Local casinos hedge their bets
On Thursday, the Japanese government passed a bill to permit casinos in the country, which has been strongly pushed by the Shinzo Abe administration as a way to boost tourism in line with the 2020 Tokyo Olympics. Before, casinos were strictly forbidden by law in Japan for promoting gambling addiction. But now that restrictions have been eased, competition is expected to heat up among China, Japan and Korea.
Japan’s first casinos will open their doors in three different resort complexes, but the whole process is expected to take another five to seven years. Industry insiders have set the year 2022 as the earliest opening date, though some say the date may move up with the Abe government projecting strong will for the project. “Prime Minister Abe is actively promoting the boost in domestic demand and tourists [from 20 million a year to 40 million by 2020],” said Kwon Young-ki, secretary general of the Korea Casino Association.
Once Japanese casinos open their doors, it’s another industry for regional competition. China, Korea and Japan have traditionally competed in electronics, steel, shipbuilding and petrochemicals. Now, they will have to launch a new battle to pull in international casino clients.
The investment and support pouring into resort complexes also differs on a large scale. Japan is forecast to invest 5 to 10 trillion won into building resort complexes, compared to Korea’s 1 to 2 trillion won. There’s no doubt that there will be a quality gap in facilities. Japan is also likely to build “open casinos” which allow locals to enter as well as foreigners. In Korea, only Kangwon Land among the country’s 17 casinos is open to locals.
Korea’s casinos fall behind in terms of nearby tourism infrastructure. One remaining hope is the three resort complexes scheduled to open next year on Yeongjong Island in Incheon, which will increase the number of casinos in the metropolitan area from four to seven.
“A survey I conducted in 2010 for a research paper revealed that half of local casino-goers in Korea would visit Japan if there’s a casino there,” said Lee Choong-ki, a professor of tourism management at Kyung Hee University. “Japan is reachable within an hour by plane, while Kangwon Land, even with enhanced transportation thanks to the PyeongChang Olympics, is a two-hour trip from Seoul.”
“One small relief is that China still has anti-Japanese sentiment among its people,” he added, “but still, domestic casinos may lose 310 billion to 750 billion won, according to my research.”
Despite having much smaller land and restricted local demand, Korea’s regulations on casinos are relatively tighter than competing countries.
“Korea is the only country that draws a line between domestic and foreign clients,” one source said.
“Kangwon Land is subject to government restrictions imposed on gambling businesses. If we surpass a certain level of sales, we could face disadvantages,” said Park Sang-ho, a manager at Kangwon Land. “We filed requests to a relevant government committee to at least ease such regulations for foreign customers.”
The need to find counteractive measures against the threat of Japanese casinos is urgent, say many industry insiders, which could be realized by 2020 at the earliest.
However, there are not many realistic approaches to choose from. “There’s an everlasting concern of casinos backfiring, such as in the form of gambling addiction, so it won’t be easy to suddenly loosen regulations against it,” said Kim Gyu-jik, an official dealing with casino regulations at the Ministry of Culture, Sports and Tourism.
This leaves the problem-solving to individual companies. Paradise Group, which is waiting for the May launch of its first resort complex in Yeongjong Island, is counting on its first-move advantage. Their intention is to strengthen the resort’s stance among Chinese tourists.
“There’s no doubt that competition will heat up, but there’s more to expect than drawbacks from Japanese casinos,” a Paradise Group spokesman said. “From a long-term perspective, it could be a chance to widen the consumer base of casinos as a whole.”
BY NAM SEUNG-RYUL [email@example.com]
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