & LVegas Casino was the brainchild of Mr Park,who previously worked in the US at HAS International—a supplier of various goods to hotels and casino resorts. Mr Park explains he had a vision to bring “a very boutique, high-roller casino hotel,” to Jeju,andpoints out that apart fromKangwon Land, “we’re the only casino in Korea that owns its own hotel.”This makes his company better able to control the total experience of high rollers, who are shuttled in from the airport in Hummers and Mercedes Benzes. Recognising the potential to revive Jeju’s stagnating casino industry by bringing in a new foreign-backed operator to the island, Mr Park pitched the idea for T.H.E. Hotel and LVegas Casino to Geoff McDowell, president of leading Las Vegas-based casino development company The Gillmann Group, which has offices in California, Macau, Aruba and Costa Rica. Mr Park and Mr McDowell became partners in the venture through Gillmann subsidiary Gillman Investment Asia and together raised funds to purchase a publicly traded company, Nasign, Inc. Through that vehicle, they purchased the Crown Hotel in Jeju and undertook a major remodelling to create an upscale property with 213-rooms—128 of which are suites. The niche casino has 29 tables, including 3 VIP rooms with four tables each, and 48 slot machines. Over 40% of customers hail from Japan, another 35-40% from mainland China, and the rest predominantly from neighbouring Asian countries, including Taiwan, the Philippines and Vietnam. The LVegas Casinonow ranks fifth among South Korea’s 17 casinos in terms of revenue. Kangwon Land, which is the only casino in the country allowed to cater to locals, holds a commanding lead with annual revenue of around US$1 billion, despite being situated “four hours of hell driving away from Seoul,” according toMr Park,andhousing amere 132 tables and fewer than 1,000 slot machines.In second to fourth place are properties from established operators Paradise Group and Seven Luck. Demand drivers Another important similarity between Macau and Jeju is that the main source of casino players in both places is mainland China. It was only recently that large numbers of mainland Chinese have been allowed to venture outside their country to gamble—in China itself, the Communist government imposes a strict ban on casinos. Across Asia, and especially in Macau, casinos are benefiting from the release of enormous pent-up mainland Chinese demand for gaming. The demand will not dry up any time soon, as China’s rapid economic growth and ever-expanding middle-class is creating legions of new casino customers. Macau’s casinos benefit from a massive hinterland, while Jeju’s casinos are off-limits to Korean nationals and therefore deprived of enormous domestic Korean demand for gaming. Last year, Jeju hosted about five million visitors from the Korean mainland, T.H.E. Hotel & LVegas Casino