The Ministry of Culture, Sports and Tourism announced on March 18 that it gave the green light to opening a foreigner-only casino after assessing the bid filed by Lippo & Ceasars Consortium (LOCZ Korea), a venture between Chinese and American companies.
The assessment focused on LOCZ Korea’s credit status, investment size, capital characteristics, and other factors.
The consortium made its successful Korean entry after reinforcing several conditions, such as improving its credit rating and beefing up its investment amount, after its previous bid was rejected last June.
The permission this time is intended to entice foreign tourism, revitalizing the economy and creating new jobs in the service industry. The move is also expected to spark intense competition among foreign casino businesses that want to enter the Korean market.
In the meantime, some concerns have been voiced over how it may also induce speculative foreign investment capital indiscriminately. With this concern in mind, the Ministry established a few safety measures such as ensuring a three year permission period and requiring the Ministry’s pre-approval in case of business permit hand-over.
LOCZ Korea, a consortium between Chinese company Lippo and American company Ceasars Entertainment, turned in a report for the pre-assessment that it will invest 746.7 billion won (US$698.1 million) in Midan City, Yeongjongdo, by 2018, and will build a resort by putting in 23 trillion won (US$21.5 billion) in construction by the year 2023.
LOCZ still needs to acquire the permanent casino business permission from the government, after being evaluated about how it adheres to the original investment plan in January 2018. The government emphasized the nature of the “preliminary license” to LOCZ Korea, and presented conditions including annual accounting inspections, execution performance reports, and single-account investment fund management. Additionally, it was also urged that the corporation come up with measures to create domestic jobs.
If these conditions are not to be fulfilled, actions can be taken such as canceling the preliminary license and denying the permanent license.
The consortium’s plan calls for building a 7,700m2 casino, the largest among foreigner-only casinos in Korea, by April 2018. This is expected to create 8,000 jobs during the construction period of 2014 to 2018 and balloon tourism revenues to 890 billion won (US$832 million) by 2020.
The permission also draws attention to the possibility of turning Yeongjongdo into Korea’s Las Vegas.
In addition to LOCZ Korea, several other foreign companies are knocking on the door of Yeongjongdo, such as Universal Entertainment and Las Vegas Sands Corp. Also, the biggest local casino company Paradise Group has its casino resort business underway in Yeongjongdo, with an investment of up to 2 trillion won (US$1.87 billion) by 2017, and Grand Korea Leisure is following suit.
However, foreign corporations ultimately aim at targeting Koreans as customers, possibly causing controversy down the road.
Last year, foreigner-only casinos currently operating in 16 locations in Korea recorded 2,707,000 admissions and 1.375 trillion won (US$1.285 billion) in sales, up 13.6 percent and 9.7 percent, respectively, from the year before.