Foreigner Casinos Officially Set to Open in Q1 Next Year
Competition for Customers Inevitable with Paradise, GKL, and Others
Expected Additional Demand Inflow from North America
Concerns Over Workforce Attrition and Labor Cost Burdens Also Raised
Last month, the Mohegan Inspire Entertainment Resort, which opened on Yeongjongdo Island in Incheon, officially announced that it will open a casino in the first quarter of next year, intensifying the competitive landscape among foreigner-only casinos in South Korea. There are both optimistic views that new customer demand will be generated to expand the market and pessimistic perspectives that it will remain a 'pie-splitting' structure, merely taking away performance and operational staff secured by existing operators under limited conditions.
A view of 'Aurora' inside Mohican Inspire Entertainment Resort on Yeongjongdo, Jung-gu, Incheon [Image source=Yonhap News]
According to industry sources on the 14th, Inspire announced during the two-day 'Soft Opening Media Day' held from the previous day that it plans to open a foreigner-only casino in the first quarter of next year. The Inspire casino is set to open as the largest in South Korea, with an area of 24,000㎡. The company expects casino revenue to account for about 50% of the total revenue of the integrated resort, which includes the hotel, exhibition and performance halls, restaurants, and water park, making it a significant source of income. Accordingly, competition to attract customers with existing foreigner-only casino operators is inevitable.
Currently, competitors in the foreigner-only casino industry include Grand Korea Leisure (GKL), which operates Seven Luck Casinos along with Paradise, Jeju Dream Tower Casino operated by Lotte Tour Development, and Kangwon Land. Among these, Paradise and GKL, which have business locations geographically close to Inspire and centered inland, are expected to be in direct competition.
An industry insider said, "Inspire's major shareholder is a U.S.-based group that has mainly operated focusing on mass (general customers) in other markets," adding, "Unlike existing competitors who rely heavily on VIP customers, Inspire can expand the mass segment and attract customers from various regions such as North America." In this case, it is expected that competitors may also partially expand their customer base in terms of customer inflow.
In fact, both Paradise and GKL heavily depend on Chinese and Japanese customers among foreigners. As of the third quarter of this year, out of the total drop amount (total chip purchase amount) of about 1.668 trillion KRW at four casinos operated by Paradise and its subsidiary Paradise Segasami (Walkerhill, Busan, Jeju Grand, Paradise City), the amount bet by Japanese and Chinese VIPs was about 1.007 trillion KRW, accounting for more than 60% of the total from VIP customers of these countries.
During the same period, GKL's total drop amount at three casinos (COEX, Yongsan, Busan) was 2.4396 trillion KRW, with Chinese and Japanese visitors accounting for about 72% of the 529,678 entrants. Notably, the proportion of mass customers (439,329) was higher than VIPs (90,349). On the other hand, some analyses suggest that since two of GKL Seven Luck Casinos are concentrated in Seoul, the impact of Inspire Casino's opening on Yeongjongdo Island may be relatively less than on Paradise City.
However, the departure of existing casino industry personnel in line with Inspire's opening is a concern for competitors. Another industry insider said, "The travel and leisure market tends to have relatively poor salaries and working conditions, so cases of job changes occur frequently even with slight salary increases," adding, "Inspire has been sending frequent love calls to the same industry in the Jeju area and elsewhere ahead of its opening, and many employees have actually moved, causing damage to existing operators." Such movements could be a burden on the entire industry. KB Securities researcher Lee Seonhwa predicted, "Demand is expected to concentrate on the newly opened casino during Inspire's early opening phase," and added, "The aggressive hiring of marketers and dealers may lead to a negative effect of rising labor costs across the industry."
Inspire, which is preparing for the sequential opening of integrated resort facilities, still faces urgent staffing issues. Chen Xi, President of Mohegan Inspire, said, "Currently, some facilities including the casino are in a soft open state without full opening, and full-time staff have been recruited to about 50-60% of the target," adding, "It is especially difficult to recruit young staff, but we plan to seek solutions by strengthening partnerships with various universities and actively utilizing local networks in the Yeongjongdo area before the full opening."
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