he choice of the Mohegan Sun group wasn’t a surprise, but the decision to award any additional IR licenses was at least a mild upset, given falling profits at Korea’s current foreigners-only casinos amid tumbling Chinese VIP play. Caesars Entertainment CZR +5.22%, heading the partnership developing the Incheon Free Economic Zone’s third US$1 billion-plus IR, thinks adding Mohegan Sun creates “critical mass” but others have doubts.
“We are pleased with the Korean Government’s decision to award us the opportunity to help fulfill their vision of driving economic development by growing tourism, creating jobs, and showcasing Korean culture via the integrated resort,” Mohegan Tribal Gaming Authority President Bobby Soper said following the decision in late February. MTGA is the Native American tribal entity under which Mohegan Sun operates its Connecticut IR and other gaming properties in Pennsylvania, Atlantic City and Washington State.
The MTGA Incheon project, dubbed Inspire, will include 1,350 five- and six-star hotel rooms in three towers, a shopping mall, a Korean cosmetic and beauty hub – South Korea is a regional center for beauty products and cosmetic surgery – an indoor/outdoor Paramount Studios theme park, an indoor rainforest and adventure park, along with a 20,000 square meter (215,000 square foot) casino with 250 tables and 1,500 gaming machines, all adjacent to South Korea’s first private air terminal and connected to the main airport. The first phase is budgeted for US$1.6 billion, with a potential total investment of US$5 billion.
From 34 initial expressions of interest in the offer of two foreigner-only casino licenses in June, applications dwindled to six by the November 30 deadline. Dropouts included Macau casino operators Galaxy Entertainment and Melco Crown, plus Philippine billionaire Enrique Razon’s Bloomberry. In the end, South Korea’s Ministry of Culture, Tourism and Sports awarded just a single license.
Inspire was the only group that met the financial requirement of paying a US$50 million deposit and presenting a mix of gaming and non-gaming features satisfactory to the government, Daemin Consulting Director Tim W Lee says. He also notes that local partner KCC, holding about 25% of the IR partnership, has extensive construction experience, so will be active in the development phase. Incheon International Airport Corp is the third member of the partnership
Strategic Market Advisors Managing Director Matthew Landry says the Inspire partners share “an interest in developing the Korean tourism product but also complement one another in terms of their strengths and subsequent responsibilities… clearly reflected in a unique and compelling building plan.” He praises Mohegan Sun’s “flexibility and professionalism” in its US gaming operations.
“Caesars welcomes Mohegan Sun to Incheon,” Steve Tight, the US casino giant’s president for international development, says. “A third integrated resort in Incheon should increase the critical mass of gaming experiences being offered and drive incremental tourist visitation to Incheon.” But Tight adds, “Caesars is pleased with the thoughtful balance the Korean government achieved between IR supply and demand in recently awarding just one new license in Incheon.”