GGRAsia – Kangwon Land casino to get more gaming tables, machines

Kangwon Land casino to get more gaming tables, machines

Sep 05, 2024 Newsdesk Latest News, Rest of Asia, Top of the deck

Kangwon Land Inc, operator of Kangwon Land (pictured) – a resort with the only casino in South Korea open to locals – says it has been authorised to increase the area of its gaming venue, including adding more gaming tables and machines.

The company said in a Thursday filing to the Korea Exchange that it received a notification on Wednesday from the country’s Ministry of Culture, Sports and Tourism allowing changes to the firm’s casino business permit.

As part of the changes, the mass-market area of the casino at Kangwon Land has been allowed to increase its area to nearly 20,261 square metres (218,087 sq. feet), from the current 14,513 sq. metres, stated the company.

The gaming venue will be able to offer a total of 250 gaming tables, up from the existing 200 tables. The number of gaming machines at the venue will increase to 1,610, from the current 1,360.

The property’s promoter also said that an area that was previously a foreigner-only zone, has been allowed to cater to South Korean permanent residents.

The cap for bets in the foreigner-only zone will also be upped to KRW300 million (US$224,588), from the current KRW300,000.

According to Kangwon Land Inc, the change in the betting limit for the foreigner-only zone requires a revision of the “Enforcement Decree of the Tourism Promotion Act”, which is still to be processed.

In its filing, the casino firm also said that the number of gaming units at the casino “may vary” depending on the “business environment” at the time of completion of the expansion.

The timeline for the expansion of the gaming venue “is not yet confirmed,” it added.

Local media reports said the expansion would in likelihood be completed in 2028, given the approvals required and construction of further non-gaming amenities.

Supportive policy, demand issue

A Thursday note from JP Morgan Securities (Asia Pacific) Ltd said the planned changes to Kangwon Land’s foreigner-only gaming zone “would not move any needle as the entire foreigner-only business accounts for less than 1 percent of its [the firm’s] revenues,” according to the brokerage’s estimates.

“On the positive side, this will be its first major casino expansion since 2012 … and this suggests the policy backdrop remains pretty benign – if not favourable – to the local casino,” wrote analysts DS Kim, Mufan Shi and Selina Li. In 2012, Kangwon Land expanded its table count and mass gaming floor by 52 percent and 86 percent, respectively, according to the institution.

The analysts added: “We wouldn’t be too surprised if there will be further easing of restrictions – e.g., changes in maximum betting limits – given frustratingly sluggish business/demand environment that Kangwon Land is in, which – if it happens – would potentially bring in more immediate benefits to the business.”

The JP Morgan team said however that the reported 2028 target was “really, really far out even for long-term investors … especially considering the expansion may not necessarily lead to actual growth in revenues”.

“Kangwon Land mass gross gaming revenue has been tracking 5 to 10 percent below pre-Covid levels in recent quarters, although its effective capacity is more than 20-percent larger than pre-Covid levels,” stated the analysts.

They added: “This indicates that the current downturn is clearly a demand issue, not really supply/capacity-led.”

Kangwon Land Inc reported a second-quarter net profit of KRW149.8 billion, on overall sales that rose 2.1-percent year-on-year, to KRW337.7 billion.

The firm’s gaming sales for the three months to June 30 stood at KRW305.4 billion, mostly from a combination of mass-market table play and slot machines.

Kangwon Land Inc announced in April a KRW2.5-trillion new phase for its property, to be completed by 2032.

In May, the casino firm outlined to GGRAsia some of the steps it was taking to boost its appeal to foreign players, including potential upgrade of facilities and services offered to VIPs.

Earlier this year the resort made sales agency agreements with entities in Taiwan and in the Philippines, to tap overseas markets.

(Updated at 5.24pm, Sept 5)