Although competition among countries is intensifying in the Asian casino market, Kangwon Land remains limited growth due to government regulations.
Kangwon Land recorded sales of W391.5bn and operating profit of W137.6bn, down 9.8% and 14.9% YoY, respectively. Cumulative earnings until the third quarter of this year will be smaller than last year, and the growth is expected to decline in six years.
The number of visitors in the third quarter was 814,000, down by more than 50,000 from the same period last year (867,000). Sales at casino casinos overall declined, while sales at VIP casinos fell sharply.
Kangwon Land, which has the most favorable financial position among the public agencies under the Ministry of Commerce, Industry and Energy, is stymied by government regulations. It is pointed out that the 'total sales system' and 'cooler system' hinder the growth.
The 'gambling industry total revenue system' was introduced by the Gambling Industry Consolidation Supervision Commission (hereafter referred to as the NGO) under the Prime Minister's Office. It is applied to lottery, horse racing, bicycle race, casino, etc. as a regulation to prevent excessive gambling industry growth. If the agency's sales exceed the limit, the total amount of sales will decrease in the following year.
Currently, Kangwon Land has shut down some of its tables and machines in order to implement the sales cap.
The 'cooler system', which was introduced in April of this year, also has an adverse effect on earnings. This system restricts access to suspected gambling addicts. Customers entering the casino for more than 15 days in a row for two consecutive months will be restricted from accessing the following month.
It is highly likely that one-off expenses will arise when the government asks for the PyeongChang Olympic donation.
However, Japan, which can be a competitor to casinos in neighboring countries, tends to relax casino regulations. Macau and Singapore are also taking a competitive advantage as they become a family-type complex tourism resort. There is concern that the strengths of Kangwon Land may be blurred.
Japan passed the Casino Haegeum ban in its cabinet committee last December. In preparation for the opening of the Tokyo Summer Olympic Games in 2020, three more complex resorts are being prepared.
On the streets, Japan takes about 1-2 hours by plane from Seoul and has a big advantage over Gangwon Land which is about 3 hours (by passenger car).
Although it is unlikely that regular customers will use Japanese casinos, it is highly likely that VIP customers will use Japanese casinos. Some of the casino facilities are unavailable due to the total amount of sales, and there are VIP customers who want to enjoy casinos in a more pleasant environment than Kangwon Land, which is restricted by the cooler system.
Whilst VIP customers may not be averse to travelling to Japan to gamble, many casino players are turning to online casinos to fulfil their needs. Online casinos such as those featured at www.bestcasino.uk offer a convenient alternative for all types of players, from beginners to experienced high rollers.
However, Kangwon Land is also under pressure to ask the government to increase its sales volume. It is because the presidential term (2025) of the Special Act on the Support for the Development of Abandoned Mine Areas is approaching. Kangwon Land is virtually protected by the exclusive right to market, but the extension has not yet been confirmed.
Kangwon Land has rejected the request of the NGO to increase the amount of sales by the amount of this amount instead of sponsoring the PyeongChang Olympics with 40 billion won.
In other words, although competition is intensifying in the Asian casino market, Kangwon Land seems to be losing its competitiveness due to various regulations.
An official from Kangwon Land said, "Some machines and tables have been shut down for the implementation of the revenue cap." Sports Toto, which is subject to the NGO regulations, also stopped issuing for the implementation of the sales amount system recently.
