Genting Singapore Exits South Korea Casino Project To Re-Focus On Japan

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Resorts World Sentosa, Genting Singapore’s flagship integrated resort, has been hit by the same regional trends that have torpedoed Macau. Selling its share of a Jeju project will let it focus on Singapore and save capital for Japan. (Photo credit: Roslan Rahman/AFP/Getty Images)

Over the past 18 months, South Korea has fallen from favor as a destination for new casino investment. Last week, GentingSingapore announced it will sell its share of $1.8 billion Resorts World Jeju to focus on possible casino legalization in Japan and bolster its Singapore base. Genting, controlled by Malaysian billionaire Lim Kok Thay and family, joins Philippine billionaire Enrique Razon Jr’s Bloomberry Resorts as a foreign casino investor abandoning the South Korean resort island offering visa-free access for Chinese visitors. On the Korean mainland, more than 30 expressions of interest for two casino licenses in June last year dwindled to just a pair of legitimate bids and just one license awarded. A number of changes in the region have impacted interest in South Korea, but the biggest reason is likely what hasn’t changed, a government ban on local players in all but one casino, remote Kangwon Land, a three-hour-plus drive from Seoul.

Genting Singapore agreed to sell its 50% stake in the Jeju project to partner mainland China property developer Landing International for $420 million. Genting says it wants to focus on Resorts World Sentosa. Sanford Bernstein estimates the Singapore flagship’s VIP roll this year will be 66% lower than it was in 2014 with mass revenue off 23% and non-gaming revenue flat. Landing, listed in Hong Kong, earlier bought Genting Hong Kong’s share of their joint venture casino in Jeju, also owns Les Ambassadeurs Club in London’s tony Mayfair casino district, and Chairman Yang Zhihui says he wants Landing to become a global gaming player.

Union Gaming Group suggests that integrated resort joint ventures are especially difficult when both parties are operating in foreign territory. Union Gaming head of Asia equity research Grant Govertsen contends South Korea’s challenging environment contributed to Bloomberry, owner of Solaire in Manila, trying to sell its Jeju Sun casino hotel. A deal with Nasdaq-listed Iao Kun Group at the breakeven price of $100 million was supposed to close at the end of September, but Bloomberry’s third quarter earnings release issued this week indicates it’s still running Jeju Sun.

 Interest in South Korea casino investment peaked even amid the Middle East Respiratory Syndrome (MERS) outbreak that ended by August last year. Other factors burst the balloon. In a June 2015 preview of the raid netting Crown Resorts employees last month, Chinese authorities arrested casino marketing representatives of Korean foreign-only casino operators, Paradise Group and Grand Korea Leisure for casino marketing activities. That was accompanied by an intensified public campaign to discourage Chinese from gambling in Korea, all amid President Xi Jinping’s corruption crackdown that flattened high roller play and China’s slowing economic growth that devastated gaming revenue in Macau and Singapore.

Asian casinos, especially those banking on Chinese customers, were suddenly no longer a sure thing, and with no local feeder market, South Korea suddenly seemed oversubscribed. Besides Resorts World Jeju – due for a name change with the sale – two other integrated resort projects being developed in Jeju, along with three in Incheon. A Paradise joint venture IR with Japan’s Sega Sammy at nation’s gateway Incheon airport is due to open around the middle of next year. After changing partners, U.S. casino giant Caesars says it will start construction of its $800 million Incheon project next year. U.S. tribal operator Mohegan Sun and a local partner are due to invest more than $1 billion in an IR linked to the airport.



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