In the second portion of a two-part interview with GGRAsia, Shin Jong Ho, secretary-general of the Korea Casino Association (KCA), discusses how South Korea can usefully address the growing regional competition for casino-resort business. In the first part, Mr Shin explained the opportunities and challenges for the country’s regulated casino sector.
Why does South Korea need a stronger commercial-IR sector?
Integrated resorts [IRs] are the most effective way to extend the stay of increasingly diverse global tourists and maximise their spending. Under current South Korean law, casinos are limited to under 5 percent of total floor area in an IR. But integrated resorts combining non-casino facilities such as shopping, MICE [meetings incentives, conferences and exhibitions], theme parks and luxury hotels can generate exponential spillover effects for local commercial districts and create real added value. In order to bring about and maximise these positive effects, it is important to introduce exceptional tax incentives for facility infrastructure investment and a government-wide one-stop administrative fast-track, thereby creating an environment in which overseas capital finds the South Korean market attractive and is willing to invest.
What’s your pitch to lawmakers and the public about South Korea staying competitive regionally in the IR sector?
South Korea’s casino industry has accumulated the most transparent and reliable operating know-how in Asia on the basis of strong regulation. At present, we are facing a major threat, but we will use this opportunity to find ways to make a further leap forward. We ask for continued attention to, and investment in, the future of South Korea’s casino industry as it transforms into a true global integrated entertainment hub.
What are the key constraints facing South Korea’s casino industry?
First, the industry needs greater autonomy in global marketing linked to K-tourism. Although South Korea’s foreigner-only casinos serve only overseas visitors, they still face major restrictions on overseas promotional activities because of the country’s conservative classification of gambling-related industries. As a first example, even when casinos seek to join overseas tourism fairs to promote attractive packages combining K-culture, MICE and K-food, they are often excluded from official national promotion channels or face strict limits on the distribution of promotional materials simply because casinos are included. Since casinos are high-value tourism content aimed solely at foreign visitors, these institutional barriers should be lowered so they can be marketed more actively abroad in synergy with other parts of the tourism sector.
Second, the industry needs more flexibility to adopt advanced IT [information technology] that improves transparency and personalised customer service. Global casino competitiveness increasingly depends on such technologies. Examples include RFID [radio frequency identification] smart-chip systems to track chip movements and help prevent money laundering; AI [artificial intelligence]-based casino management systems that analyse customer behaviour and play patterns; and modern electronic table games.
South Korea is already a global IT powerhouse, and the industry should be allowed to integrate these technologies more rapidly in order to enhance transparency, efficiency and service quality.
President Lee Jae Myung seems not to have a favourable view of casinos. What can you do to persuade him of their social benefits?
The current government’s key policy priorities include export-led growth, balanced regional development and job creation for young people. We would stress that the casino integrated resort industry is well aligned with all of those objectives.
Compared with the past, the modern casino industry should be understood as an invisible but high value-added export sector, similar in economic effect to semiconductors or automobiles. It attracts foreign visitors directly to South Korea, encourages them to spend foreign currency locally, extends their length of stay, and stimulates consumption in regional communities. Among the policy tools available to help South Korea attract 30 million foreign visitors, the casino sector can be one of the most effective.
In addition, integrated resorts involving multi-trillion-won [KRW1 trillion = US$656.7 million] investment can be a powerful catalyst for regional revitalisation and for preventing local economic decline. Casino operations are also labour-intensive service businesses where automation is limited, meaning they can generate large numbers of stable, high-quality jobs for younger workers.
Concerns about the negative side of the industry should be addressed through transparency and sustainable growth: areas in which our association continues to make consistent efforts. South Korea’s casinos comply with strict international standards, including FATF [Financial Action Task Force] principles, and manage funds with a high level of transparency under the legal framework emphasised by the current government. We will continue to challenge outdated perceptions and show, through concrete economic data and increased tax and fund contributions, that the casino industry is a strategic tourism sector that can support national growth.
Is S.Korea likely to license additional casinos for use by locals?
Given South Korea’s current social sentiment, the introduction of additional casinos allowing local players would be very difficult. However, if people come to feel an ongoing astronomical outflow of national wealth [from overseas competition], a more forward-looking social consensus may develop on the issue. In the short term, the first line of defence should be to make it [locals-facing casino business] more in line with international standards, such as by raising betting limits or easing entry restrictions.
