CAESARS’ SOUTH KOREA APPROVAL
Caesars Entertainment secures preliminary approval as part of a casino resort joint venture in South Korea
South Korea - New Licences
Caesars Entertainment has confirmed that LOCZ Korea Corporation, a joint venture between Caesars, Lippo Group and OUE Limited, has received preliminary approval from the South Korean Ministry of Culture, Sport and Tourism to include foreigner-only casino gaming in its planned integrated resort in Incheon, South Korea.
Gary Loveman, Caesars Entertainment Chairman, CEO and President commented: “We are excited about the opportunity to expand our network and brands to Asia. Foreign visitation to South Korea has grown significantly, and we look forward to creating a world-class destination to further sup- port Korea’s economic growth and tourism goals.”
Highlights for the planned integrated resort include hotels and resort amenities, live enter- tainment venues, a standalone convention center and a foreigners-only casino. A preliminary plan anticipates potential future expansion to accom- modate growth in the number of resort visitors.
The consortium hopes to open the Incheon inte- grated resort in time to welcome visitors arriving in Korea for the 2018 Olympics in Pyeongchang. Caesars may elect to include Caesars Growth Partners, LLC in the development of the project. Caesars Growth Partners, LLC is a joint venture between Caesars Entertainment and Caesars Acquisition Company. Caesars Growth Partners would then make the capital investment associat-
China Politicians from the Chinese holiday island of Hainan have said casinos will never be allowed to operate, ending investor hope that the market could open up there. Speaking at China’s annual parliamentary meeting, Luo Baoming, Hainan’s Communist Party Chief, said: “We cannot at all allow Hainan to operate casinos.” Sol Kerzner, the man who created South Africa’s Sun City, announced in October that he would partner with Chinese conglomerate Fosun International to build at the $1.6bn Atlantis Sanya at Haitang Bay, a 22km long beach. Another 30 five-star hotels are scheduled to be developed in the next five years.
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ed with the project, with Caesars Entertainment acting as the operator and sharing in the manage- ment fee associated with the project.
South Korea is home to 17 casinos with all but one of those being foreigner-only casinos, half of which are owned by local operator Paradise and state-owned Grand Korea Leisure. Paradise said that Chinese players made up around 60 per cent of its player database, accounting for more than 80 per cent of 2013’s revenue. The market has been growing at an average of 15 per cent each year in recent times with 2012 generating total revenues of 1.25 trillion won.
The Caesars project aims to add more than 890bn won in tourism income from new visitors and will create more than 8,000 jobs during construction from 2014 and 2018. Other operator such as Japan’s Sega Sammy Holdings and Genting Singapore are also looking to enter the market. Genting Singapore is partnering with Chinese property developer Landing International Development in the hope of developing Resorts World Jeju, a US$2.2bn casino resort, but is still waiting for confirmation that it will be given a licence.
Macau casino groups look to claw back junket commission
MACAU Macau casino operators are con- sidering launching their own junkets rather than rely on pri- vate operators as they look to hold on to more of their profits.
Junket operators are believed to have taken US$13bn in commis- sion from the casinos last year. Deutsche Bank Analyst Karen Tang said casino operators could make 10 per cent to 15 per cent more profit from VIP play by offering their own junkets and hosting VIPs in their own facili- ties rather than in leasing the junkets the tables.
When the Macau market opened up in 2002, the incumbent oper- ators had no player databases and no means of chasing debts from players gambling on credit. VIP play makes up about two-
thirds of Macau’s casino revenue. The market’s dependency on mainland Chinese playing on credit is caused by border con- trols that limit the amount that can be taken over the border to $3,300 (20,000 yuan).
Times have changed though with Hong Kong analyst Richard Huang explaining that nowa- days, the international casino groups in Macau have access to a much more in-depth database. He explained that with many Chinese VIPs now having off- shore bank accounts and proper- ties, the casinos have more col- lateral in extending them credit.
MGM China’s CEO Grant Bowie confirmed that working directly with VIPs would provide the operators with ‘considerably higher profit margins.’
AUSTRALIA – GROUP PROPOSES BUDDHIST CASINO The China Australia Entrepreneurs Association Incorporated (CAEAI) has officially lodged an Expression of Interest pro- posal to operate a A$5bn integrated resort casino and Buddhist temple in Queensland. It wants to develop a China Town style precinct at Airlie Beach along with a retail and commercial complex, a casino and an international standard hotel.
Chinese billionaire Raymond Wang confirmed that the group wants to build Queensland’s largest Buddhist temple along with a resort casino at Shute Harbour. Its proposal also includes a promise to upgrade Proserpine Airport in order to receive international flights and fly Chinese tourists direct in seven hours. The CAEAI is made up of more than 500 Chinese and Australian entrepreneurs working in a range of industries. These include Zelong Group and the Hong Kong based Esteem Capital Success.
Mr Wang said of his vision for Chinese tourists: “They need not go to Sydney or Melbourne because it is pretty similar to where they now live; another big city. But the natural beauty of the Whitsundays is unique and definitely something that would appeal to Chinese tourists. We also want to work with the state and Whitsunday Regional Council to upgrade the Proserpine Airport for international flights.”
Queensland is a hotbed of activity at the moment with con- firmation that 18 companies have expressed an interest for three new casino licences. Two resorts will be built in regional Queensland and one at Queen’s Wharf, a huge river side opportunity in Brisbane. Developers will have to pay a $100,000 non-refundable fee to secure their place. The licences will be announced in 2015.
CHINA – RECORD BREAKING SJM’S LISBOA PALACE As it broke ground on its latest project in Cotai, Macau’s biggest casino operator; SJM Holdings, has reported growth of 14 per cent in net profit for 2013, beating analysts’ predic- tions and surpassing its previous results. Net profit in 2013 came in at HK$7.7bn ($992m) up from HK$6.7bn in 2012, beating forecasts of HK$7.6bn from 23 analysts.
Casino Grand Lisboa continued to perform strongly in 2013, contributing gaming revenue of HK$32,248m for the year, an increase of 10.3 per cent over the previous year. Grand Lisboa Hotel’s occupancy rate also increased by 1.4 per cent to 96.4 per cent for the full year. The Group maintained its strong balance sheet, with cash and bank balances totalling HK$26,733m. On May 15 2013 SJM agreed to lease 70,468 square metres of land on Cotai from the Macau Government for an initial term of 25 years, on which the Group intends to build and operate the Lisboa Palace casino gaming resort containing approximately 700 gaming tables and 1,000 slot machines as well as approximately 2,000 hotel rooms.
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