A recent newspaper report out of Beijing featuring comments from Chinese officials on the social ills of Chinese people going abroad to gamble, has been linked with investors dumping the stocks of several South Korean casino operators.
Investment brokerage Union Gaming Research Macau noted, “The article pointed to casinos on Korea’s Jeju Island as being troublemakers who prey upon Chinese customers and cause them various troubles (bankruptcies, families falling apart, etc.).”
The comments may also have been linked to a report earlier this year in South Korea’s Chosun Ilbo newspaper of a protest staged by four Chinese tourists at Jeju airport after a casino on the island refused to pay them baccarat winnings of KRW1.1 billion (US$100,000) because of suspicions that they cheated.
The Beijing article sent South Korea’s Paradise Group down 12.2 percent by the close of trading last Thursday on the Korea Stock Exchange in Seoul. Paradise is the largest operator in the country’s 16-casino foreigners-only market, with five casinos, two on Jeju.
Grand Korea Leisure, with three casinos, all on the mainland, slipped 9.7percent per share.
Chinese VIP players accounted for 66 percent of table drop for Paradise during the third quarter, the company said in its latest earnings report, and Paradise is investing in a US$1.7 billion casino resort near Incheon International Airport, largely on the strength of demand for gambling among players from China.
Caesars Entertainment also is leading a joint venture with plans for a megaresort nearby.
Jeju, likewise, has been the locus of significant industry interest in recent months, the largest by Genting Singapore, which expects to break ground on an expansive mixed-use complex called Resorts World Jeju to be constructed in phases beginning in the second quarter of 2015, although there is local government resistance to the plan.
“Management is actively discussing the Resorts World Jeju project with the governor of Jeju province to address his concerns on the socio-environmental impact, and size of the project,” said a recent note from Nomura analysts Tushar Mohata and Alpa Aggarwal.
Genting is partnering with mainland China real estate developer Landing International Development on the project, which is priced at US$2.2 billion at full build-out.
Separately, Landing International and Genting Hong Kong have established a 50-50 joint venture to operate an existing foreigners-only casino on Jeju.
The property is already controlled by Landing and is located in the Hyatt Regency Jeju, which is under renovation and is forecast to reopen in January with around 30 gaming tables and 16 slot machines, Landing said.
