SOUTH KOREA

Tour ban knocks revenues

South Korea’s foreigner-only casinos faced another tough year in 2017, falling victim this time to a political spat with China.

The latest setback came just as the country’s casino sector was recovering from an outbreak of Middle Eastern Respiratory Syndrome in 2015 that caused tourism to plunge. This time it was a dispute with Beijing, which retaliated for Seoul’s decision to deploy U.S. anti-missile defences by banning tour groups to the country.

It was also another warning for foreign investors of the risk of venturing into a market where locals are for the most part not permitted to gamble. Kangwon Land operates the only casino that allows South Koreans entry in a remote part of the country.

China eased the tour group ban, which had been in place since March, in November only to seemingly do a u-turn a month later, creating further uncertainty.

The Bank of Korea estimated that South Korea suffered a loss of 5 trillion won ($4.6 billion) in 2017 due to the decreasing number of Chinese tourists, which had accounted for almost half of the total foreign visitors to the country. Last year tourists from the mainland fell by 50 percent to 4 million.

The ban only affects tour groups and not independent travel, therefore the VIP market was less affected.

Still, it has taken its toll. Paradise, which operates the Walker Hill casino and opened the country’s first IR in April, reported that casino revenue fell almost 9 percent in 2017. Revenue was approximately KRW551.86 billion (US$517.3 million), compared to about KRW603.75 billion in 2016. Full-year 2017 table revenue went down by 9.2 percent yearon-year to nearly KRW515.42 billion, from approximately KRW567.81 billion a year earlier.

However, machine revenue was up by 1.4 percent in 2017, to KRW36.45 billion, from KRW35.94 billion in the previous year.

The operator has been focusing on boosting arrivals from other Asian countries to offset the decline from China and to increase VIP traffic. Its third quarter figures, the latest detailed report available, showed it has been having some success. At its IR, which is a joint venture with Japan’s Sega Sammy, Q3 Japanese VIP drop was up 116 percent, while its VIP drop from elsewhere was up 176 percent.

Elsewhere, there have been further delays for the opening of the casino at the Jeju Shinhwa World resort, which is owned by Hong Konglisted Landing International Development, due to issues with the transfer of its license. The company had planned to transfer its permit to operate a casino from the Grand Hyatt Jeju to the new IR, which held its soft opening in September. However, the transfer appears to have hit legal issues.

Kangwon Land told to trim opening hours, cut tables

Kangwon Land was ordered by the Ministry of Culture, Sports and Tourism to cut its hours and the number of mass tables it operates.

It was told to reduce its daily operations from a maximum of 20 hours per day to 18. The maximum number of mass tables is being lowered by 20 to a limit of 160 tables.

The company, which operates the only casino in South Korea in which locals are allowed to gamble, said the table reduction would have no immediate impact as it has only been offering about 130 tables over the past year.

Lottery nears all-time high

Sales of lottery tickets in South Korea neared a record high in 2017 of KRW3.79 trillion (US$3.4 billion), just short of the 2003 record high of KRW3.82 trillion - due mainly to a buying frenzy that year due to prizes carried over from previous drawings.

Sales fell 13.7 percent in the following year and continued to fall as the government restricted the carryover of prize money to one time only and halved the price of each game to KRW1,000. A rebound was only observed in 2014.

According to local media, market observers have attributed the increase in lottery sales to youth unemployment and public concerns over economic conditions.