Scientific Game

Regulatory pressure hurts Korea’s Kangwon Land as revenue falls

Tuesday, 13 February 2018 05:05
Visit us

Kangwon Land, the only casino in South Korea in which locals are allowed to gamble, saw its gaming revenue fall by 6.0% year-on-year to KRW1.52 trillion (US$1.4 billion) in 2017 amid regulatory pressure that led to a reduction in operational gaming tables.

The figures, released on Monday, included a 3.4% decline in 4Q17 to KRW377 billion, down from KRW390.2 billion 12 months earlier.

Notably, mass table revenue suffered the biggest decline, falling 8.7% from KRW186.6 billion in 4Q16 to KRW170.3 billion in 4Q17. Net profit for the year fell 3.7% to KRW437.5 billion.

The numbers follow Kangwon Land’s decision to reduce the number of tables in operation throughout most of 2017 to around 130, well below the maximum allowed of 180, due to increasing pressure from South Korea’s Ministry of Culture, Sports and Tourism.

The Ministry has since issued a new directive, effective from 1 January 2018, that reduces both the maximum number of tables allowed to 160 and daily operating hours from 20 to 18.

In a note seen by Inside Asian Gaming in January, JP Morgan analysts DS Kim and Sean Zhuang said that the changes formed part of the government’s Gaming Industry Reform Plan announced by the Prime Minister’s Office on 14 December which “clearly points to further regulatory tightening and increasing oversight on local gambling” and includes four major initiatives, “one of which effectively targets Kangwon Land by redesigning the Revenue Cap Policy with heavier penalties and stricter legal enforcement.”

While the reduced table cap won’t have any immediate impact on Kangwon Land given that it had already voluntarily removed tables from operation, the new operating hours “should have some direct impact” in 2018.

Kim and Zhuang noted previously that even if the Gaming Industry Reform Plan failed to pass the National Assembly, Kangwon Land would likely continue to lay low.

“Our read on the government’s Gambling Industry Reform Plan points to further regulatory tightening and increasing oversight of local gambling, possibly throughout this administration, and we believe Kangwon has no choice but to keep curbing its revenues to avoid further scrutiny for a (good) while,” they said.

“Even in the medium term, we believe management is unlikely to allow its business to grow faster than GDP (which can be seen as a maximum politically acceptable level of growth for gambling), hence we feel it is reasonable to assume its growth potential is effectively ‘capped’ at ~3% per annum at best, possibly throughout this administration until 2022.”


What's new

Changing of the guard: Macau’s Galaxy buys 5.3 million Wynn Resorts shares as Steve Wynn agrees to sell entire stake

Changing of the guard: Macau’s Galaxy buys 5.3 million Wynn Resorts shares as Steve Wynn agrees to sell entire stake By Ben Blaschke and Andrew W Scott Galaxy Entertainment Group (GEG) has emerged as a shock investor in Wynn Resorts, with the two integrated resort giants announcing today that Galaxy has agreed to purchase 5.3 million primary Wynn Resorts shares for a total of US$927.5 million. Wynn also announce... Friday, 23 March 2018 08:31

The Star Gold Coast opens luxury hotel The Darling

The Star Gold Coast opens luxury hotel The Darling Star Entertainment Group has opened its new luxury suite hotel, The Darling, at The Star Gold Coast – part of the company’s Australia-wide property makeover. The 17-storey hotel is considered the jewel in crown of The Star Gold Coast’s AU$850 million redevelopment, featuring seven suites on e... Friday, 23 March 2018 06:44

Korea’s Jeju Shinhwa World holds Grand Opening

Korea’s Jeju Shinhwa World holds Grand Opening Korea’s Jeju Shinhwa World celebrated its Grand Opening on Thursday, described as “the first and only iconic world-class integrated leisure and entertainment resort in Jeju Island, Korea.” The ceremony, hosted by the Chairman of Jeju Shinhwa World owner and operator Landing International, Dr ... Friday, 23 March 2018 06:21

Revenue, profits surge as Summit Ascent avoids Russian tax hike

Revenue, profits surge as Summit Ascent avoids Russian tax hike Hong Kong-listed casino investor Summit Ascent international has announced a 46% increase in revenue from its Russian integrated resort, Tigre de Cristal, in Vladivostok in 2017, due primarily to a 33% surge in rolling chip turnover. Group wide revenue increased to HK$470.8 million for the year, up... Friday, 23 March 2018 05:57

Current Issue

MGM “all-in” on Cotai

MGM “all-in” on Cotai Almost five years to the day since MGM first broke ground on its second Macau integrated resort, MGM Cotai finally opened its doors to the public on 13 February with the US$3.4 billion investment pinning its future on the premium mass market and an array of innovative features. By Ben Blaschke “... Tuesday, 27 February 2018 14:50

European vacation

European vacation Novomatic is targeting both the US and Asian markets with its recent acquisition of a 52% stake in Australian slot machine developer Ainsworth Game Technology.By Ben Blaschke WHEN Austrian gaming giant Novomatic Group confirmed the completion of its AU$500 million purchase of a 52.2% stake in Austra... Tuesday, 27 February 2018 14:48

Problem solving

Problem solving Inside Asian Gaming speaks with Davis Fong, Associate Professor in International Integrated Resort Management and Director of Institute for the Study of Commercial Gaming at the University of Macau’s Faculty of Business Administration, about the extent of gambling disorders in the Asian gaming hub... Tuesday, 27 February 2018 14:44

Gaming and the nine intelligences

Gaming and the nine intelligences Sudhir Kale explores the nine types of intelligence as defined by Harvard psychologist Howard Gardner and how they apply to the gaming industry.  DURING my decades of involvement in the gaming industry, I have had the pleasure of knowing many senior executives from all over the world. They are all... Tuesday, 27 February 2018 14:40