Inside Asian Gaming

JUly 2015 inside asian gaming 13 “We believe our history, success and ability in creating a complete entertainment destination which incorporates a memorable and legendary ‘wow’ factor is exactly what they are looking for.” South Korea’s Ministry of Culture, Sports and Tourism is evaluating IR proposals submitted by 30th June and expected to issue gaming licenses to two applicants. Mohegan Sun and Incheon International Airport Corporation (IIAC) finalized an agreement in late June for an IR concept on the grounds of the airport, located 70 kilometers (42 miles) from Seoul and serving 45 million passengers a year. The IR, dubbed Inspire, adjacent to the new Terminal 2, would have $1.6 billion budgeted for the first phase of the $5 billion overall development plan. Inspire would include 1,000 hotel rooms adjacent to Korea’s first private air terminal, Korean and Native American cultural experiences, an indoor/outdoor amusement park, Korea’s largest indoor arena with capacity of 20,000 and a Korean cosmetics and beauty hub with an “iconic” Fountain of Youth feature, plus a casino with 250 tables and 1,500 machines. Mr Soper says Inspire “represents the next major evolution in the global hospitality, tourism and gaming industries.” The partners also claim Inspire will create synergy with the Paradise- Sega Sammy resort already under construction near the airport’s current terminal. Mohegan Sun may have hit turbulence en route to its agreement with IIAC. Not long after Mohegan Sun announced the project in April, a letter linked to former Incheon mayor and presidential candidate Ahn Sang-soo invited investors to beat Mohegan Sun’s commitment of $500 million for 25% equity in phase one plus ownership of the casino. Apparently, no one bettered Mohegan Sun’s ante. The episode highlights the limits of what Mohegan Sun brings to the table in Incheon. “Management’s success is in about as America as America can get and a far cry from a foreigners- only casino operation in Seoul, Korea,” Macomber International President Dean Macomber says. “Management is smart and definitely has big casino experience but may be presumed to be not dumb but ignorant about Asian mores and gambling ways, particularly the VIP room/junket business unique to Asia. If Mohegan brings cash or investors more comfortable with a participating Western name, then that plus their big casino operations expertise could be accretive and enough. They should not be left alone, however.” “We have a strong domestic Asian clientele base in the US, but also draw our fair share of international Asian business at our Connecticut property,” Mr Soper says. Initial news report about Mohegan Sun’s interest in Incheon indicated its partners would include Korea’s number two foreigners-only casino operator, Grand Korea Leisure, and Australia-listed Donaco International, which built Aristo International in Vietnam, catering to Chinese players. Mr Soper says Mohegan Sun remains “open” to adding partners, especially those with Asian gaming expertise. In Focus Caesars Entertainment, partnered with Indonesia’s Lippo Group, won approval last year for an IR in a different section of Yeongjong, expected to be open when South Korea hosts the 2018 Winter Olympics. corruption crackdown and negative Chinese media reports about Korean casinos, particularly on Jeju Island, where some of the eight casinos are accused of having operated dishonest games. Fitch Ratings warned last month that new foreigners-only IRs in Korea may struggle to produce double-digit returns due to growing competition regionally, citing the impending opening of new casino resorts in Vladivostok, Russia, the huge investment in Macau, and the estimated $5 billion in new IRs within Korea. Paradise acknowledges that more Incheon casino resorts, particularly another one at the airport, could help or hurt its IR project. “We may face competition with global players,” Paradise Investor Relations Manager Hyejeong Shim says. “However new supply will bring attention and create new demand from North Asia, especially northeastern China.” The new Paradise-Sega Sammy IR, replacing the Paradise casino