In March, the South Korean government awarded the Mohegan Tribal Gaming Authority (MTGA) and its two partners a license to develop Project Inspire adjacent to South Korea’s Incheon International Airport, located 30 miles west of Seoul.
Recently, the tribal gaming arm said it expects to receive around $750 million in fee income from its involvement in the new casino, reported GGRAsia.com. The firm presented at the Bank of America Merrill Lynch 2016 Leveraged Finance in Florida on Tuesday: MTGA “will invest $100 million (already raised) for 50-percent plus of the project’s equity, earn a development fee during construction (aroundS$45 million) and a 24-year management fee (3 percent of all revenues [plus] around $30 million per year).”
MTGA acknowledged that management and development agreements have yet to be signed.
South Korea, Asia’s fourth-largest economy, hopes to emulate the Macau and Singapore gaming markets, attracting more Chinese tourists who currently make up more than a third of visitors to South Korea, reported Bloomberg.
MTGA, operators of Mohegan Sun in Uncasville, Connecticut, teamed up with KCC Corporation, a Seoul-based chemicals manufacturer, and Incheon International Airport Corp. to bring the gaming venue to life. It will host 250 gaming tables, 1,500 slot machines, and an additional 15,000-seat arena space.
Check out the below video, a Project Inspire “fly-through”:
Phase one, called “Inspire Integrated Resort,” of the estimated $5 billion development costs $1.6 billion and includes a 20,000-square-foot casino and 1,350-room luxury hotel, as well as luxury retail space and restaurants, and an eco-adventure park with indoor rain forest. The entertainment destination is slated to break ground in 2017 and open in early 2020, Robert (Bobby) Soper, president of the MTGA, told GGRAsia last month.
The partners are aiming for a balance between gaming and non-gaming amenities, a dissention from South Korea’s 17 existing casinos. All but one of South Korea’s 17 casinos are open only to foreigners. “The existing casinos in Korea are like gambling dens which do not offer any non-gaming amenities such as spa, restaurants or entertainment shows. They simply cannot cater for large groups of visitors,” D.S. Kim, a Hong Kong-based analyst at BNP Paribas Securities Asia, told Bloomberg.
South Korean nationals are only allowed to gamble at one of the country’s casinos: Kangwon Land Hotel & Casino, run primarily by the national government. That casino is located in Gangwon-do, a province in northeast South Korea roughly a three-hour-plus drive from Seoul. (In Gangwon-do’s county of Pyeongchang, the Yongpyong and Alpensia ski resorts are host sites of the 2018 Winter Olympics.)
Thus, the MTGA anticipates the majority of casino patrons to come from Incheon airport, and approximately 20 percent of the revenue to come from VIP players. Another South Korean operator, Paradise Co Ltd, plans to open Paradise City, a foreigner-only casino and “South Korea’s first integrated resort-style foreigners-only casino,” at Incheon airport in April 2017. In addition, Las Vegas-based Caesars Entertainment Corp. and Hong Kong real estate developer Lippo Ltd. will open a third gaming operation strictly for foreigners. Lippo later intends to dissolve its affiliation. Construction has not started on that unnamed gaming project.