South Korea is betting on a new US$120 million casino project to lure more Chinese gamblers to a market that has traditionally focused on Japanese high-rollers. There are currently 13 casinos in South Korea that draw around 600,000 gamblers a year, mostly Japanese and Chinese. With about half a billion dollars in annual revenue, South Korea's casino industry is still far behind the former Portuguese colony of Macau, which is about to surpass Las Vegas as the world's richest gambling venue. Macau reportedly attracted 16.7 million visitors last year that spent about US$5 billion.
But South Korea's gambling industry sees plenty of room for expansion. The state-run 700-workforce Korea National Tourism Organisation (KNTO) is about to establish a 1,500 workforce casino operator as its subsidiary in order to open and operate two or three new casinos in Seoul and Busan later this year or next year. Oh Young-Soo, who leads the KNTO's taskforce for the new gambling business, said: "We are about to pick a CEO in June who will manage the new company for these new casino properties that would cost us about US$120 million for its initial set-up."
While casinos in South Korea have previously been operated mostly for the high-roller Japanese customers with a minimum US$10,000 spend per visit, the new casinos are being designed to attract the general public from China and Japan that treat gambling as part of their overall entertainment. Critics, however, doubt that the new casino business and a state-run agency will be a good match. Han Seung-Ho, an analyst of Hyundai Securities, said: "Korean law forbids casino operators from hiring brokers who bring a group of gamblers to a certain casino. Without using brokers, it would be hard to bring lots of Chinese gamblers into casinos here."
Meanwhile, KNTO is fighting against time, for it will have to employ at least 1,500 people to staff its new casinos. This has triggered concern among the 13 casinos already in operation, although KNTO promised the government it wouldn’t poach staff from other casinos. Analysts say the country's major casino operator, Paradise Group, has little to fear about the upcoming launch of three new casinos, because their target group is different. Mr Han added: "Unlike the new casinos, targeting Chinese masses, the Paradise is specifically aimed at Japanese high-rollers. Chinese gamblers tend to prefer an exciting place with lots of peers to mingle with. Japanese high-rollers tend to try to gamble in a quiet milieu, where they do not have to mix with the cramped masses."
The Paradise casinos have built up family-like ties with a selected group of professional Japanese gamblers by sending out their house hosts who work as salespersons to keep the customer loyalty base intact. The Paradise Group is a stock-listed company and its assets include five casinos, five hotels and one duty free shop. The company has a 51% share of the country's gambling market, which is worth about US$500 million. Despite a slump in tourism, the group posted an 8.7% increase in revenue and an 18.4% jump in operational profit during the first quarter of 2005, year-on-year. (E-06.08.05)
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