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Chinese Clients Returned to Support South Korean Casinos

May 25, 2023 Casino & Hotel

The second half of 2023 should see a boost in the South Korean casino industry thanks to the return of Chinese tourists, especially from the mass market. This is supported by a report from the brokerage NH Investment & Securities Co Ltd, which was cited on Tuesday by the news source Business Korea.

Analyst Hazell Lee claimed that despite “worries” about a probable “economic slowdown,” the South Korean casino business has experienced “solid earnings” in the first half of the year.

She continued, making reference to the conclusion of China’s zero-Covid policy earlier this year and the ensuing loosening of overseas travel restrictions, that the recovery “should sustain” in the second half of 2023 thanks in part to the return of Chinese clients.

The “demand rebound,” according to Ms. Lee, “is likely to be focused on mass consumers as China’s crackdown on VIP [gaming] continues.”

In recent years, the Chinese government has repeatedly emphasized the need to crack down on individuals who gamble online or fly abroad to play at casinos, a practice known as “cross-border gambling.” The nation has changed its criminal code to make it illegal for anyone to help others engage in such activities. On March 1, 2021, in the midst of the Covid-19 pandemic, it went into force.

NH Investment claimed that among the South Korean casino operators, it preferred Paradise Co Ltd. That was because of that company’s integrated resort, Paradise City, which gave it a “competitive edge” in luring mass market tourists.

The first quarter results of several South Korean listed casino companies were released earlier this month, with the majority displaying significant year-over-year profit growth.

An operator of casinos for foreigners exclusively, Paradise Co, declared a first-quarter net profit of KRW6.99 billion (US$5.3 million). The KRW4.05 billion deficit from the preceding three months and the KRW28.58 billion loss from the first quarter of last year were both reduced by that amount.

The operator of casinos open only to foreigners, Grand Korea Leisure Co Ltd, reported a net profit of about KRW21.60 billion for the first three months of this year. This was in contrast to a net loss of KRW10.78 billion a year earlier and a loss of KRW8.95 billion in the quarter before that.

The only South Korean casino resort that is allowed to allow locals to play, Kangwon Land, is promoted by Kangwon Land Inc. In the first quarter of 2023, the company turned a profit of KRW101.54 billion, as opposed to a loss of KRW5.85 billion the previous quarter. From the KRW9.22 billion made in the fourth quarter of last year, the profit for the three months ending March 31 increased by 1,001.6%.

The Jeju Dream Tower casino resort, located on the South Korean vacation island of Jeju, was an exception to the general upward trend. The resort’s owner, Lotte Tour Development Co Ltd, reported a first-quarter net loss of KRW2.19 billion for the casino division. That contrasted with a net loss of KRW1.01 billion in the first quarter of 2022.

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