It is not uncommon for governments to ask casino operators to ‘do better.’ Whether that is introducing responsible gambling measures, reducing predatory marketing tactics or not facilitating crime on the premises, the gambling industry often feels like a naughty child that always has something to work on. These expectations are usually communicated clearly to the operators, but that was not necessarily the case in South Korea earlier this year. 

When Korea’s Minister of Trade, Industry and Resources (MOTIR), Kim Jung-kwan, took to the stage, he was vague but firm with his words. “Public institutions are no longer simple policy-executing organisations… they must become drivers of innovation that the public can feel,” he said. If institutions could not prove themselves “with results that meet the public’s expectations, the very existence of public institutions could disappear.”

This was followed by another comment made by South Korea’s President, Lee Jae-myung, only a few weeks earlier. The leader said that, regarding casinos, “significant profits are generated, and it is not appropriate to grant licenses for this to the private sector, to specific individuals.” He added that “it would be good for the Ministry of Culture, Sports and Tourism to keep this in mind when making policy decisions later. Why grant it to individuals, to specific companies? That is why people call it a favor. Isn’t it better to grant such things to the public sector?” 

Could Korean casinos inspire a tourism boost?

Tourism has always been a point of pride in the country. After the 1997 IMF Crisis, South Korea had to reposition both its economy and its place on the world stage. One of its most successful strategies was in culture, creating K-pop, K-dramas and skincare lines so desirable that many of them are now worldwide industry leaders. In the wake of this, South Korea has become a major tourism destination, with visitors from around the world descending upon the country all year round. Around 240,000 passengers are believed to pass through Incheon International Airport each day, which is comparable to Heathrow in the UK or LAX in the US. 

Interestingly, two of the closest establishments to the Incheon International Airport are integrated casino resorts: Inspire Entertainment Resort, managed by Bain Capital, and Paradise City, operated by Sega Sammy. The first markets itself as a location for major K-pop events or family-friendly experiences, while the latter boasts a quiet luxury for those looking to unwind. Both offer regular shuttle buses to the properties, hotel rooms, spa facilities and anything else weary travellers may want or need. They also both have casinos on site. Inspire boasts the ‘largest foreign-player-only casino in Korea’ with 395 slot machines, a 195-seat ETG stadium and 159 table games; while Paradise City takes a very close second place with 353 slot machines, 154 ETGs and 180 table games. Whether visitors are in Incheon for a layover, to catch a concert or travelling further into Korea, both properties are ready to welcome them.

Despite this, the current South Korean Government still views gambling as one of the “terminal symptoms that signal a nation’s decline.” Prime Minister Lee stated that “it is predatory lending that exploits poverty and gambling driven by the hope that ‘things will somehow work out’ that are concerning.” Both Inspire and Paradise City operate as foreign-player-only casinos, which makes their chances of harming Korean society much lower. Kangwon Land, however, is a different story.

Is location everything in the casino business?

The Kangwon Province was once an industrious coal mining town, but after coal was replaced with gas in the 1990s, the area suffered a devastating economic downturn. Despite several government initiatives to restore the economy, the community maintained its stance that it only wanted one thing. So, in October 2000, the Government capitulated and Kangwon Land opened its doors as Korea’s only casino to accept locals. Since then, it has continuously renovated the property to remain competitive against other resorts, building a golf course, a ski resort, a water park, saunas and swimming pools, and even a free cinema. 

Kangwon Land has been successful for a long time, but it now risks being left behind by Inspire and Paradise City. Not only is it much further away – Kangwon Land is a four-hour journey by shuttle bus from Incheon International Airport while Inspire is 20 minutes – but allowing locals to play means that it has much higher standards to hit when it comes to success.
This is where the KRW3trn (US$2.04bn) K-HIT 1.0 Project comes in, which will feature a new domed entertainment venue, musical fountains, a K-Culture studio, three new hotel towers, and a five-storey casino building. Kangwon Land also has plans for a spa resort, guided walks, night-sky observation talks and seven new sports facilities.

Rather than encouraging fans to spend one or two days at the resort while catching their favourite artist at the new concert venue, Kangwon Land is banking on people making a full cultural experience out of their stay and taking full advantage of the facilities on offer. The operator also believes that more visitors in general will encourage more casino players to visit, while higher table drop can be converted back into facility investments. It is a symbiotic relationship that banks on visitors perceiving Kangwon Land as much more than just a casino, but also a full holiday destination. These plans are expected to be completed by 2035, but with increasing scepticism about a casino’s place in society, there are legitimate concerns that Kangwon Land might not make it that far.

Despite Kangwon Land offering scholarships to students from abandoned mining areas and spending KRW 2bn a 
year to treat and support pneumoconiosis patients, the operator is still finding its lobbying efforts falling on deaf ears. During a recent meeting, CEO Choi Cheol-Gyu asked Prime Minister Lee to raise bet limits, formally approve the casino expansion and relax visitation restrictions for locals. At the moment, although locals can visit the property, they can only do so 180 days each year and the casino cannot remain open 24/7. Lee responded that the K-HIT 1.0 expansion was a “risky business” and that Kangwon Land “must not risk failure by such ventures.” Although he did add that while “gambling is considered part of the terminal symptoms of the nation’s decline… It may also promote sport or leisure, so I shall examine it.”

Prospecting vs prospects: Separating the weak from the strong

Korean Ministers are demanding that casinos “revitalize local economies” with proven results, but perhaps they do not mean simply offering employment or scholarships for people in rural areas. Compared to how other land-based casino properties are supporting their local economies, this may no longer be enough to be seen as a world leader in ‘community spirit.’

For example, in nearby Macau, Galaxy Entertainment Group regularly invites local SMEs to showcase their businesses at its International Convention Center, runs competitions for students and connects start-ups with incubation and investor organisations to help boost their trajectory. In the US, some land-based casinos sustain entire Native American tribes and fund education, healthcare and even international travel initiatives for young people within them. 

But do casinos have a responsibility to sustain their surrounding economies to such a degree? Compared to other businesses, this is a very high bar to expect, especially with political leaders toying with the idea of closing the casino doors forever if they do not manage to exceed these expectations. On the other hand, pushing for innovation and success could also be what sets Korea apart from other destinations across Asia. Between MGM Osaka, City of Dreams Sri Lanka and proposed changes to Melco properties in Macau, the land-based gambling sector has more competition than ever – and South Korea does not want to be left behind.