Inside Asian Gaming

5 4 outh Korea’s casino industry was long dominated by the Paradise Group, which in 1968 opened what is now the country’s best known casino at the Sheraton Walker Hill Hotel in the capital city, Seoul. The country’s first casino,also opened in 1968,is in Incheon, where the international airport serving Seoul is located. The Incheon property was taken over by the Paradise Group in 2001. All four of the Paradise properties in Korea are mod- est-sized, with Walker Hill featuring 59 gam- ing tables and 40 slot machines.Paradise also notably operates the largest casino in Kenya, Africa – the Paradise Safari Park & Casino of- fers 40 tables and 600 machines. Observing the positive impact on overall Betting on Culture Only one of South Korea’s 17 casinos is open to locals, with the rest restricted to foreigners, and mainly dependent on Japanese high-rollers. Business could fall precipitously should Japan legalise casinos, as expected shortly. Inside Asian Gaming visited South Korea in order to assess the outlook for the casino industry and tour the country’s new government-run casinos revenue and visitor numbers that resulted from the ending of Macau’s 40-year casino monopoly, the South Korean government decided to stimulate competition in its own country’s casino market by forming Grand Korea Leisure Corp (GKL). GKL is a subsidiary of the Korea National Tourism Organisation (KNTO), and in 2006 opened three properties under its Seven Luck brand. Brand philosophy Two of the Seven Luck casinos are located in Seoul, and the third in Busan, the country’s second largest city. While each of the Seven Luck properties offer differing décor and facilities, the brand philosophy throughout is to provide guests “a cultural experience,” rather than “just a place to gamble,” accord- ing to CEO Jung-Sam Park. The first of the Seven Luck casinos opened in January, the second at the end of May and the third at the end of June. Al- though they were not operational for the full year, the three casinos generated combined gaming revenue of US$153 million in 2006, exceeding the company’s target of US$100 million.Furthermore,according to Shinyoung Securities in Korea, although casino revenue growth averaged 4.2% a year between 2002 and 2005, with the arrival of competition, growth is forecast to average 16.8% for the three years from 2006. Mr Park believes Seven Luck’s focus on customer service and provision of a unique cultural experience is the key to the compa- ny’s strong debut. He contrasts Seven Luck’s decision to emphasize its Korean roots to the pursuit of generic Vegas-style glitz by casino developers elsewhere in the region. “So far, the casino industry in Asia has been focused on recreating the Las Vegas strip. Macau is now dubbed‘Asia’s Las Vegas’,which means it is no different from Vegas. Macau has a taste of Asia, but is being developed by western capital, predominantly from Las Vegas. Seven Luck, on the other hand, incorporates Asian culture into everything from door knobs to our customer-service spirit.” Healthy start The revenue generated by foreigner-only ca- sinos in South Korea grew 11% from US$457 million in 2005 to US$505 million in 2006, with visitor numbers surging 73% from 57 million to 99 million. Seven Luck attributes a large part of the growth to the opening of its three casinos. Although only one of South Korea’s casinos is open to locals, it is the country’s biggest, and brought the coun- try’s total casino revenue for 2006 to about US$1.3 billion. Japanese customers made up 54% of Seven Luck’s customers, followed by main- land Chinese at 8% and Hong Kong cus- tomers at 6%. Many of the remainder are wealthy South Korean residents holding foreign passports. Japan Casino Threat In the last issue of Inside Asian Gaming , CLSA’s Aaron Fischer wrote of Japan’s Casino Oppor- tunity. That opportunity clearly presents one of the biggest threats to the South Korean casino industry, given its heavy reliance on Japanese high-rollers. According to Mr Fischer, CLSA believes the bill seeking the legalisation of casinos could be proposed for approval in the next 12-18 months. Hakubun Shimomura, the chief secretary of a Japanese parliamentary panel called the Study Group to Promote International Tourism, stated “in the best-case scenarios in which a new law is passed in 2007,we believe we could have the first two venues operating by late 2008.” Mr Fischer feels this timing is too aggressive and unlikely, and that using Singapore and Macau as a guide and fac- toring the pace of change in Japan, casinos there would not likely be operational until post 2010. That gives South Korea and Seven Luck some breathing space at least to continue to further develop and refine casinos offering a uniquely Korean cultural experience, which Mr Park argues will allow the country’s casino industry to continue to thrive in spite of in- tensifying regional competition. “The legalization of casinos in Japan has been a hot issue for a while,”explains Mr Park. “The majority of people think it will definitely hurt the Korean casino market.  However, in the long run, Seven Luck has no doubt that legalization of casinos in Japan can turn into a great opportunity to enlarge the Far East- ern casino market by furthering acceptance of casino gaming in the region.”He adds that although his company is presently “highly dependent”on Japanese players, it will waste no time in diversifying its customer base and tapping into new markets all over the world. Far from neglecting Japanese custom- ers, however, Mr Park says Seven Luck will focus on retaining their loyalty. After all, he explains, “according to market research, it costs 80% more to attract new customers than to keep loyal customers on board. In order to retain the loyalty of Japanese VIP players, Seven Luck hosts regular special events such as dinner shows, private par- ties, and tournaments.” In fact, following his interview with Inside Asian Gaming at Seven Luck’s Seoul headquarters, Mr Park rushed to catch the express train to Busan where he was to host a dinner featuring an appear- ance by a famous Japanese pop star for 200 Japanese high-rollers. S

RkJQdWJsaXNoZXIy OTIyNjk=