The firm's regulatory filing showed Wednesday that this decision was maken due to the downbeat outlook for the gaming industry. The joint venture by the two companies, called LOCZ Korea, became the first foreign operator to receive a casino license from the South Korea government in 2014.
The 60-40 venture by Lippo and Caesars initially planned to invest 2.3 trillion won (US$2 billion) to build a casino resort in Yeongjong Island, west of Seoul, by 2022.
Despite rising concerns over the feasibility of the project, the Seoul government said it will approve the license if a qualified investor shows up”
"In light of the current outlook for the gaming industry in North Asia and the volatility of the global economy, the group is in discussions with Caesars for some alternatives which may include the possibility for a third party investor to acquire the group's interest in the project," Hong-Kong listed Lippo said in a filing to the Hong Kong Stock Exchange.
Although Lippo decided to hand over its stake, the company left room for participation in certain developments related to the project depending on the conditions agreed upon by the two parties.
"However, it is to be noted the company has no interest in participating in any gaming aspect of the project in any event," it said.
It is not clear whether the project can be completed as scheduled due to the weak financial standing of Caesars and the slumping gaming industry in the wake of China's anti-corruption campaign.
In January 2015, Caesars Entertainment Operating Company and several U.S. subsidiaries lodged bankruptcy filing in a Chicago court. The group, which runs Caesars Palace and scores of other properties in the U.S. and abroad, said the move will cut its debt by $10 billion.
Despite rising concerns over the feasibility of the project, the Seoul government said it will approve the license if a qualified investor shows up.
"Talks are currently underway with LOCZ to figure out the direction of the resort project. If Caesars finds an alternative investor, we will review the qualification and decide whether to approve the casino license," said an official from the Ministry of Culture, Sports and Tourism, which is in charge of license review.
LOCZ's venue is close to where another consortium of South Korea's Paradise and Japan's Sega Sammy Holdings broke ground near the airport to open a casino resort next year.
Last month, a venture by U.S. casino operator Mohegan Sun and South Korean chemicals maker KCC Corp. won a bid to build an integrated resort project, with the goal of opening by 2020.