Virus-free Paradise casinos rebound; bid to end Kangwon Land local monopoly

Virus-free Paradise casinos rebound; bid to end Kangwon Land local monopoly

In Q2 2015, Paradise saw profits at its five foreigners-only casinos fall by nearly half after an outbreak of Middle East Respiratory Syndrome killed dozens of people while other Asian nations – China, in particular – warned their citizens to steer clear of the country.

Virus-free Paradise casinos rebound; bid to end Kangwon Land local monopolyWith that threat now behind them, Paradise saw revenue rise nearly one-third to KRW 189b (US $170m) in the three months ending June 30. Operating profit enjoyed an even larger bounce, rising a whopping 147.6% to KRW 32.7b, while net profit rose 113.6% to KRW 27b.

Meanwhile, Kangwon Land, the only one of South Korea’s 17 casinos to which local residents are allowed entry, reported a more modest revenue bump (KRW 411.8b, +5.9%) but net income rose a respectable 27.1% to KRW 123.7b.

Daiwa Securities analysts said Kangwon Land’s gains were no thanks to VIPs, as high-roller revenue fell 2.7% year-on-year. By contrast, mass market tables and slots were up 5.5% and 11.6% respectively. VIP gaming accounted for 16% of the overall pie, while mass tables and slots notched 45% and 36%, respectively, and non-gaming revenue contributed the remaining 3%.

Kangwon Land’s monopoly on local gamblers doesn’t expire until 2025 but a group of opposition politicians would like to speed up that timetable. Members of the People’s Party submitted legislation this week that would authorize a locals casino in the Saemangeum tidal flat area in North Jeolla Province, located on the country’s southwest coast.

The Korea Times quoted People’s Party Rep. Kim Kwan-Young saying North Jeolla Province lawmakers had agreed to support the new casino plan, which would require amending the law that stipulates only a foreigners-only casino can be built in the region.

To sway those who worry about locals suffering harm from gambling, Kim has suggested charging an admission fee of KRW 50k to 100k, significantly higher than the KRW 9k fee charged by Kangwon Land. Kim also suggested capping monthly visits at 10 per resident.

A previous plan that would have permitted locals to gamble in shipboard casinos docking in South Korean ports met with fierce resistance from Kangwon Land and the residents of Gangwon Province. Anticipating similar resistance, Kim has suggested (a) letting Kangwon Land’s operators invest in the Saemangeum casino project, or (b) diverting a slice of the profits to Gangwon Province.

Despite Kim’s efforts, the expectation is that the plan won’t fly, as previous efforts to convince South Korea to relax its no-locals policy have failed to sway legislators, and the People’s Party lacks the clout to rally enough votes on such a potentially contentious issue.