Chinese tourists enter Paradise Casino inside the Jeju Grand Hotel in Jeju, South Korea
Paradise Co., South Korea’s largest operator of casinos for foreigners, is increasing gambling space to cater for a boom in Chinese visitors, even as China cracks down on foreign casinos marketing to its citizens.
Paradise will expand floor space at three of its five foreigner-only casinos including doubling the size of gaming areas at its casino on Jeju Island, as Chinese gamblers who comprise more than two-thirds of its visitors pack its halls, Vice Chairman Lee Hyuk-Byung said in an interview.
China announced on Feb. 6 it would stop foreign casinos from luring its citizens to gamble overseas including through offices set up in the country, the latest in a slew of policies linked to an anti-corruption campaign that has hit gambling revenues in Macau. Seoul-based Paradise doesn’t market directly to gamblers in China as that is illegal, and it mainly relies on word of mouth, Lee said on Feb. 5, prior to China’s announcement.
There isn’t enough information about the latest policy and Paradise hasn’t seen any impact on its operations, said Hyejeong Shim, an investor relations official at the company after China’s announcement.
Casino operators such as Australia’s Echo Entertainment Group Ltd. and Nagacorp Ltd. are trying to woo Chinese gamblers as the anti-graft campaign and stricter visa rules to Macau drove bettors to seek out alternative gaming markets. There has been a surge in the number of visitors from China to South Korea over the past two years , Lee said.
“If you visit our casinos, it isn’t full on the weekdays, but on the weekends from Friday afternoon to Sundays, it’s fully packed and very crowded,” Lee said. “This means we cannot provide all the gaming needs of our visitors. By expanding, we can.”
Paradise shares broke its three-day losing streak to rebound from Monday’s 17-month low, rising 2.3 percent to 22,300 won at the close of trading in South Korea. Rival Grand Korea Leisure Co. closed up 0.8 percent, while the benchmark Kospi index fell 0.6 percent.
While sentiment for Paradise and Grand Korea Leisure will probably suffer in the short term, China’s clampdown is unlikely to seriously impact casino markets targeting Chinese gamblers, Ilwoo Yang, an analyst at Samsung Securities Co., wrote in a note this week.
“Korean casinos may actually benefit, as their success at attracting Chinese punters appears to be due to Korea’s proximity to China, not marketing capabilities,” he wrote.
Paradise will spend $26 million on the expansion, Lee said. The operator will add 26 gambling tables at its casinos, mostly for baccarat card games, bringing the total to 252, according to the company. Baccarat games are a favorite of China’s gamblers,
The expansion by the South Korean operator comes as Macau’s casino revenue slumped for an eighth straight month in January, for the longest losing streak on record. Paradise in 2014 posted its first profit decline in three years, according to data compiled by Bloomberg.
Chinese tourists to Korea are increasing as Korean pop culture gains popularity and travel restrictions between the two countries ease, Lee said. Mainland gamblers formed 67 percent of the company’s high rollers last year, growing from 46 percent in 2010, the Seoul-based company said. Chinese accounted for 77 percent of the total mass gamblers last year, up from 50 percent in 2010, it said.
About 6.1 million mainland travelers went to the North Asian country last year, an increase of 42 percent, according to data from the Korea Tourism Organization.
South Korea last year approved construction of its first foreign-owned casino as Asia’s fourth-largest economy tries to emulate Macau and Singapore in attracting more tourism spending from China.
Paradise is Korea’s largest foreigners-only casino operator with almost 50 percent market share, the company said, citing data from the Korean Casino Association. Grand Korea Leisure, a state-run casino operator, ranked second with a 42 percent share.
Kangwon Land Inc., which operates South Korea’s only casino that allows local gamblers, is the country’s largest operator overall by sales, followed by Paradise, according to data compiled by Bloomberg.
Paradise plans to focus on bringing in mass market gamblers, especially with its 1.3 trillion won (USD1.2 billion) integrated resort Paradise City project, Seoul-based Shim said.
Paradise is teaming up with Japanese video-game and pachinko operator Sega Sammy Holdings Inc. to build a foreigners-only casino resort, which will have Korean-style spas, restaurant and K-pop entertainment, Lee said. Bloomberg
No Comments