SOUTH KOREA

Operators report mixed fortunes

South Korean operators posted mixed fortunes for 2018, even though tourism arrivals picked up after a lacklustre performance the prior year.

Both Grand Korea Leisure, which is owned by the Korean Tourism Organization, and Kangwon Land, the only resort where locals are allowed to gamble, produced weak results. Paradise Co. was the exception with strong gains in 2018.

South Korean tourism arrivals rose 15 percent from the prior year, with a pick up of the same amount in arrivals from China, despite slumping visitor numbers in January and February. Mainland visitors were the biggest source market, making up about a third of the total. Japanese arrivals were also strong, gaining 27.6 percent in 2018.

Paradise Co. runs casinos in Seoul, Busan and Jeju and operates the Paradise City IR in Incheon with Japan’s Sega Sammy. The resort was the country’s first IR and the first to open in what is destined to be an entertainment hub near Seoul’s international airport.

For 2018, the group recorded a near 18 percent rise in revenue, with casino sales up 15.3 percent to KRW635.9 billion ($566.4 million).

After a weak start to the year, the company reported that its VIP drop from mainland China had gained from KRW324 billion in the first quarter of the year, to KRW541 billion in the final quarter, regaining the top place position.

VIP drop in Q4 alone gained 19.7 percent despite the slowdown in the mainland Chinese economy, which had been expected to have an impact on VIP revenues across Asia.

Over the year, the company’s VIP business had been supported by Japanese gamers who up until Q4 were the biggest contributors to the sector.

The Walker Hill casino recorded the highest level of casino sales in the fourth quarter at KRW807 billion, though Paradise City was closing in at KRW718 billion, its best quarterly performance of the year.

Given South Koreans are not permitted to gamble, investors planning to build resorts in Incheon are counting on drawing locals from the greater Seoul area into their non-gaming attractions. Both Mohegan Sun and Caesars Entertainment have projects underway in South Korea.

Paradise reported a 33 percent gain in its hotel sales for the year and has noted that locals had been enjoying “hocances,” a South Korean version of a staycation, at the resort.

Grand Korea Leisure, which operates the Seven Luck brand casinos, saw a dismal performance in the final quarter, dragging down its results for the year.

Fourth-quarter net income fell by 51.8 percent year-on-year to approximately KRW6.85 billion and the firm stated net income for full calendar-year 2018 declined by 3.5 percent to KRW77.74 billion.

Aggregate revenue for the final three months of 2018 stoodat KRW111.84 billion, down 12.4 percent from the prior-year period.

The company has given no commentary as to why its three casinos have performed so poorly.

Meanwhile Kangwon Land, which generates more gaming revenue than the other two operators combined, also reported falling sales.

It saw an 8.3 percent decline in gaming revenue in 2018 to KRW1.27 trillion over the year, while non-gaming revenue at the remote resort tumbled 22.7 percent. The decline came despite South Korea’s hosting of the 2018 Winter Olympics nearby, which had been expected to provide a boost to the resort.

Mainland visitors were the biggest source market, making up about a third of the total.

As the only placewhere locals are allowed to gamble, the Kangwon Land has come under increased scrutiny from the government, partly as a result of a major corruption scandal involving illegal hiring practices. The government last year also ordered Kangwon Land to reduce its complement of mass market gaming tables from 180 to 160 and to cut the opening hours at its casino by two hours a day.

Jeju tightens surveillance of overseas Koreans

Jeju authorities are stepping up their surveillance of Korean overseas residents attempting to enter the island’s casinos.

Locals are banned from gambling in South Korea, though Koreans who are permanently resident abroad are permitted provided they have the correct documentation.

Jeju monitored procedures at the casinos from Jan. 31 to Feb. 24. The island will also educate casino employees about the new entrance procedure for Korean migrants announced in July of last year.

The new legislation for casinos requires an identification card and documentation that confirms migrant status, such as a permanent residence card, or overseas migration confirmation letter.

Previously, presenting documentation on migrant status was enough for Korean migrants to enter the casinos.

Government accused of “China-style” censorship

The Korean government has come under criticism after blocking hundreds of gambling and porn websites using a method described as “China-style internet censorship,” The Korea Times reported.

On February 11, the Korea Communications Standards Commission (KCSC), the country’s internet censorship body, announced it had blocked 895 foreign-owned websites with “harmful” content.

KCSC said it used Server Name Indication (SNI) in order to block the websites – sparking controversy among many people over how much control the government should have on what is being accessed on the internet.