American casino operator Caesars Entertainment’s futile pursuit of an Asian presence was dealt yet another setback on Friday after South Korea rejected its application to construct and operate a resort-casino near the capital Seoul. Earlier this month, UBS Investment Research analyst Sera Oh reported that Caesars’ bid for the potentially lucrative casino license was “almost confirmed,” but the key word there appears to have been ‘almost’. Caesars had teamed with Indonesian conglomerate Lippo Group and an unidentified local third party on a joint venture dubbed LOCZ Korea, which sought to build a casino on the Yeongjongdo island district of Incheon’s free economic zone.
South Korea’s Ministry of Culture, Sports and Tourism declined to offer specific reasons for rejecting the LOCZ Korea bid, saying only that it had failed to satisfy the government’s criteria. But sources told both Reuters and the Wall Street Journal that the government was concerned by Caesars’ crushing debt load, which created doubts in the bureaucrats’ minds as to Caesars’ ability to see the Incheon project through to completion.
Steven Tight, Caesars’ president of international development, called the decision “really quite baffling,” leaving one to surmise that Steven doesn’t spend a lot of time reading the financial papers. Even before Friday’s news, Caesars stock has slumped this week, from a high of $13.93 on Tuesday to $12.25 as of time of writing. (Could be coincidence, but the decline neatly coincides with Sheldon Adelson’s verbal broadside against all things online gambling, on which Caesars had been pinning hopes for a turnaround).) LOCZ Korea released a statement saying it was “surprised and disappointed” by South Korea’s decision because it believed it had met all of the government’s requirements. The joint venture has a 90-day window in which to decide whether to appeal the decision and is said to be evaluating its options.
Also getting a taste of the back of South Korea’s hand was Japan’s Universal Entertainment, which had teamed with South Korean retail shopping outfit Shinsegae Group on their own Incheon casino bid. In this case, South Korea was reportedly bothered by the Japanese pachinko giant’s inexperience in running full-scale casinos as well as ‘reputational issues’ stemming from the ongoing brouhaha between Universal boss Kazuo Okada and Wynn Resorts, which has also complicated Universal’s Philippines casino aspirations.
