South Korea holds winning hand as Japan gambling bill dies

PARADISE

23/11/2014 21:00

By Ritsuko Ando and Joyce Lee 
    TOKYO/SEOUL, Nov 24 (Reuters) - South Korea looks like the 
consolation prize as Japan's $15 billion casino dream fades, a 
setback for companies such as Las Vegas Sands Corp  LVS.N  that 
envisioned a new gaming hub rivalling Las Vegas in 2020. 
    A bill that would have legalised casino gambling died when 
Japanese Prime Minister Shinzo Abe dissolved parliament on 
Friday to call a snap election. That means lawmakers cannot pass 
 regulatory legislation next year, making it highly unlikely any 
 casinos will be ready in time to profit from tourists arriving 
for Japan's 2020 summer Olympics. 
     Sources involved in helping negotiate the bill's passage 
through parliament said it was unclear whether the legislation 
would even pass next year because the budget and defense are 
likely to dominate parliamentary debate. 
    "It's challenging but not impossible," said pro-casino 
lobbyist Satoshi Okabe, head of ad agency 
Dentsu's integrated-resorts and tourism business. 
    Others were less optimistic about a bill passing next year, 
saying it may not even make it to debate for a while.   
    Developing new markets is important for casino companies as 
China's corruption crackdown and a slowing economy curb revenues 
in Macau, the world's biggest gaming hub. October revenues in 
Macau fell 23 percent, the largest monthly drop on record. 
    Japan is seen as the biggest unclaimed prize, a market that 
research firm Union Gaming estimated would generate $15 billion 
in annual revenues, more than double what Las Vegas recorded 
last year. 
    South Korea, by contrast, generated $2.4 billion in casino 
revenues last year, less than half of Vegas revenues and just 6 
percent of Macau's take.  
    That tally will grow as new casinos open. The main draw is 
Chinese tourism. Arrivals into South Korea from China rose about 
53 percent last year, with some tourists signing on for triple 
packages that include cosmetic surgery, shopping and gambling.   
    "South Korea already has got the gaming industry 
infrastructure," said Ben Lee, managing partner at IGamiX 
Management & Consulting Ltd, a Macau-based gaming consultancy. 
    "At least they are familiar and don't have to go through the 
initial stages like Japan." 
    South Korea's first gaming-and-entertainment integrated 
resort, Paradise City, broke ground on Thursday and is expected 
to open in 2017. Joint venture partners Paradise Co Ltd 
 034230.KQ  and Sega Sammy Holdings Inc  6460.T  plan to invest 
about 1.3 trillion won ($1.17 billion).  ID:nL4N0QA1BC  
    Hong Kong-based Chow Tai Fook Enterprises, owned by Hong 
Kong tycoon Cheng Yu Tung, has signed a letter of intent to 
invest more than $1 billion in a resort in Incheon where 
Paradise City and U.S.-based Caesars Entertainment Corp  CZR.O  
are building. 
    Sands wants in, too.  
    CEO Sheldon Adelson said last month he was visiting South 
Korea as part of an Asia trip with stops in Macau and Japan, and 
boasted of designing "the most iconic building in the world" in 
South Korea to house a casino and entertainment complex. 
    He did not specify a location but Sands' head of global 
development, George Tanasijevich, was quoted by South Korea's 
Yonhap news agency as saying the firm was interested in Seoul. 
    Indeed, South Korea was mentioned 14 times during a Sands 
analyst call in October, according to a transcript from Thomson 
Reuters' StreetEvents. During the previous quarterly call in 
July, when Japan's gambling prospects looked more promising, 
Korea came up only twice. 
    Adelson sees one big obstacle: South Korea will allow only 
foreigners to gamble at large resorts. Locals are allowed to 
play in only one casino, which generates more revenue than the 
other 16 casinos combined.  
    Adelson has been vocal about wanting to see that changed. 
    "We are not interested in foreigners-only resorts," he said. 
    (1 US dollar = 1,111.8000 Korean won) 
 
 (Additional reporting by Farah Master in Hong Kong; Editing by 
Emily Kaiser and Mark Bendeich) 
 ((emily.kaiser@thomsonreuters.com; +65 6318 4763; Reuters 
Messaging: emily.kaiser.reuters.com@reuters.net)) 
 
Keywords: GAMBLING JAPAN/