Caesars Entertainment Inc. and Mohegan Gaming & Entertainment (MGE) are reportedly facing financing issues for their integrated resort (IR) projects in South Korea’s Midan City.
Both groups say they have been unable to secure funding due to the coronavirus pandemic and subsequent lockdown, and Caesars cites “disagreements” with local partners over the repayment of outstanding debts.
Development in Midan City Yeongjong Island, west of the Incheon Free Economic Zone, has been stopped since February 11, therefore delaying construction for IR Caesars Korea and MGE’s Inspire.
Caesars Focused on US market
Caesars’ ambitious $700 million project is in a precarious situation, as the giant capped its investment at $150 million and has not been able to obtain funding since February. The group hopes to finance the remainder via external funds.
Industry experts estimate casino operators will need up to three or four years to recover from Covid-19, as finding backers who agree to invest into unfinished projects has become much more difficult.
All of Caesars Entertainment’s international plans debuted before the $17.3 billion merger with Eldorado Resorts, completed in July 2020. The megadeal led to Caesars’ withdrawal from various international IR bidding competitions.
Eldorado CEO Tom Reeg said in June 2019 that the group planned to focus on the US market, as it would need a “stupendous” opportunity to expand internationally. On September 30, Caesars reached a £2.9 billion ($3.7 billion) agreement with UK-based bookmaker William Hill, in order to grow in the US sports betting market.
Mohegan’s Hopes for Global Expansion
Despite similar struggles for Mohegan’s plans in Midan City, which is only 14% completed, according to South Korean news outlets, the casino leader said it is confident the resort will be ready by the second half of 2022.
The closing of all seven of its North American casinos because of the pandemic does not bode well for the operator, but MGE has high hopes for its $1.5 billion Korean casino resort complex, located near Incheon Airport.
CEO Mario Kontomerkos said the group “remains committed” to Inspire Incheon and that it is important to diversify its activity during the current difficult situation.
The Inspire complex will feature 1,250 luxurious guest rooms, a rooftop swimming pool, a traditional Korean day spa, 40 restaurants, a golf course, a 15,000-seat arena, a casino featuring 1,500 slot machines and 250 table games, and retail stores.
Last January, the group won its bidding for an integrated resort (dubbed Inspire Athens) on the grounds of former Athens International Airport, against rival casino giant Hard Rock.
The two Inspire projects are Mohegan’s first international developments and are expected to cost approximately $6.6 billion.
Mohegan is also the first tribal operator to enter the Las Vegas Strip corridor by leasing a 60,000 square feet property at Virgin Hotels Las Vegas, the former Hard Rock Las Vegas.
Online Gambling as an Alternative for Casinos
A return to normalcy cannot be expected until migration barriers are removed, but online gambling could be an alternative to in-person gambling for casinos until then.
The growing market of gambling apps and the boom in smartphone ownership might just be the perfect solution for gaming operators, but the sector faces legal issues in most of the US and in some countries around the world.