Taiwan county turns down casinos in referendum

* Major casino giants had expressed interest in Taiwan

* Voters worried about crime, environmental degradation

* Two casino resorts were already being planned

By Ralph Jennings

TAIPEI, Sept 26 (Reuters) - Voters in a remote corner of Taiwan rejected by a large margin on Saturday a plan to allow Taiwan's first casinos to be built in their county, snubbing gaming giants like Harrah's Entertainment Inc [HAMLEH.UL] and MGM Mirage (MGM.N).

Residents of Penghu County, also known as the Pescadores, where officials want a source of income to replace tourism during the winter months, decided by 17,359 votes to 13,397 not to have casinos on their island group in the Taiwan Strait.

The referendum was the final hurdle for the scheme, and failed after a well-organised opposition campaign.

Harrah's, the world's largest casino firm, and runner-up MGM Mirage had hoped to use Taiwan to tap into Asia's fast-growing gaming market, officials of both firms had said.

Macau gaming developer Melco Crown Entertainment (MPEL.O) has also expressed interest in Taiwan.

Penghu county, population 90,000, said it would have given permits to at least three resort casinos.

A private project with likely backing from a big-name firm was ready to break ground on 11 hectares, and the county was working on another that would have cost $910 million and occupied 130 hectares.

Voters were worried about crime and environmental degradation on the sparsely populated archipelago, said Shih Chao-hwei, a convener of the Anti-Gambling Legalisation Alliance, which had called for a strong No vote.

"They didn't want their beautiful homeland to be spoiled," Shih said. "Now you can leave your doors unlocked."

Illegal gambling is rampant in Taiwan and some of it would have moved above ground to Penghu if the casinos had been approved, analysts said. Chinese tourists, allowed to visit once forbidden Taiwan since last year, had also been expected to visit the casinos.

Hotels and restaurants in Penghu would also have prospered if the gamblers had done well, said Daniel Soh, an economist with Forecast Ltd in Singapore.

But other analysts had cautioned against expecting easy winnings because of the global economic downturn. (Editing by Tim Pearce)