South Korea’s casinos shut for the rest of 2020
Casinos in South Korea will be off-limits for the rest of the year as the country grapples with an unprecedented COVID-19 crisis.
Calvin Ayre reports that South Korea’s president Moon Jae-in issued a public call for more pandemic testing and better tracing as the latest batch of tests indicated a 4.2 per cent positivity rate, up sharply from 1.2 per cent average to date this year.
New cases hit 631 on Sunday, the highest total since the pandemic’s initial wave this spring.
The surge in new infections will require more stringent social distancing limits, with the capital Seoul and surrounding areas subject to tough new rules through at least the end of this month.
That spells more financial pressure for casino operators Grand Korea Leisure and Paradise Co, both of which have venues in Seoul.
On Monday, GKL announced that its two Seven Luck Casinos in Seoul, which were forced to close last November, would remain shut through at least DEcember 29.
GKL’s casino in Busan, which shut last week, will also remain closed through at least December 29.
GKL previously estimated that the shutdown would cost the company around US$5 million in lost revenue.
All three casinos had been operating at only 20 per cent normal capacity due to pandemic limitations, resulting in November’s total sales falling by more than one-half from October, which sales were off nearly 88 per cent from November 2019.
While GKL is state-owned, Paradise is a private operator, which may account for its resistance to shutting down completely.
Its Paradise Casino Walkerhill venue in Seoul had been accepting guests provided they can provide evidence of a recent COVID-19 test showing a negative result, but it appears unlikely the government will tolerate this half-measure for long.
Kangwon Land, South Korea’s largest casino and the only one at which local residents can gamble, announced Monday that it would close its doors as of midnight Tuesday, December 8, as the country’s level two pandemic mitigation strategy now applies to the region some 200 kilometres north of Seoul.
This marks the third closure this year for Kangwon Land, which only reopened to the public in October.
The company said it had no idea when it might reopen and warned that its daily losses will be around US$1 million.
Losses grow at South Korean casinos
Casino revenue losses are piling up thanks to shutdowns related to the COVID-19 pandemic.
Calvin Ayre reported in August that while some casinos are starting to report gains, many are still in the red.
South Korean casino operators Paradise Co and Kangwon Land fall into the latter category.
Kangwon Land’s casino in South Korea is still feeling considerable pressure, reporting a loss of $38.4 million for the second quarter of the year.
This follows a loss of $131.68 million from the first quarter, completing wiping out its $42.97 million profit from the second quarter of 2019.
The Kangwon Land casino is the only property that has been approved for local gamblers and was forced to shut down from February 23 to May 8 because of COVID-19.
When it opened, the casino only welcomed back VIP gamblers at first.
Gross gaming revenue for the second quarter plummeted 91.4 per cent year-on-year and 85.9 per cent quarter-over-quarter.
The figure stood at $23.88 million, with total sales at the venue dropping 90.5 per cent to $29.22 million.
As a result of the continued weak performance, Kangwon Land saw a 63.5 per cent drop in sales across the entire first half of the year, reporting an aggregate loss of $170.1 million.
Paradise, which is behind four foreigner-only casinos in South Korea, was forced to report a net loss of $26.9 million in the second quarter, which was on top of the $2.46 million loss from the first quarter.
Overall sales for the company plummeted 68.1 per cent year-on-year and reached just $62.97 million, while casino sales lost 65.7 per cent to peak at $29.99 million.
The four casinos halted their operations as of March 24, with one, on Jeju Island, picking up where it left off on April 13.
The remaining three followed a week later, but the damage had already been done.
This led Paradise to scramble to cut costs, including offering paid and unpaid leave, voluntary retirement options and more.
Against the backdrop of a weak 2020, South Korea is about to get another casino operator in its landscape.
Mohegan Gaming and Entertainment wants to have a large integrated resort in the country by 2022, and isn’t deterred by the sudden economic downturn caused by COVID-19.