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Known as the Vegas of Asia, Macau has traditionally seen the bulk of the region’s casino investment. But, increasingly, the industry is booming outside the small former Portuguese colony with a raft of projects announced across the region, including Vietnam, the Philippines and Australia.

It’s South Korea, though, that could be set to become the next hottest market for the region’s gaming industry with major developments planned in Jeju and Incheon. Casino giant Genting, jointly with Landing International, is planning to develop Resorts World Jeju (RWJ) to target the eastern and northern China audience. In addition to the traditional gaming tables, the new resort will include a luxury hotel, shopping mall, theme park, serviced apartments and residential villas. Ground was broken on the new development in February 2015 with plans to progressively open the resort from 2017, with completion expected by 2019.

And it doesn’t stop there. American casino operator Mohegan Sun, in partnership with Incheon International Airport Corp, is planning to open a first-of-its kind ‘gateway entertainment city’ close to the airport. Notwithstanding the world’s first private jet terminal connected to a casino resort, the development will include a luxury hotel, retail and entertainment venues and an amusement park. Subject to a casino licence being granted, the first phase could be completed by 2020, with the resort fully opened by 2040.

So what is supporting the rationale behind the development of these mega resorts?

“South Korea is attracting such huge interest due to the rapidly growing number of Chinese visitors; already up by 45% y-o-y by April 2015,” explains Claire Gent, from JLL’s Strategic Advisory team in Asia.

“This growth is supported by the increasing number of direct flights from eastern Chinese cities, with several budget carriers opening routes to Jeju to meet the growing demand.”

“The South Korean gaming industry enjoyed growth of around 10% per annum between 2011 and 2013 and in 2014, gross gaming revenue reached KRW 1,375 billion (USD 1.2 billion). However, this is still small when compared with Macau (USD 44 billion), and Singapore (USD 4.3 billion). Despite casino operators’ attempts to lure Chinese gamers to Korea, this figure represents a fall in revenues on 2013. Additionally, visitors from Japan, South Korea’s second largest source market, were down 16.9% as at April 2015 due to the depreciation of the Yen. As a result, some of the major gaming players popular with the Japanese have seen revenues fall.”

So will these mega-projects succeed in a market that is already starting to show signs of softening? Is there demand to support these casinos, especially as gaming is viewed extremely negatively in Korean society?

“Singapore and Macau’s success was supported by locals being allowed to use the casinos, something South Koreans will not be able to enjoy as a result of the mainly foreigner-only casino policy,” says Ms Gent.

“But, for those willing to roll the dice the rewards could be huge. As with any major development project it doesn’t come without risk.”

So is it worth the gamble? Would you place your bets on South Korea?

Claire Gent

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