As of the beginning of April, South Korea reopened its borders to vaccinated tourists – a measure that provided the country’s foreigner-only casinos with some relief. The actual recovery of the sector, however, is expected to be delayed because there are literally no Chinese customers returning to local casinos.
For the time being, there are 17 foreigner-only casinos in South Korea. Eight of them are situated on Jeju island, but only three of them are actually currently open. If everything was according to plan, there could have been another casino resort at foreign visitors’ disposal but, unfortunately, the project has been delayed for so long that everyone is already wondering whether the project will be finalized or not.
In fact, there are currently several integrated casino resorts (IR) in various stages of development in South Korea, with all of them being forced to bring some changes to their timetables for completion. One of them, however, has recently seen a 12-month extension, and, for the time being, it remains unknown whether the developer would manage to complete the construction of the project in line with that extension.
Caesars Entertainment Withdraws from Midan City IR Project Leaving Local Partner Helpless
The planned expansion of Midan City’s gambling market has been particularly tough. The coronavirus pandemic outbreak forced developers to delay their integrated casino resort project, as operators had to mind their costs over a period of social distancing and lockdowns that affected the visitations and revenue.
Midan City’s integrated casino project of R&F Korea (RFKR) is literally and figuratively losing ground.
It all started with Caesars Entertainment’s desire to establish an integrated casino resort in South Korea. However, the US gambling giant began having second thoughts about such a significant commitment, and early in 2021, it officially withdrew from the project. Its then-partner, Guangzhou R&F Properties, acquired Caesars’ half and proceeded with the integrated casino project through its South Korean unit RFKR.
Unfortunately, RFKR also faced some difficulties on the way, so in February 2022 it asked the country’s Ministry of Culture, Sports and Tourism (MCST) for a delay, hoping that it will get an extension until March 2024. The Ministry, however, gave it only one extra year for the completion of the integrated casino resort project, and the extension came under a special condition, as the developer is now expected to spend another 5% on the project.
Reportedly, the delay partly originates from some financial difficulties experienced by Guangzhou R&F, which is trying to find new ways to raise more capital for the planned integrated casino resort. However, it seems that the Ministry has had anything else but this in mind when giving 1 more year to the company in return for 5% more than the originally announced investment of the operator. The South Korean arm of Guangzhou R&F Properties, however, has not been satisfied with the delay and has already revealed that it will likely ask the competent authorities for another extension next year.
Midan City Integrated Casino Construction Lag as Developers Are Unable to Complete the Development
As it is currently trying to find ways to fund the planned development, RFKR could decide to dispose of some of the land it purchased for the establishment of the planned integrated casino resort in Midan City. So far, it has not revealed whether it has started negotiating with any buyers for a potential deal or how much of the land will be sold. Last summer, the company secured about $16.5 million in foreign direct investment for the Midan City Resort Complex, with the money set to help it start the development.
The work on the project was stopped in February 2020 because Ssangyong E&C, the construction company engaged with the project, was unable to cover the costs of about $27 million after Caesars Entertainment’s decision to no longer invest in the project.
As mentioned above, South Korea has already seen a delay in the planned development of a few integrated casino resorts. Midan City, however, has been way behind the original schedule of construction.
The development project situated on Yeongjong Island in the Free Economic Zone of Incheon island was expected to start welcoming gaming elements in 2020. Unfortunately, the gambling companies engaged in the project have faced difficulties staying on track with the initially announced development and as a result, only about a quarter of the casino complex is now in place. Furthermore, the completed part of the complex (around 25%) is still unable to start offering the promised gambling and entertainment services.
Reportedly, about 60% of the land that was set to host the promised development in Midan City still remains untouched, as it has been so far failing to attract the necessary attention from potential new owners or developers. Some analysts have shared that the first gambling properties there will not be ready until 2025. Of course, this projection could change in the following months, especially considering the fact that some operators could seek potential targets for further expansion.