January 18, 2007 09:01
The casino industry is seeing its fortunes rise in Seoul. Grand Korea Leisure, a subsidiary of Korea Tourism Organization, last year advanced into the casino business for foreigners with its Seven Luck casinos, ending 38 years of domination in the city by Paradise Walkerhill Casino.
Thanks to the new competition, the casino market has exploded. The number of foreign visitors to Seoul's casinos exceeded 700,000 last year, up from around 330,000 in 2005. With W120 billion in revenue during its first year, Grand Korea Leisure easily beat initial expectations of W64 billion for 2006 (US$1=W937).
Han Seung-ho, an analyst with Shinyoung Securities said, "The growth rate of Seoul's casino market for foreigners hovered at 4.2% between 2002 and 2005. But since the market opened to competition, the figure is expected to soar to 16.8% on average for the next three years."
Local casino operators can find inspiration abroad. After Macao ended a 40-year gaming monopoly in 2002, the gambling industry in that territory grew to match that of Las Vegas in just four years. The change brought a boost in jobs and raised per capita GDP to exceed Hong Kong's. The shift came about as the government changed its perspective on gambling as a vice that should be restricted to business that should be nurtured.
Casinos can be very profitable. According to research by Lee Chung-ki, a professor at Kyunghui University, per capita spending in casinos is equivalent to exporting 76 semiconductors or four color TVs. Put another way, if 11 foreigners visit a casino, they will spend the equivalent of one exported car. The business can also create huge job opportunities. Three to four employees serve each table in a casino, including dealers, currency exchangers and serving staff. Furthermore, casinos employ three shifts all year round. That explains why Seven Luck Casino needed 1,400 regular staff last year.
Korea's location between China and Japan makes it particularly well positioned for the gaming business. Because both Japan and China forbid gambling (with the exception of Macao), Korea can easily capitalize on its cash-rich neighbors. Last year, Chinese visitors to Paradise Walkerhill equaled those from Japan, with each group making up 33% of the total. This year, the Chinese figure is expected to grow to 40%.
To add value, Korea's gaming companies are turning to the country's IT companies to build advanced gaming centers. High-tech membership cards can keep track in real time of what games gamblers prefer and how much they bet. The cards even keep record minor details like how much sugar a customer prefers in his coffee, so the next time he's in town a waitress can have ready for him a latte prepared exactly the way he likes it.
Of course Korea is not the only country vying for gamblers. Vietnam recently announced it would grow casinos as one of the nation's strategic industries. Singapore, despite its fame as a 'moral' state, plans to increase GDP by 2% by developing two small islands as gambling destinations by 2008. Taiwan and Thailand have also rolled up their sleeves to introduce casinos. And with an increasing cash drainage due to Japanese gamblers overseas, that country's ruling party is trying to legalize its own gaming business.
Changes are already visible at home. On Jeju island, two casinos for foreigners that closed last year because of dwindling tourists recently reopened, as the closure drove Japanese tourists to the Philippines. "Though few oppose casinos for foreigners, many people worry that the industry will lead to a flourishing gambling business for Koreans," said an official from the Ministry of Culture and Tourism responsible for supervising casinos. "Korea should consider carefully before deciding whether to really develop the industry."
In contrast, Prof. Roh Young-sang from Pusan Women's University said the industry must ramp up to succeed. "If Korean casinos fail to develop into a total leisure destination like Las Vegas, they will all go bankrupt," the professor said.
- Copyright © Chosunilbo & Chosun.com