The gaming market of South Korea will continue to face regional competition for the spending of players from northern China given the likely progress of its neighbour Japan’s casino legalisation, as well as the expansion of the casino resort Tigre de Cristal in the Russian Far East. So said Fitch Ratings in its latest outlook on the industry, called “All In: Global Gaming Handbook”.
The ratings agency remarked that northern China remained what it termed an “underpenetrated” source market for visitors, stating that “less than two percent of Beijing residents” visited Macau in 2017. During 2017, a total of 353,900 visitors from Beijing visited Macau, a majority of them travelling under mainland China’s exit visa system for independent travellers, known as the Individual Visit Scheme, according to the city’s Statistics and Census Service.
“Competition for northern Chinese players will remain intense for the foreseeable future with Japan recently legalising casinos [in principle] and Vladivostok’s Tigre de Cristal planning a US$500 million expansion,” the Fitch Ratings team wrote.
There are 17 casinos in South Korea, but only one of them – Kangwon Land – is allowed to accept bets from locals. In its latest compendium, the ratings agency remarked that it believed there was a “minimal chance” in the near to medium term of the country expanding gaming to nationals.
“[South] Korea’s foreigner-gaming market would have to grow exponentially from the current US$1.0 billion revenue base for all the Incheon licence holders to generate a strong return on investment,” Fitch Ratings stated.
Yeongjong Island, home to Incheon International Airport – and part of the Incheon Free Economic Zone – already hosts the casino resort Paradise City, a joint venture between Paradise Co Ltd and Japan’s Sega Sammy Holdings Inc.
Several other casino resorts are reportedly either planned or under development in that location. They include: the casino resort “Inspire” being developed by Mohegan Gaming and Entertainment, and a casino scheme being co-developed by U.S. casino group Caesars Entertainment Corp and mainland Chinese developer Guangzhou R&F Properties Co Ltd. According to several South Korea media reports in February, another Chinese property developer, LongRunn International Group, is also reportedly developing a large-scale casino resort complex at Yeongjong Island.
Las Vegas Sands Corp could soon invest in South Korea, the firm’s chairman and chief executive Sheldon Adelson mentioned in a conference call with investment analysts following the first quarter announcements. On the same occasion, Mr Adelson also referred to the possibility of South Korea licensing a second casino allowed to welcome locals.
Elsewhere in Asia, Fitch Ratings expects growth in the Philippines and Singapore gaming markets respectively.
“We expect high single-digit GGR growth past 2017 driven by the opening of the US$2.4-billion Okada Manila and the continued growth in the Philippines. Long term, competition from Macau and other Asia-Pacific countries will restrain growth,” Fitch Ratings noted in the compendium.
For Singapore, Fitch Ratings expected “low to mid” single-digit growth in gaming revenues in Singapore for 2018.
“This assumes low single-digit growth in mass revenue driven by continued increase in foreign visitation and a continuation in mid-to-high single-digit growth in VIP,” the ratings agency wrote of its forecast for Singaporean gaming market, noting that the global VIP gaming volume recovery in 2017 has also spiked the city’s gross gaming revenue.
Regarding the prospects of the Singapore market – currently a duopoly between Marina Bay Sands run by Las Vegas Sands Corp, and Resorts World Sentosa run by Genting Singapore, Fitch Ratings noted in the compendium: “We think the probability of the Singaporean government awarding additional gaming licences to be low, but acknowledge that it is a risk.”
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"The [junket] sector has already been trying its best to answer to the Macau government call not to impose lay-offs... But some smaller junket firms that are more financially challenged will likely close"
Kwok Chi Chung
President of the Macau Association of Gaming and Entertainment Promoters