South Korea is unlikely to reconsider its stance on banning local access to casinos until after the monopoly of Kangwon Land ends in 2025, according to a market expert.
Currently Kangwon Land, located in remote area of the country, is the only casino in which Koreans are allowed to gamble. It accounts for $1.7 billion of the country’s total gross gaming revenue of about $2.8 billion.
“Kangwon Land has a monopoly until 2025 so it would be really hard to reopen the discussion until then we believe, because someone really has to come up new legislation to open up the discussion, special legislation,” Glenn Burm, partner at PwC Korea, told AGB at G2E in Macau.
“Politically, economically, if Japan were to open up and promote casino markets maybe, it would be considered, but because the current situation in Japan is on hold, the government might say the current situation in Korea is fine,” he adds.
Korea has been seen as one of the most promising markets in Asia due to its close proximity to China and cultural phenomena, such as K-pop. However, the ban on locals has dented foreign investor interest. Last year’s request for proposals for two new integrated resort licenses started out with a field of 36 bidders, but then dwindled down to one, granted to U.S. tribal operator Mohegan Sun.
Other potential investors dropped out, citing concern over the economic viability of a large casino in the country without the support of the local market. Their concerns were highlighted by an outbreak of Middle Eastern Respiratory Syndrome, which hit the tourism market hard last summer and caused a steep drop in sales at the two foreigner-only casino operators Grand Korea Leisure and Paradise Co.
Burm says the operators will need to generate strong non-gaming revenue in order to thrive.
“We analyse, it’s critical that they need to raise more than 50 percent of revenue from non-gaming section to be successful. The number of foreign visitors is limited and the increase in visitors may be limited as well, so in order to secure the profit you need to secure domestic people coming in to the resort as well and foreign visitors coming in with families to spend time.”
Analysts have warned that without a significant increase in tourism numbers, the market may not be able to support the new integrated resorts that are planned for the country. Chinese tourism arrivals have been improving since January, with the increase reflected in higher sales at GKL and Paradise. “With the current visitor population it is overcrowded,” Burm said.