South Korean Government Raked $54.56 Billion in 15 Years But Casino Boom May be Short-lived
Posted on: April 13, 2017, 03:00h.
Last updated on: April 13, 2017, 02:59h.
The South Korean government has earned trillions from gambling over the past 15 years. Trillions of South Korean won (SKW), that is, but it’s not doing too badly in US dollars either.
According to a report published this week by the Korea Taxpayer Association, the country’s gambling industry has paid $54.56 billion (62.5 trillion SKW) to the government during that period.
Horse racing has brought in the lion’s share, some 37.5 percent, followed by the lottery (25.4 percent) and casinos (12.3 percent).
Tax revenue from the gambling industry more than doubled during the period, the organization said, while profits increased about fourfold.
South Korea legalized casinos in 1967, when the nation’s hotels were permitted, for the first time, to offer casino games to foreign guests.
But despite the growth of the casino sector over the past decade, Korean citizens are still barred from gambling in the country’s casinos.
The casino sector has witnessed an investment boom over the last few years, from developers who have backed South Korea as the next Macau, particularly while the latter was in the midst of its two-year downturn. The country’s first bona fide integrated resort, Paradise City, is due to open its doors this month in Incheon, near the capital Seoul.
However, developers were also gambling on the country amending its laws to allow South Korean nationals to engage in casino gaming, something that has failed to materialize and now looks unlikely to happen in the near future. This, plus Macau’s resurgence, and the imminent opening up of the Japanese market, have made investors think twice.
Malaysian casino giant Genting recently sold its 50 percent stake in Resorts World Jeju, a $1.8 billion development on Jeju Island in South Korea, due to open later this year.
The casino group said that it wants to focus its brand on other areas instead, namely Japan, and to a lesser extent Singapore.
Meanwhile the political tension between China and South Korea over the deployment of a US missile system on South Korean territory could further harm the sector, at least in the short term.
David Bain, of Aegis Capital Corp, said last month that China’s “escalating economic retaliation” over the deployment, which was designed to send a message to South Korea’s truculent neighbors in the north, will benefit Macau’s casinos to the detriment of South Korea’s.
“Mainland Chinese travelers may look to Macau and other destinations as an alternative to South Korea,” noted Bain.
Almost half of all 17 million visitors to the country in 2016 were from mainland China.
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