SOUTH KOREA

Foreigner only casinos seen struggling with tourism drop

South Korea’s casinos reported a strong start to the year, though the country’s foreigner-only operators are again likely to suffer from a drop in tourist numbers as a result of the coronavirus.

Locals are only permitted to gamble in one remote property in South Korea, which generates more revenue that the rest of the country’s casinos put together. In recent years, operators in the country have been on a roller coaster ride, with the tourism market hit by the Middle East Respiratory Syndrome in 2015 followed by a travel ban by China over Seoul’s decision to deploy a U.S. air defence missile system in 2017.

Now, after a positive year of operating results in 2019, the sector looks likely once again to suffer from the impact of events beyond its control.

Paradise Co., which operates four properties, saw its casino revenues increase 23.4 percent year-on-year in 2019, reaching KRW 784.8 billion (US$673.1 million). For January, the positive trend continued with a 28.3 percent jump.

The company’s results are being helped by revenue from its Paradise City integrated resort, where sales were up 51.2 percent last year. For January, the IR accounted for half of group revenue.

Paradise City is a joint venture with Japan’s Sega Sammy and was the first true integrated resort to open in South Korea in an area designated as an entertainment hub close to Incheon International Airport, one of the busiest in the world.

The company also operates the Paradise Walker Hill casino in Seoul, the Paradise Casino Busan and the Paradise Casino Jeju Grand.

Rival foreigner-only group Grand Korea Leisure reported a 6.9 percent drop in profit to KRW72.4 billion (US$61.2 million) in 2019, while annual revenue rose 2.2 percent to KRW490.8 billion.

The Seoul Gangnam casino nearly doubled its year-on-year sales, and Seoul Hilton Casino also turned in an impressive advance.

However, the company, which operates the Seven Luck casino in Gangnam Seoul, the Seoul Hilton and the Busan Lotte, said it had noted a turnaround in the fourth quarter when net income gained 167.5 percent year-on-year and revenue rose 17 percent.

That performance continued into January, when GKL posted a 58 percent jump in yearon-year net sales in January, lifted by its two casinos in Seoul in particular.

The total sales amount for GKL’s three casinos in January 2020 was nearly KRW54.6billion (about US$45.9 million). The Seoul Gangnam casino nearly doubled its year-on-year sales, and Seoul Hilton Casino also turned in an impressive advance. The Busan Lotte Casino, however, reported only modest gains. Table games contributed far more to the sales increase than did the slot machine segment.

Both of the foreigneronly casinos chose to bar tour groups from China into their casinos, even though the government has not imposed an all out ban. Paradise Co., which stopped accepting Chinese as of Jan. 27, said however that most of its customers are individual VIPs and not package tourists.

The company warns on its web site that lines have been set up to channel visitors toward thermal scanning points for body temperature checks before they enter the gaming tables.

GKL, a unit of the Korea Tourism Organisation, has also put a similar policy into place. As of going to press, the South Korean government has only barred entry to non-Koreans who had visited Hubei province, where Wuhan, the city at the epicentre of the outbreak, is based.

The Korea Institute for International Economic Policy has estimated that the virus may lead to a drop of 15 percent in tourism this year.

In a report cited by Yonhap News, the institute noted Chinese visitors accounted for 39 percent of all foreign visitors to South Korea between January and November 2019, while their average spending far exceeded that of tourists from other countries at US$1,887 to $1,342 per person. A drop in the number of Chinese tourists by 1 million may lead to an annual reduction of up to $2 billion in tourism income for South Korea, it added.

Meanwhile, Kangwon Land, the casino and resort company based in Gangwon Province that uniquely allows locals to gamble, reported full-year profit in 2019 was up 12.7 percent.

With sales at KRW1.52 trillion (about US$1.28 billion), which was up 5.7 percent year-on-year, combined with lower costs, net profits for the year came in at KRW335 billion (about US$281 million).

Finance Ministry mulls lotterystyle tax for bitcoin

South Korea is considering taxing gains from cryptocurrency transactions in the same way as it treats winnings from the lottery, or other prizes.

The Ministry of Economy and Finance has recently ordered its office of income tax to review a taxation plan for cryptocurrencies, according to officials.

The move raised speculation that the government may categorize gains from cryptocurrency trading as other income, not capital gains. As such they would carry a tax rate of 20 percent.

A government official, who spoke on the condition of anonymity, said the finance ministry has not finalized its plan to tax cryptocurrencies.

Jeju poker tournament becomes casualty of coronavirus

Triton Poker postponed the kick off of its super high roller season 2020, which was due to begin in February on Jeju island, due to the spread of the coronavirus.

The event was to include 12 tournaments, including the 1,000,000 HKD Main Event on February 20. If Triton Poker’s stop in Jeju is not rescheduled in the next few months, the 2020 series won’t officially begin until May with the Triton Poker Super High Roller Series Montenegro.

“The safety of our players and support staff remains our utmost priority. Coupled with our duty to do everything we can in our power to prevent the virus from spreading, we’ve taken the difficult but correct stop of postponing the event with immediate effect,” it said.