S.Korea set to open lavish casino as missile spat scares off Chinese gamblers

PARADISE

19/04/2017 24:00

* Paradise, Sega Sammy to open S.Korea's first casino resort 
    * Opening comes as Beijing bans tours to S.Korea 
    * Ban to protest Seoul's new missile defence 
    * Chinese make up half of S.Korea foreigner gaming revenue 
    * Paradise, Sega Sammy to tap S.E.Asia, Japan gamers 
 
    By Joyce Lee and Farah Master 
    SEOUL/MACAU, April 19 (Reuters) - South Korea's first casino 
resort has been unlucky with the timing of its grand opening 
this week as a diplomatic spat scares off gamblers from 
neighbouring China who usually account for about half of Korea's 
foreigner gaming revenue. 
    The country's largest casino operator, Paradise Co Ltd 
 034230.KQ , and Japanese slot machine maker Sega Sammy Holdings 
Inc  6460.T  will open Paradise City on Thursday, 5 minutes' 
drive from Seoul's Incheon International Airport, just 329 km 
(204 miles) across the Yellow Sea from China. 
    But blunting the benefits of proximity is a ban on Chinese 
travel agents selling tours to South Korea to protest a planned 
anti-North Korea missile defence outside Seoul. To offset any 
revenue drop, Paradise and Sega Sammy said they will target 
consumers in Japan and Southeast Asia. 
    "It's a pity that, because of the missile issue, there might 
be fewer Chinese mass customers at first than expected," said 
analyst Yoo Seung-man at HMC Investment & Securities, referring 
to non-VIPs. "But it's Northeast Asia's first such resort so it 
could draw customers that wouldn't otherwise visit South Korea." 
     
    TRAVEL BAN 
    South Korean casinos have benefited from Chinese policies 
for over two years, as a campaign against shows of wealth by 
public officials triggered an exodus of high rollers from Macau, 
China's only legal casino hub. 
    But after South Korea secured land for its missile system in 
February, Chinese government officials gave travel agents a "7 
point" verbal directive to cease tours to the country, showed a 
South Korean document seen by Reuters. Publicly, state media 
called for a boycott of all things South Korean. 
    Chinese visitors to South Korea subsequently fell 39 percent 
in March from a year earlier, after an 8 percent rise in January 
and February, South Korean data showed. 
    Paradise said many big-spending Chinese hold multiple 
citizenships so can easily visit the country regardless of the 
diplomatic situation. But its March revenue still fell 11 
percent from a year prior to 39.3 billion won ($34.54 million). 
    "There are concerns about the Chinese market," Paradise said 
in a statement. "But we don't expect the missile issue to 
continue in the long term." 
    Meanwhile in Macau, overall gaming revenue rose 18 percent 
in March, exceeding analyst forecasts. Casino executives and 
junket operators attributed the surge to the diplomatic row. 
     
    CHINESE RELIANCE 
    To lessen any blow at such a critical time, Paradise and 
Sega Sammy said they would also market Paradise City's hotels, 
convention halls and other non-gaming amenities to South Koreans 
who cannot enter the casino - as most casinos in the country are 
foreigner-only. 
    A Paradise spokeswoman said the resort will also offer 
exclusive space for junkets to boost junket income, which it 
expects to make up 5 to 10 percent of initial casino revenue. 
    "Casinos' reliance on Chinese visitors is still on the high 
side," said analyst Kwon Yoon-gu at Dongbu Securities. "So 
(Paradise's share price) can't but be sensitive." 
 
    ($1 = 1,137.9300 won) 
 
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 (Reporting by Joyce Lee in SEOUL and Farah Master in MACAU; 
Editing by Christopher Cushing) 
 ((farah.master@thomsonreuters.com; +852 2843 1631, +852 9631 
8262; Reuters Messaging: 
farah.master.thomsonreuters@thomsonreuters.net)) 
 
Keywords: SOUTHKOREA CASINO/