Caesars Entertainment Corp. is expected to open a namesake integrated resort in South Korea in 2021, its first push into the East Asian gaming market. But the operator is trying to be mindful of the costs associated with that endeavor.
The Las Vegas-based casino company is working on the Caesars Korea project with Chinese property developer Guangzhou R&F Properties Co. Ltd. Costs for the foreigners-only gaming venue, which will be built on Yeongjong Island, near South Korea’s Incheon Airport, are expected to be $700 million to $735 million. But those numbers aren’t set in stone and the company is assessing its financial commitment to the Asia deal.
We expect to spend approximately $275 million to $295 million for development related CapEx, mostly for the Caesars Forum project and our investments in sports books across the US,” said CFO Eric Hession on a conference call with analysts and investors following Caesars’ third-quarter earnings report Tuesday. “This range excludes spends for the Korea projects which we are currently evaluating.”
Hession said that total capital expenditures for 2019 should be $400 million to $420 million, a figure that includes room renovations at Harrah’s Las Vegas.
Pondering Its Fate
Since Eldorado Resorts, Inc. announced its $17.3 billion takeover offer for Caesars in late June, analysts familiar with the latter’s South Korea ambitions have wondered what will become of the project because of the acquirer’s overt lack of interest in international expansion.
After the offer was revealed, Eldorado CEO Tom Reeg said the company hasn’t made decisions on international expansion, but added that those plans have to be “stupendous for us to be running in that direction.”
Since news of the Eldorado takeover became official, it became known that Caesars dropped out of integrated resort bidding competitions in Australia, Greece, and Japan. However, it’s believed that the company scuttled Australia plans before the Eldorado offer was made public.
The operator of Harrah’s and Horseshoe brands, among others, also maintains an interest in building a gaming property in Brazil. But that process isn’t nearly as far along as the Caesars Korea push.
Looking To Asia
Currently, Caesars lacks an adequate presence in East Asia, which is one of the world’s most lucrative gaming regions. When Chinese regulators decided to open the Macau market to foreign competition in 2002, Caesars didn’t get involved, and four years later, the company declined to purchase a sub-license there from rival Wynn Resorts.
Today, Macau is the world’s largest gambling center. Operators on the peninsula posted combined gross gaming revenue (GGR) of $30.56 billion through the first 10 months of 2019, and the region serves as a major driver of results for Caesars rivals such as Las Vegas Sands and Wynn.
With Caesars having no footprint in Macau and with its recent departure from the Japan integrated resort competition, the company’s Korea project stands as its only viable near-term gateway to Asia.
Caesars Korea is expected to have 720 guestrooms, convention and meeting centers, and a massive casino that will only be open to foreign visitors.