Mohegan Sun Goes to Korea

Casinos everywhere are being attacked on every side by newer, bigger and more expensive competitors located closer to the customers. Small casino companies don’t have many options except cutting expenses and working harder at marketing. However, major gaming corporations have more resources and options at their command. There are two dominant corporate strategies being used currently. One strategy is to diversify the product offerings, adding retail, entertainment, swimming pools, nightclubs, flower gardens, singing fountains, giant observation wheels, white tigers and “fights of the century,” just to name a few. The other major strategy is to expand into new jurisdictions, an objective that is easier to say than do in the 21st century.

The opportunities to move into new jurisdictions are becoming very limited. Once all of the licenses are awarded in New York, Massachusetts and Maryland, there won’t be much left. Alabama, Illinois, Maine and Texas are surfacing as potential expansion opportunities, but nothing will happen in the next year or two. Florida and New Hampshire have closed their doors to gaming, at least for this year. That leaves mergers and acquisitions as the only domestic opportunity for casino companies to grow. Within the United States, there are still some merger possibilities, but only for second tier corporations; the big guys are about merged-out.

However, just as the U. S. is drying up, Asia has started to heat up. The Philippines, Japan, Vietnam and Korea all offer potential opportunities. Japan in particular appeals to all major gaming corporations in the world. If Japan does open up, the competition for a license will be fierce and costly and not just for the winning bidder. The process itself will be very expensive. The other countries may be a bit cheaper to obtain a license, but not necessarily to build a resort. But they have other liabilities; Vietnam and Korea limit gambling to non-citizens. Regardless of the problems, Vietnam, Korea and the Philippines are moving forward. Each of these countries is expanding gaming to more sites and encouraging foreign operators to apply for licenses.

An unexpected bidder for Korea was Mohegan Sun. Although, it should not have been a surprise, as the casino business has not been good for Mohegan Sun at home for a long time. The corporation, along with its competitor Foxwoods, has been under economic siege in Connecticut. Revenues at Mohegan Sun are down drastically due to casinos in nearby states. That competitive pressure will certainly increase when casinos open in Massachusetts. In a last ditch attempt to protect its revenues, Mohegan Sun is working with Foxwoods to get legislative approval for a jointly operated casino on the Massachusetts border. Both wanted licenses in Massachusetts, Maryland and New York, but failed to gain any. That makes Asia the mostly like spot in the world to get a license and put the company back on a solid financial footing. Korea is on a very short list of viable Asian opportunities.

The Mohegan Tribal Gaming Authority and the Incheon International Airport Corporation announced they have signed a memorandum of understanding for a resort that would include a 1,000-bedroom hotel, a casino with 250 tables and 1,500 slot machines, a 20,000-seat arena, an outdoor amusement park and other entertainment. The resort would be connected to a private jet terminal at the airport. Associated Press, 4-21-15

Mohegan Sun has probably been exploring Asia longer than we realized. Korea might not seem like a perfect place, given its policy prohibiting locals gambling at the casinos. But Korea has designated the airport outside of Seoul as a gambling zone and that may be a very good place to build a casino. Forty-five million visitors a year pass through the airport and that is probably enough potential customers to make a casino successful. Oh, and Mohegan Sun plans the world’s first private-jet terminal that is connected directly to a casino. So rather than being a better-than-nothing location, this might be one of the best opportunities anywhere in Asia.


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