South Korea’s southern Jeju island is shaping up as a serious gaming rival to Macau.
Jeju has its advantages. The island is the only place in the country that Chinese can visit without a visa and it’s close to key mainland cities.
People in Beijing and Shanghai, for example, can get there in a couple of hours.
But Jeju casinos are not a threat to their Macau counterparts — not yet, but perhaps soon.
Already, Jeju is home to half of the country’s 16 casinos open exclusively to foreigners, but the scale of its gaming business remains rather small.
We visited the newly opened Genting Jeju Casino, a joint development between Landing International (00582.HK) and Genting Hong Kong (00678.HK).
The casino has 29 gaming tables, including 15 in five VIP rooms, and 16 slot machines.
Another casino — Jeju Lotte’s Paradise Casino — operates 28 gaming tables.
By comparison, Macau’s The Venetian alone has more than 500 gaming tables and 2,000 slot machines.
We visited the Jeju casinos on a normal weekday afternoon. In Genting Jeju, just a dozen customers were playing Blackjack and Baccarat. Some dealers were idle.
The slack attendance could be due to a number of reasons but the fact that Genting Jeju has been open for only a month tops them.
Also, this is the traditional lull before the Lunar New Year peak season.
VIP service manager Zhao Junwah told us most of the customers come from mainland China and Hong Kong.
And like other casinos, Genting Jeju works closely with junket operators to bring in Chinese high rollers.
The gaming center works with more than 20 operators who on average bring in about 20 high rollers a day, Zhao said.
Although Jeju casinos typically target wealthy Chinese, they employ dealers who speak English. Putonghua is not required.
Dealers receive a monthly salary of US$1,000 to US$2,000 plus allowance, which is quite competitive in the industry, according to Zhao.
But it’s not easy to employ Chinese staff due to Jeju’s strict labor laws.
Although the local gaming industry is small and is still in its early stage, it has the potential to turn Jeju into one of Asia’s gaming hubs. It has its fair share of challenges, too.
On the bright side, China’s anti-graft campaign could push some Macau operators to look elsewhere.
In 2014, Macau’s gaming revenue fell for the first time since 2001. Many junket operators are scaling down their business and looking for business opportunities somewhere else.
For example, David Group, which closed three of its seven VIP rooms in Macau last month, said it is taking wealthy customers to other destinations with more relaxed visa approval procedures such as South Korea, Vietnam and the Philippines.
Landing International and Genting Singapore, which are co-investing in a US$1.8 billion Resorts World Jeju project, are well placed to ride the trend.
The groundbreaking ceremony took place last week in Seogwipo-si. The resort is scheduled to open progressively from 2017.
When Landing International announced its foray into the island’s gaming business in February, its share price shot up above 40 percent in mid-March.
But it hasn’t been exactly a smooth ride for the gaming group.
Won Hee-ryong, governor of of the self-governing province, delayed some investment projects, pending a government review, when he came into office in July.
As a result, Resorts World Jeju’slaunch ceremony had been delayed at least twice.
Public distrust of foreign investors increased under former governor Woo Geun-min due to a perceived lack of communication.
Many community groups called for closer consultation during the last election, so one of the first things Won did after he became governor was to embark on a tour of Jeju’s villages to gauge the public mood.
During the groundbreaking ceremony, Resorts World chief executive Jay Lee promised that more than 80 percent of staff will be local residents.
Also, 50 percent of the construction work would be awarded to Jeju contractors.
After pacifying the locals, Landing International faced another problem: China’s planned crackdown on foreign casinos targeting Chinese gamblers.
This month, President Xi Jinping took his campaign against rampant government corruption to a new level.
Authorities are focusing on casino operators from neighboring countries that have offices in China recruiting Chinese citizens to gamble abroad, according to Hua Jinfeng, a deputy director of the Ministry of Public Security.
Landing International has slumped more than 10 percent since the beginning of the month.
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