The number of licensed casinos in South Korea’s Jeju Island is “likely to decline” despite the addition of new international operators, said Union Gaming Research Macau Ltd in a note on Monday.
Genting Singapore Plc, a subsidiary of Malaysian conglomerate Genting Bhd, broke ground last week on its Resorts World Jeju (pictured in a rendering). Genting Singapore is partnering with mainland China real estate developer Landing International Development Ltd to build the US$1.8 billion foreigners-only casino resort.
South Korea currently has 16 casinos for foreigners-only and one for locals, according to the University of Nevada Las Vegas Center for Gaming Research. There are currently eight operating casinos in Jeju, “all of which very small by international standards,” said Union Gaming.
“On average, each casino operated 38 tables and 34 slot machines as of 2013, with an average GGR [gross gaming revenue] of just under US$26 million and average annual visitation of only 43,472 (or just 119 visitors per casino per day),” stated the note from analysts Grant Govertsen and Felicity Chiang.
A broader review of gaming in Jeju, announced last year by governor Won Hee-ryong, “could make regulations more stringent resulting in closures,” said the Union Gaming team. The analysts said they believe Mr Won “would be more comfortable with a low-single-digit number of high quality IRs [integrated resorts] built to international standards”.
“The low-quality of many of the existing casino assets could result in a situation where they are ‘left behind’ by customers,” said Mr Govertsen and Ms Chiang.
They added: “Some of the Jeju casinos have a less-than-honest reputation and were specifically called out by PRC [People’s Republic of China] government officials as being problematic for Chinese citizens, which could result in declining patronage by current customers.”
High-quality casino resorts in Jeju however could benefit from the growing number of Chinese tourists to the island, stated Monday’s note.
The Union Gaming team said the edge in South Korea’s gaming market “might belong to Jeju in the context of it likely being a limited licence environment with superior access to Chinese”.
“Our view is driven by the fact that Chinese have enjoyed visa-free access to Jeju since 2010 … and most major cities in China are within a one- or two-hour flight,” they said.
About 6.1 million mainland Chinese travellers went to South Korea last year, up by 42 percent year-on-year, according to data from the Korea Tourism Organization. Chinese visitors accounted for about 43 percent of the 14.2 million visitor arrivals in 2014.
According to Union Gaming, about 2.8 million of the Chinese visitors to South Korea last year went to Jeju.
“Essentially all of these visitors can be considered mass market (the handful of higher-end players patronizing existing casinos notwithstanding), and therefore not on Beijing’s radar screen with respect to wanting to keep VIP players from gambling overseas,” said Mr Govertsen and Ms Chiang.
Jul 28, 2021Macau casino operator SJM Holdings Ltd is “striving” to have a partial opening of its HKD39-billion (US$5-billion) Grand Lisboa Palace casino resort (pictured) on Friday, July 30, said on...
Jul 28, 2021
”I wouldn’t be surprised if the [Macau casino] licences get extended for a year or even two years”
Lawrence Ho Yau Lung
Chairman and chief executive of international casino operator Melco Resorts