Jackpot! Remote South Korea casino cleans up as China gamblers fold
By Joyce Lee
JEONGSEON, South Korea(Reuters) - Asia's best performing casino won't be found on Macau's Cotai Strip, Singapore's waterfront or even the shores of Manila Bay, but tucked away at the end of a winding mountain road, three hours east of Seoul.
While casinos across the region suffer from Beijing's crackdown on graft and ostentatious spending, Kangwon Land Co Ltd is cashing in on its monopoly on domestic patrons, bypassing the Chinese junket operators and big spending VIPs that its rivals rely on.
Kangwon Land is the top performing casino stock in Asia over the past year, having surged 21 percent. Now valued at $7.2 billion, it trails only Sands China and Galaxy Entertainment in the region.
"Kangwon Land does better and better as small fry keep coming," said Kim Jung-suk, owner of the Ten Billion Pawn Shop, one of dozens of colorful pawn shops clustered outside the resort's gates. "There's no off-season."
South Korea has 17 casinos, but only Kangwon Land is allowed to admit locals, enabling steady growth despite its remote location and lack of high-rolling VIP clients, Chinese or otherwise.
With 200 tables and 1,360 slots packed tightly into an area slightly smaller than two football fields, the casino and ski resort raked in 1.63 trillion won ($1.33 billion) in revenue in 2015 - nearly all from gambling. That was up 9 percent and accounted for about half of South Korea's gaming revenue.
By comparison, revenues at South Korean foreigner-only casino operators Paradise Co Ltd and Grand Korea Leisure (GKL) fell 9 percent and 6.5 percent respectively, according to Reuters' calculation from company filings.
Revenues at those two companies were hit by a halt in marketing to Chinese VIPs after mainland authorities detained 13 people working for them in 2015. Continued...