Shin Jong Ho (pictured) is secretary-general of the Korea Casino Association (KCA), having started his career with the trade body in 1995. The KCA represents South Korea’s 18 licensed casino businesses. Here in the first of a two-part interview with GGRAsia, Mr Shin explains the opportunities and challenges for the country’s regulated casino sector.
What’s the purpose of the Korea Casino Association?
The core mission is to ensure South Korea’s casino industry is fully recognised as a high value-added tourism export industry and achieves sustainable growth. Our association represents the interests of the 18 venues within the country and serves as a communication channel with the government. We propose rational policies and call for sensible deregulation, while also training employees to foster professional talent and carrying out public-awareness activities to promote a sound leisure culture. The KCA serves as a compass guiding the healthy development of South Korea’s casino industry.
What are the strengths and weaknesses of South Korea’s casino industry compared with other regulated jurisdictions in the region?
Strengths are its world-class transparency, stability and high-quality service. South Korea operates under strict regulations, including on anti-money laundering [AML] and countering the financing of terrorism [CFT]. Standards exceed international benchmarks. These strengths enable the country to provide global customers with a highly-trustworthy leisure environment.
A clear weakness is that 17 of the country’s 18 casinos are foreigner-only venues. Other countries, supported by strong domestic markets, are able to attract very large-scale international investment and achieve economies of scale. South Korea, with its addressable-market constraints, and trapped in the outdated framing of casinos as merely a speculative or vice industry, faces difficulties in attracting global capital and expanding infrastructure.
What are examples of S.Korea exceeding international AML/CFT standards?
All South Korean casinos are subject to the strict provisions of the Act on the Reporting and Use of Specific Financial Transaction Information, and they thoroughly verify the identity of customers and the source of their funds. While the FATF [Financial Action Task Force] recommendations require the reporting of large cash transactions where a single transaction or the cumulative total of transactions in a single day exceeds US$3,000, in South Korea the threshold is set at KRW3 million [US$1,953] for transactions involving casino chips.
Furthermore, the operation of an independent internal compliance monitoring body is standard practice [in South Korea], and casinos are subject to constant supervision by the Ministry of Culture, Sports and Tourism, the National Gambling Control Commission, and the police. As severe administrative penalties are imposed for regulatory violations, internal control standards exceeding international benchmarks are applied.
What is the most urgent governmental task if South Korea is to remain competitive regionally?
South Korea’s casino industry is a tourism-services export sector. To strengthen and maintain international competitiveness, the most urgent task is to ease regulations on operations and marketing so that they align with standards seen internationally, and to reform rules in order to allow the adoption of the latest information technology [IT].
Recently, South Korea’s competitors in Asia have introduced various forms of IT to improve operational efficiency and transparency. In line with this trend, South Korea’s casino industry also needs to remove barriers to technology adoption in order to upgrade services. In addition, there must be state-level [national] industrial development policies that can ease marketing difficulties in attracting foreign tourists and allow the sector to compete confidently on the global stage.
What are examples of IT innovation in S.Korea casinos?
RFID [radio frequency identification] chips at Kangwon Land; AI [artificial intelligence] casino automation robots at Kangwon Land; RFID and AI interpretation services at Paradise Co Ltd [properties].
The South Korean casino industry is making significant efforts to introduce and implement various IT technologies such as those mentioned. It is actively embracing new technologies to enhance customer convenience, operational efficiency and, most importantly, transparency.
Is there anti-casino sentiment in South Korea, and if so, why?
The biggest misunderstanding at government level and among the public is the perception South Korean casinos are simply a source of addiction and a harmful presence that undermines the stability of local communities. The reality is different. South Korea’s casino industry pays hundreds of billions of won each year into the country’s Tourism Promotion and Development Fund and the ‘Abandoned Mine Fund’. Through such contributions, the industry serves as seed capital supporting the country’s overall tourism ecosystem, while also creating and providing hundreds of thousands of quality jobs for young people.
In addition, the industry plays a major role in economic development through local infrastructure expansion and in ensuring public order [as a licensed industry]. Various media outlets often exaggerate negative narratives about casinos. We hope those views can be set aside and that the industry will instead be newly-recognised as a transparent, ESG [environmental, social and governance]-driven, high value-added legal tourism export industry equipped with thorough addiction-prevention systems.
Japan’s MGM Osaka integrated resort (IR) is due to open in 2030. Will it compete with South Korean casinos?
Simply in terms of the emergence of a powerful global competitor, it could deal an existential and devastating blow to South Korea’s casino industry. If Osaka’s large-scale IR opens with superior accessibility, attractiveness, and overwhelming capital investment, Japanese customers would be the first to stop coming to South Korea. Additionally, not only Chinese-speaking customers, but also a large share of Western customers, would likely be absorbed by Japan. One cannot overlook the possibility of an annual outflow of South Korean national wealth exceeding KRW5 trillion [US$3.28 billion], as well as an industry exodus in which South Korea’s key casino professionals leave the country in large numbers.
Why could the MGM Osaka be an ‘existential’ threat to South Korea’s casino sector?
First, there is the risk of losing key customer segments. Visitors from Japan and Greater China are the core customer base for South Korea’s foreigner-only casinos. If a high-quality IR backed by a very large investment opens in Osaka, South Korea could lose not only Japanese customers but also part of its Greater China clientele.
Osaka also offers strong non-gaming appeal, including attractions such as Universal Studios [theme park] and a broad mix of Japanese cultural and tourism content. As seen in Macau, the market has been shifting gradually from a VIP focus to more mass and family-oriented customers. In that context, Osaka represents a highly serious competitive threat.
Second, there is the risk of an outflow of skilled personnel. Japan has no direct experience in casino operations, but it represents a major new market with strong growth potential. Both the government and the industry there may try to recruit experienced South Korean staff who understand casino systems and are well equipped to serve Asian customers, possibly by offering very attractive salaries. After the Covid-19 pandemic, many markets identified weaker service quality caused by staff losses as a major challenge. South Korea should learn from that experience. If a large-scale outflow of key personnel occurs, the competitiveness of the domestic casino industry could weaken rapidly.
