Kangwon Land, the only Korean casino in which locals are allowed to gamble, showed signs of improvement in its gaming segments in 1Q19, aided by a gradual easing of regulatory pressures.
Gross gaming revenue fell by 1% year-on-year to KRW362 billion (US$308.4 million), a significant improvement on the far greater slides it experienced through 2018, with VIP growing 13% to KRW61 billion (US$52 million). Mass market revenue was flat at KRW164 billion (US$139.7 million) while slot revenue declined 6% to KRW137 billion.
Operating profit held steady at KRW125 billion (US$106.5 million).
JP Morgan analyst DS Kim described the results as encouraging, stating it “reflects gradually alleviating regulatory pressure, as well as easier comps.
“We continue to expect Kangwon’s GGR growth to turn positive from 2Q19 and to modestly accelerate into 2H19.”
Casino sales at Kangwon Land had fallen last year due largely to a decision to reduce the number of tables in operation as a result of increasing pressure from South Korea’s Ministry of Culture, Sports and Tourism.
The company has also come under scrutiny following a corruption scandal involving the hiring of 226 employees in 2012 and 2013 via political connections.
Kim noted that Korea’s revenue cap, which limits the revenue of gambling-related industries and is based on a proportion of the nation’s GDP, will likely rise by around 17% year-on-year in 2019 but said this was unlikely to provide any benefit to Kangwon Land given current limitations on the number of tables in operation.