Galaxy, NagaCorp in S.Korea casino permit bids: reports

Jul 06, 2015 Newsdesk Latest News, Rest of Asia, Top of the deck  

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Macau casino operator Galaxy Entertainment Group Ltd and NagaCorp Ltd, operator of NagaWorld casino resort in Cambodia’s capital Phnom Penh, are said to be among the bidders for new casino licences in South Korea. Local media reported that the country’s Ministry of Culture, Sport and Tourism (MCST) has received a total of 34 proposals from local and international companies.

“According to media, MCST will review these proposals and select ‘around two’ potential sites in August, followed by a full request for proposal process by November,” said a note from analysts DS Kim and Daisy Lu, from JP Morgan Securities (Asia Pacific) Ltd.

“MSCT targets to issue around two IR [integrated resort] casino licences by the end of 2015,” they added.

South Korea’s national government said in January it was likely to approve two more foreigners-only casino licences this year to boost tourism, with operators expected to invest at least KRW1 trillion (US$891.2 million) each. The government didn’t specify a location for the new licences.

The JP Morgan team said that based on media reports there are quite a few “surprises” among the bidders for a casino licence in South Korea, “namely Galaxy Entertainment…, Suncity Group…, Lotte-Genting Consortium (note: it’s unclear at this point if this is Genting Singapore or [Genting] Malaysia), [as well as] NagaCorp (the largest casino operator in Cambodia), among others”.

“In terms of location, Galaxy’s choice of Goyang (Greater Seoul) looks interesting, which is close to Seoul and also within a 40-minute drive from two international airports (Incheon and Gimpo),” said Mr Kim and Ms Lu.

Galaxy Entertainment, founded by Hong Kong tycoon Lui Che Woo, was approached by GGRAsia for comment on the JP Morgan report, but neither confirmed nor denied if it had submitted a proposal to develop a casino in Seoul.

“While we believe that the best growth opportunities are still in Macau, we are always open to investment opportunities in other jurisdictions and would consider them on a case-by-case basis, so long as they can add value to our shareholder returns,” Buddy Lam, vice president of public relations of Galaxy Entertainment, told us in a written reply. “We continue to explore opportunities in overseas market,” he added.

NagaCorp – which is expanding the NagaWorld property in Cambodia and developing a casino resort near Vladivostok in the Russian Far East – told GGRAsia it had “nothing to say at this point”. “[We] Will be glad to share with you if and when something looks likely,” said NagaCorp’s chairman Tim McNally.

GGRAsia also approached Suncity Group, but the company did not reply before this story went online.

Incheon attraction

In their note, JP Morgan’s Mr Kim and Ms Lu said they “think it is impossible to predict the outcome of bidding at this point, although we do expect the government to award at least one licence for Incheon.”

In June, Fitch Ratings Inc said it had a “cautious view” on the South Korean casino industry’s foreigners-only venues in the light of likely competition from new or improved overseas properties. The country has 17 casinos but 16 of them are for foreigners-only.

Nonetheless, a number of international casino operators have confirmed plans to pursue a casino licence in South Korea, including Genting Singapore Plc, Caesars Entertainment Corp, and Philippines-based Bloomberry Resorts Corp.

U.S. regional tribal casino operator Mohegan Tribal Gaming Authority, known as Mohegan Sun, announced last week it has finalised a “concept agreement” with Incheon International Airport Corp for a casino resort it hopes to develop.

The airport, serving the country’s capital Seoul, is one of the largest air transport hubs in Asia, catering for more than 45 million passenger trips in 2014, according to the country’s Yonhap news agency.

Several local operators are also in the running for any new casino licences that might be issued this year. South Korean majority state-owned gaming operator Grand Korea Leisure Co Ltd confirmed in a filing last month that it has also signed an agreement with the operator of Incheon airport for use of land to build a casino resort.

In November, local casino operator Paradise Co Ltd broke ground for the US$1.7 billion Paradise City on land near the Incheon airport. The development, in partnership with Japan’s Sega Sammy Holdings Inc, is scheduled to open in 2017.

According to media reports cited by JP Morgan, other companies eyeing a gaming licence in South Korea include Imperial Pacific International Holdings Ltd, a company that has pledged to spend as much as US$7 billion on a casino resort on the Pacific island of Saipan; and Global Gaming Asset Management LLC, managed by Bill Weidner, a former president of Las Vegas Sands Corp.

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