All casino resorts in Asia will be competing with Macau and will have to differentiate themselves, especially since such mega-resorts and casinos are a hefty investment with potential for low returns.
South Korea has rejected preliminary casino licenses for two international bidders – a Caesars Entertainment Corp and Lippo Limited consortium, and Kazuo Okada’s Universal Entertainment Corp – in a surprise move that could stall the government’s casino development plans.
The Ministry of Culture, Sports and Tourism told Reuters on Friday that both requests for licenses were rejected. A ministry spokeswoman give no reason for the decision.
South Korea is one of several Asian countries considering building casino resorts to lure high-spending tourists after Singapore’s success with two large properties that opened in 2010. Taiwan plans to allow casinos to set up shop on offshore islands and the Philippines is developing four large casino resorts.
The Caesars-Lippo consortium and Universal had applied to build large integrated resorts in Incheon, an economic zone that the government hopes will attract tourism and investment. Caesars and Lippo announced in January that they were seeking government approval.
The Caesars-Lippo consortium declined to comment on the reason its application was rejected but said it was “surprised and disappointed” and believed it had met the specific requirements.
A local government official with knowledge of the matter said the decision reflected concerns about Caesars’ credit rating. The official declined to be named due to the sensitivity of the matter. Moody’s Investors Service lowered its ratings on the company and assigned a negative outlook in April, citing adverse gaming revenue trends.
Universal, controlled by billionaire founder Kazuo Okada, was not immediately available for comment.
The FBI and the Philippine National Bureau of Investigation have been investigating $40 million in payments Universal made to a politically connected Manila consultant in 2010, on suspicion of bribery.
Universal, which is developing a $2 billion casino resort on Manila Bay, has said it conducted its business in the Philippines lawfully and appointed a panel of experts in January to look into the payments.
The panel issued a report on Friday saying its five-month investigation had found no evidence of bribery but acknowledging its lack of access to key players in the incident.
The panel said that it intends to investigate further and that Universal needs to reform its governance structure.
Reporting by Jungyoun Park in Seoul and Farah Master in Hong Kong. Additional reporting by Nathan Layne in Tokyo. Editing by Edmund Klamann.
Copyright (2013) Thomson Reuters.
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Photo credit: A general view shows the empty streets outside The Caesar's Casino in Atlantic City, New Jersey, August 26, 2011. Jason Reed / Reuters