Inside Asian Gaming

INSIDE ASIAN GAMING | November 2010 8 job that CEOChoiYoung has and the political sensitivity surrounding the growth of the domestic casino market, the government has indicated Kangwon Land will only be allowed to apply for more gaming tables after building work is completed. Although Kangwon Land is a state enterprise and must abide by the government’s wishes, it could certainly use more tables. The first quarter of 2010 produced the casino’s best ever result, with gross gaming revenue equivalent to US$282 million. Still, crowding and a six- year-long freeze on the number of gaming tables permitted at the property are causing revenue growth to plateau. In the second quarter of 2010, gaming revenue slipped back to US$260 million—an 8.3% increase from Q2 2009, but only 3% up on Q4 2009. Kangwon Land was originally conceived as a government initiative to rejuvenate Kangwon Province—a former coal production centre that became impoverished after the mines shut. The casino opened in March 2003 with 30 tables. Following 18 months of steady capacity expansion, the National Gaming Control Commission imposed a cap of 132 tables in November 2004 in line with government orders to limit the casino industry’s income. Kangwon Land’s casino currently covers nearly 300,000 square feet and also offers 960 video slots that are upgraded regularly via a rolling acquisition programme. There has been much speculation over the past few years that the table cap would be lifted, but that has yet to happen. The possible expansion of the domestic gaming market in Jeju could take South Korea’s industry to a whole new level. Singapore, and with an ageing population, South Korea has recently been looking around for ways to create fresh economic growth and bring in fresh forms of taxation income. Taking advantage of the country’s existing casino infrastructure by opening it up incrementally to local players, and doing so ahead of any liberalisation plans by neighbouring jurisdictions, could have many benefits. As well as providing taxation revenue from duty raised on gambling, the opening up of the market to locals could generate the sort of cash that will allow the operating companies to invest further in new infrastructure. Already, several of them have teamed up with clinics and private hospitals to promote medical tourism from more expensive countries such as Japan, or ones with more patchy medical infrastructure, such as China. That fresh investment can only happen on any scale if the casino industry has unequivocal political support from the country’s leadership. The first sign of a thawing in the government’s attitude has been its willingness to allow the state owned operators to become more commercially focused and more independent in the way they are run. In November 2009, Grand Korea Leisure (GKL), a state enterprise that operates three casinos (two in Seoul and one in Busan) under the Seven Luck brand, was allowed to float 30% of its stock on the Seoul bourse. As a sign of its growing confidence in the future of the industry, GKL spent KRW8.3 billion (US$7.1 million) on refurbishing VIP facilities at its flagship Seven Luck property at Gangnam in Seoul. GKL also revamped its casino at the Millennium Hotel Seoul Hilton. The new look property, with extra seating, new Sheraton Walker hill—the Seoul flagship of Paradise’s foreigners-only operation Taking on Macau—Seven Luck Gangnam’s new look VIP area Market Outlook games and new décor, opened on 6th September this year. Changes are also afoot in the South Korean gaming equipment market. In June BMM Compliance, a global gaming machine testing company based in Australia, set up South Korea’s first gaming device test centre in partnership with Dongseo University and iReal Inc, a technology development company. This was significant because previously, suppliers wishing to sell into the local market had to undergo a testing procedure overseen by the government that was unique to Korea, regardless of whether that kit had already been approved for major markets such as Las Vegas or Australia by one of the internationally-recognised compliance companies. Because of the relatively small number of units sold into the Koreanmarket annually compared to Macau, some equipment manufacturers had found the extra layer of local compliance a significant barrier to entry. BMM’s presence means it can advise the government on how to develop a set of standards that have international as well as local resonance. In July, Gaming Laboratories International, the world’s largest gaming compliance and gaming equipment testing company, hired a new development representative to work with suppliers and regulators in the Korean marketplace. Growing game Kangwon Land, currently the only one of South Korea’s 17 casinos open to locals, is planning a major expansion of its gaming facilities, to be completed by March 2012. But in a graphic illustration of the delicate