Grand Korea Leisure (GKL) doesn’t want to gamble on a casino in case its VIP segment ends up being squeezed by Beijing’s corruption crackdown.
South Korea’s state-run casino operator Grand Korea Leisure Co. has abandoned its plan to apply for a casino license on Yeongjong Island due to shrinking demand from mainland Chinese customers and failed attempts to form a consortium, a senior official told The Korea Herald.
But the company is not completely closing the door, saying that “there is still room for another try if there are opportunities down the road.”
Daiwa Securities Capital analyst Thomas Kwon confirmed the news, noting that GKL had officially scuttled its bid to build a casino resort near Incheon International Airport due to the unfavorable business environment.
GKL operates three foreigners-only casinos in South Korea under the Seven Luck brand and in a recent filing to Korea Stock Exchange, the company saw its third quarter income fall 41.5% year-on-year to approximately KRW22.58 billion as the number of Chinese customers further dropped following South Korea’s outbreak of Middle East Respiratory Syndrome (MERS) in May.
But the company saw a sequential improvement, recording a 21.8% income gain from the previous month.
Sales dropped 9.1% from the previous quarter to KRW111.3 billion, a decline of 18% from the same three-month period a year ago. Operating income amounted to KRW26.5 billion, up 22.1% quarter-on-quarter and down 32.5% year-on-year. Income before tax totalled KRW29.7 billion, up 21.9% from the second quarter of the year and down 39.4% year-on-year.
In August, 9 out of 34 applicants were chosen to proceed to the next level of the bidding process for the remaining two licenses to develop and run an integrated casino and resort in South Korea. The remaining bidders have until November 27 to submit their respective proposal, which require a minimum investment of more than 1 trillion won ($847m), foreign investment of more than 590 billion won ($500m) and certain levels of credit ratings in order to confirm competitive investment demands.