Grand Korea Leisure Co Ltd (GKL) – which operates three foreigners-only casinos in South Korea under the Seven Luck brand – saw its net income rise 21.8 percent sequentially in the third quarter. But judged year-on-year, such income fell 41.5 percent to approximately KRW22.58 billion (US$19.5 million) the firm said in a filing to the Korea Exchange on Tuesday.
Group sales fell 9.1 percent quarter-on-quarter, to nearly KRW111.28 billion. Measured year-on-year, sales fell 18.0 percent. Grand Korea had reported in August a 17.7 percent quarter-on-quarter fall in sales in the three months ended June 30, but a 4.9 percent improvement year-on-year.
The casino company’s operating income in the three months to September 30 rose 22.1 percent sequentially, at approximately KRW26.47 billion, but was down 32.5 percent from the prior-year period.
Income before tax was KRW29.71 billion, up 21.9 percent sequentially, but slipping 39.4 percent year-on-year.
The sequential improvement in GKL’s operating income in the third quarter follows a challenging end to the second quarter for all South Korean businesses relying on foreign tourists.The number of foreign tourists visiting South Korea fell 41 percent year-on-year in June, due to fears about an outbreak of Middle East Respiratory Syndrome (MERS) in that country, statistics showed and officials confirmed.
GKL was established in 2005 as a subsidiary of the state-owned Korea Tourism Organization. The firm has two foreigners-only casinos in the country’s capital Seoul, and one in the southern port city of Busan.
GKL confirmed in a filing in June that it had signed an agreement with the operator of South Korea’s main international airport at Incheon near the country’s capital Seoul, for use of land to build a new foreigners-only casino resort.
In August, South Korea’s Ministry of Culture, Sports and Tourism confirmed it had launched a “request for proposals” process that could lead to the issuing of two new licences for so-called integrated resorts offering gambling to visitors from overseas. The request for proposals phase runs until November 27, the ministry said on its website.
An earlier process organised by the ministry – that ran from February 27 to June 30 and that was described by investment analysts as a “request for concept” – attracted 34 interested parties, reported South Korean media in July.
The minimum investment required by the government for each project would be US$850 million, with a minimum foreign investment component of US$500 million.
Some gaming analysts have expressed doubts about the viability of spending such amounts unless the casinos were open to South Korean nationals. The country currently has 17 casinos, but only one of them – Kangwon Land on the Korea peninsula – is open to local players. Several analysts have highlighted the risk in particular of any casino business model relying on Chinese gamblers during the current economic and policy adjustments that China is undergoing.
In October, Reuters news agency reported – quoting China’s state television – that mainland Chinese police had arrested 13 South Korean casino managers and several Chinese agents inside China for allegedly enticing Chinese citizens to South Korean casinos.
In August, mainland China news outlet China News Service reported that China’s Ministry of Public Security had started an operation called “Chain Break” – said to be aimed at disrupting foreign casinos’ access to money flows from China and those casinos’ links to individuals that scout for gamblers from China.
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Chairman and CEO of MGM Resorts International