* Total development cost to be around $2.2 bln
* Approval is preliminary, gaming license not guaranteed
* Genting Singapore, Paradise also planning casino complexes
By Joyce Lee and Farah Master
SEOUL/HONG KONG, March 18 Caesars Entertainment
Corp looks set to build its first gaming resort in Asia
after South Korea granted preliminary approval for a large-scale
foreigners-only casino - a key boost for a company that has
largely missed out on the region's boom in gambling revenues.
The consortium of Las Vegas-based Caesars, Singapore's OUE
Ltd and Hong Kong-based Lippo Ltd is also
one of the first foreign ventures to gain an entry into South
Korea's casino industry, a promising market by virtue of its
proximity to China and the country's wealthy punters.
While frowning on gambling for its own citizens who only
have access to one remotely located casino, South Korea is
willing to make exceptions for overseas visitors in the interest
of developing its tourism industry. It has 16 small
foreigner-only casinos but as yet no big glitzy integrated
The new complex, to be located near country's main
international airport on Yeongjong island, is expected to cost
around 2.3 trillion won ($2.2 billion), will be built over
several phases and is expected to be ready in time for the 2018
Winter Olympics in Korea, the companies said.
While they did not give an ownership breakdown, a South
Korean government source said their plans called for Caesars to
own 40 percent of the venture, OUE to own another 40 percent and
Lippo to hold 20 percent.
Caesars missed out on getting a strong footing in Macau, the
world's casino capital which rakes seven times more in annual
gaming revenue than Las Vegas. That's in stark contrast to
rivals Las Vegas Sands Corp, Wynn Resorts and
MGM Resorts International which entered the Chinese
territory over a decade ago.
Its South Korean resort is set to compete with a casino
complex planned by Genting Singapore and Chinese
property developer Landing International Development
on the island of Jeju.
South Korea's Paradise, one of two companies
that dominate the country's foreigner-only casino market, has
also teamed up with Japan's Sega Sammy Holdings Inc for
a separate casino resort.
Shares in Caesars' property developer partners surged during
Asian trade, with Lippo jumping 35 percent and OUE gaining 6
South Korea's government and the companies noted, however,
that the approval was preliminary and not a guarantee of a
gaming license, with the government reserving the right to
withdraw it if investment conditions are not met.
Current rules call for the consortium to build a five-star
hotel and invest $500 million in 3.5 years. The government is
also seeking parliament's approval to bar the consortium from
operating the casino until it invests a total of $700 million,
the government source said, declining to be identified as he is
not authorised to speak to the media.
The granting of the preliminary licence comes after the
government initially rejected in June a bid from the consortium,
as well as separate one from Japan's Universal Entertainment
At the time, a separate government source said the
consortium's bid was rejected due to concerns about Caesars'
credit rating. Moody's Investors Service lowered its ratings on
the company and assigned a negative outlook in April, citing
adverse gaming revenue trends.
This time, however, the first government source said the
consortium gained approval over other parties as it was the only
one that satisfied the government's requirements on investment
size, funding plans and credit ratings.
Universal, headed by Japanese billionaire Kazuo Okada, has
not reapplied for a license.
The South Korean government is also seeking to shift to an
open bidding process for foreigner-only casino licenses instead
of requiring prior government approval.
Wynn, MGM and other major foreign firms that had previously
expressed interest in building a casino could try again when the
process is eased, the first government source said.
Many Asian countries, including the Philippines and Vietnam,
are building large-scale casino resorts, hoping to attract
Chinese gamblers and imitate the success of Macau. Japan is also
looking to legalise casino gambling.
Gaming revenues in South Korea totalled $2.7 billion in 2013
according to research house CIMB, slightly higher than the
Philippines at $2.6 billion but trailing both Singapore at $6.4
billion and Macau at $45 billion.