SJM invited to co-manage Korea casino scheme: report
Macau casino operator SJM Holdings Ltd has been invited to be joint manager – alongside South Korea’s Paradise Co Ltd – of a casino project near Seoul, reported Bloomberg News on Monday, citing people it didn’t name.
The casino scheme in question is one of several planned for Incheon, near the international airport that serves South Korea’s capital Seoul. Casinos in South Korea currently rely on foreign players, as 16 of the country’s 17 venues are barred from letting locals play.
The particular casino project being linked to SJM currently involves Paradise Co and Japan’s Sega Sammy Holdings Inc. The US$1.7 billion scheme known as Paradise City broke ground on November 20 and is scheduled to open in 2017.
The casino resort will have 160 gaming tables and 340 slot machines and 750 hotel rooms, according to a recent note from Daiwa Capital Markets.
The site is at Yeongjong Island in the Incheon Free Economic Zone. Paradise holds a 55-percent stake in the joint venture according to previous statements by the company.
SJM, founded by Hong Kong entrepreneur Stanley Ho Hung Sun, is one of two majority Chinese-owned casino operators in Macau. The other is Galaxy Entertainment Group Ltd founded by Lui Che Woo. Senior executives from both companies have expressed an interest in investing in Japan if casinos are legalised there.
Paradise could benefit from having a Chinese partner in South Korea to build its own foreigners-only business and possibly to stave off potential competition from Japan casino resorts. Some of Paradise’s best customers come from China and from Japan. Chinese VIP players accounted for 66.1 percent of table drop at Paradise casinos during the third quarter of the year, the firm said in its third quarter 2014 results on November 6.
But Paradise’s stock dropped 12 percent on December 4, following an article in the mainland China press. It singled out casinos on the South Korean island of Jeju – where the firm operates a gaming venue – for allegedly “preying” on Chinese customers.
GGRAsia has sought comment from SJM on the Bloomberg report linking it with Paradise. The news comes on a Macau public holiday to mark the winter solstice.
A company led by Hong Kong billionaire Cheng Yu Tung, a long time associate of Stanley Ho and investor in SJM’s parent company STDM, has also been linked with an Incheon casino scheme.
Privately held Chow Tai Fook Enterprises Ltd – the controller of a jewellery shop chain founded by Mr Cheng that is popular with mainland tourists to Macau and Hong Kong – on November 16 signed a letter of intent to invest US$1.6 billion to create a new South Korean casino resort at Incheon, reported the Korea Herald newspaper.
A number of Macau’s gaming promoters – known more commonly as junket operators and serving high roller players – are currently looking to expand their operations in other Asian casino jurisdictions. That interest comes at a time when China’s corruption crackdown appears to be gathering steam rather than winding down.
On December 10, the Wall Street Journal newspaper reported that Hong Kong police had launched a money-laundering investigation into one of the most prominent figures in the modern Macau junket industry. Police also froze his Hong Kong assets.
The person under investigation – Cheung Chi Tai – in 2007 owned as much as 12.9 percent of the listed Macau junket operator Neptune Group Ltd. He has had no stake since September 2008, according to Hong Kong Stock Exchange filings.
It was reported last week that Chinese security officials have been given access electronically to all cash transfers done via the state-backed China UnionPay Co Ltd bank payment card system, in order to identify suspicious transactions. The UnionPay route – whereby high value goods such as watches and jewellery were bought and then returned immediately for a cash refund – has traditionally been one of the ways used – generally by wealthier Chinese mass-market gamblers in Macau – as a way of circumventing the mainland’s RMB20,000 daily limit on cross border cash transfers.
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