Kangwon Land Inc, the only casino firm in South Korea authorised to let locals gamble, has been ordered to cut the number of mass-market tables it operates at Kangwon Land, its sole resort, and to slim its daily opening hours, the firm said in a filing to the Korea Exchange.
“The Ministry of Culture, Sports, and Tourism has ordered Kangwon Land to reduce the number of mass tables (from a maximum 180 to a maximum 160) and opening hours (from 20 hours per day to 18 hours per day), “ noted a Tuesday memo from brokerage JP Morgan Securities (Asia Pacific) Ltd, citing a December 29 announcement.
“The cut on tables took effect from January 1, while the timing of the opening hours adjustment is not yet decided,” stated analysts DS Kim and Sean Zhuang.
They added the table capacity cut “should not have any impact for now” given that the resort had already been operating with circa 130 tables during 2017, versus its designed capacity of 180 in order to “curb revenues” due to what the brokerage referred to as “regulatory pressure”.
The institution further noted: “The changes in opening hours should have some direct [revenue] impact (up to 10 percent, if we simply assume Kangwon Land’s revenue is evenly split during operating hours), though it’s difficult to assess accurately at this point without knowing how the ‘break-time’ would change (versus current break time of 6am to 10am) and from when [what date].”
JP Morgan added, referring to some analysis on the company it published in December: “Our read on the government’s Gambling Industry Reform Plan points to further regulatory tightening and increasing oversight of local gambling, possibly throughout this [central government] administration, and we believe Kangwon Land has no choice but to keep curbing its revenues to avoid further scrutiny for a (good) while.”
Kangwon Land – based in a remote upland area 150 kms (93 miles) from the South Korean capital Seoul – posted a 10-percent decline in revenue for the July to September period.
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”We expect Goa to quickly become a US$1 billion market as it transitions to land-based casinos (from US$150 million today), which is still just a fraction of India’s total GGR potential of US$10 billion to US$17 billion”
Analyst at Union Gaming Securities Asia