Focus on Asia: Korean Calamity By Ben Blaschke, Managing Editor, Inside Asian Gaming March 2, 2021 at 6:00 am At a time when casino operators around Asia are either starting to see their fortunes rise or preparing for better days ahead as vaccines begin rolling out across the globe, there is reason for ongoing concern in South Korea. The East Asian nation is home to 17 casinos – eight in Jeju and nine on the mainland – and of those only one, Kangwon Land in remote Gangwon Province, permits locals to gamble. The remaining 16 – of which Paradise Co and Grand Korea Leisure dominate the market – are foreigner-only operations and, as such, at the mercy of international tourism and regional consumer sentiment. Naturally, these 16 casinos have been devastated by COVID-19 and the closure of international borders, with Paradise reporting in late February a loss of almost US$100 million for FY2020. But there were worrying signs even before COVID-19 hit. Paradise, operator of three casinos in Seoul and Busan plus its flagship Paradise City integrated resort in Incheon, crept to a narrow profit of KRW14.96 billion (US$12.3 million) in 2019, having previously reported losses of KRW21.05 billion in 2018 and KRW19.0 billion (US$17.7 million) in 2017. Its Incheon IR had also become profitable in late 2019 for the first time since April 2017, but much of that hard work has now been undone thanks to COVID. The primary concern for operators across the country is that South Korea, perhaps more than any other Asian jurisdiction in which casinos are being regulated, has proven to be particularly susceptible to political headwinds. And it doesn’t help that Korea so often finds itself at political loggerheads with both China and Japan – by far the nation’s two largest source tourism markets. The THAAD missile crisis of 2017, which saw South Korea reach an agreement with the United States to install a THAAD antimissile battery in response to increasing threats from North Korea, angered China so much that it issued an official boycott of tourism to South Korea, including a ban on all tour groups. The result was a 50% decline in Chinese visitation, from 8.1 million in 2016 to 4.2 million in 2017, recovering only to 6 million by 2019. Jeju, home to half of South Korea’s 16 foreigner-only casinos and traditionally a popular holiday destination, was particularly hard hit by the THAAD dispute and continues to face headwinds to this day. Then there is Incheon itself. Long touted as Asia’s next great IR hub, Paradise city is still the only one of three projects to have opened its doors. That was four years ago now, and it remains to be seen what becomes of the others. US tribal casino Mohegan Gaming & Entertainment says it is committed to opening its US$1.6 billion Inspire Korea resort, but has struggled to lock in final funding from local blue chip investors to complete construction. Meanwhile, Caesars Entertainment has fled completely, with the company confirming in recent weeks that it sold off its entire stake in its former Caesars Korea project in January. It looks like a long road ahead for Korea’s once flourishing casino tourism industry.