Inside Asian Gaming

INSIDE ASIAN GAMING | February 2014 20 bank, reportedly has proposed an integrated resort with a casino pegged at $6.5 billion. Currently, the country’s foreigners-only market generates around US$930 million annually from 16 relatively small casino hotels serving mostly Japanese and Chinese players. There is also one large and lucrative casino, Kangwon Land, in the remote northeast of the country that is open to Koreans—it generates in excess of $1 billion annually, more than the others combined, despite its location and various statutory limits on bet sizes. Its exclusive right to serve domestic gamblers expires in 2025, and it’s speculated the government will license at least one new casino for Korean nationals by then. Offshore, there is Jeju Island, which has emerged as a major hotspot for Chinese visitors, offering plenty of scenery, visa-free entry and casino gambling. According to a 2013 Goldman Sachs report, “The pace of growth in number of visitors and gaming revenues of casinos in Jeju is three to four times higher than what we see for overall foreigner-only casinos in Korea. While the total number of visitors to casinos in Korea increased to 2.4 million persons in 2012, up by 13% year on year, visitors to casinos in Jeju increased to 227,000, up 45% year on year. Gaming revenues are also rising at a fast pace in Jeju with aggregate sales of eight Jeju casinos increasing by 55% vs. 11% year on year for total gaming revenues of foreigner- only casinos in Korea for 2012.” Malaysian conglomerate Berjaya is currently undertaking a large development on the island that includes a casino. Priced at US$2.5 billion, it is the most expensive foreign-developed project in Korea to date. One downside for the foreigners-only market is the imposition of a 4% “consumption tax” which kicks in this year. The government is also proposing an additional 10% leisure tax on Kangwon Land to raise funds for infrastructure development in its host Gangwon province, which will be the site of the 2018 Winter Olympics. If that measure proceeds it’s possible a similar tax will be imposed on the foreigners-only casinos. P lans to introduce resort gaming to Sri Lanka have been mired in the country’s fractious domestic politics, with legislation to allow two large developments appearing inevitable, then delayed, then watered down. Since the defeat in 2009 of a bloody insurrection by the island’s Tamil minority that raged for 25 years, the government of President Mahinda Rajapaksa has worked assiduously to present the country as a viable destination for tourists and foreign investment. The government in 2011 released a five-year tourism development strategy that envisions the sector as the nation’s primary foreign exchange earner. The targets are for 2.5 million tourists per year by 2016, at which point the government hopes to have attracted US$3 billion in tourism-related FDI and foreign exchange earnings of US$2.75 billion. Overseas visitors numbered 1.27 million in 2013, in line with the target, with India providing the most with more than 200,000. Chinese visitors numbered only 54,000 despite a China road show by the government promoting the country as a destination. The target for Chinese visitors is 275,000 by 2016. Just where all the future tourists will stay, however, is an issue—which in large part is why casinos figure prominently in the government’s plans. Currently, only about half of the government’s target of 45,000 hotel rooms exist, and while there COVER STORY Berjaya is developing a US$2.5 billion resort on Jeju Island. The autonomous Jeju Island has emerged as a major hotspot for Chinese visitors, with the pace of growth in visitation and gaming revenues three to four times higher than for overall foreigner-only casinos in Korea. SRI LANKA A Tricky Mix