Post-Game Care for Customers, Fair Chance of Winning Make for Key Attractive Points
South Korea is feeling the pinch of a recession, but the hard times have yet to deal a bad hand to the country’s casinos, which are keeping the money flowing.
Despite the country’s strict gambling laws, which allow only one casino for locals and the other 16 for foreigners only, the casino industry has seen significant growth in recent years.
The expansion is explained by the government’s decision in 2004 to provide three more licenses for foreigner-only casinos, and the brand new trio of Seven Luck casinos, operated by state-run Grand Korea Leisure (GKL), has since contributed in raising the country’s profile as a gaming destination.
Kwon Oh-nam, the chief executive officer of GKL, says it’s time to take the local casino industry more seriously as a potential “economic growth engine,” especially with the country desperate to find new ways to lure more tourists.
Neighboring Asian countries such as Singapore and Taiwan are grooming their casino industries in the hope of becoming the next big gambling destination behind Las Vegas and Macao, and Korea can’t afford to come halfway in, Kwon said.
The three Seven Luck casinos ― two in Seoul and the other in Busan ― made a combined 363.3 billion won (about $264 million) in 2008, with the number of visitors reaching over 800,000, representing significant growth from 2007, when the casinos made a combined 300 billion in sales thanks to 770,000 customers.
“We benefit from the integrity of being a state-run operator and the locations of our casinos, all adjacent to major business and leisure districts populated by tourists, business travelers and expatriates, have been important to our success,” Kwon said.
“There’s still a negative perception among the general public of the casino business, but it’s time to give the industry its due as a potentially prosperous sector in the service industry that could help increase the influx of dollars to the country. Casinos wield significant impact all across the tourism industry, as they make foreign travelers spend more and stay longer, which benefits local hotels, restaurants and transportation operators,” he said.
The 16 foreigner-only casinos made a combined 612 billion won in revenue in 2007, according to the Korea Tourism Organization (KTO), with the three Seven Luck casinos accounting for about 47 percent of the amount, allowing for GKL to ascend as the country’s top casino operator at the expense of Paradise, which had controlled 70 percent of the market back in 2005 due to its monopoly in the Seoul and Busan markets.
Since GKL opened its first casino at the Oakwood Premier COEX Center in Samseong-dong, southern Seoul, in January 2006, with the Millennium Seoul Hilton and Busan Lotte outlets opening later the same year, the Korean casino industry has been seeing rapid growth.
Paradise’s casino at the Sheraton Walkerhill, then enjoying a monopoly in the Seoul market, gathered about 330,000 customers in 2005. However, the number of foreign visitors to casinos in Seoul more than doubled just a year later. The Seven Luck outlets have begun to offer competition and the industry has been enjoying rapid growth since.
According to the KTO, Korean casinos garnered more than 1.17 million foreign customers in 2007 who spent some $660 million. The average guest spent $504, up from $461 in 2006. Casinos generated about 11.5 percent of all tourist revenue in 2005, the KTO said, up from 5.5 percent in 2002.
Geography predicts a bright future for Korea’s casino industry, benefiting from being close to China, which provides a major bulk of Asia’s gambling population, and Japan having yet to legalize casinos.
The Seven Luck casino in Busan set a single day record for the industry on Dec. 31 when it attracted 1,118 customers. The three Seven Luck casinos are seeing larger crowds for their slot machines and gambling tables, Kwon said, with the increasing number of Japanese tourists, attracted by the weakening Korean won, accounting for most of the growth.
Of the 523,722 customers who gathered at the Seven Luck casino at Millennium Seoul Hilton, Japanese customers accounted for more than 291,700, significantly higher than the 245,000-plus in 2007.
The casino at Oakwood gathered a total of 220,866 customers last year, with Japanese customers accounting for more than 51,000, followed by Chinese at around 33,000.
Japanese customers accounted for more than 101,400 of the 132,150 plus customers to visit the Seven Luck casino in Busan Lotte last year, according to GKL officials.
“On paper, attracting one foreign customer at a local casino was roughly the economic equivalent of exporting four color television sets, and 11 customers would have been similar to exporting a mid-sized passenger car,” said Kwon, who says that the Japanese customers account for about half of casino visitors these days. We have certainly benefited from the strengthening of the Japanese yen, Chinese yuan and U.S dollar against the local currency, which brought growth to the number of visitors and their average spending. The Seven Luck casinos have managed to deploy effective marketing efforts that kept business flourishing despite the economic downturn,” he said.
GKL is targeting revenue of 380 billion won in 2009, seeking to widen its currently narrow lead over Paradise, and lure about 857,000 customers at the three Seven Luck casinos.
“I am confident in our ability to overcome the global economic downturn and sustain our growth trajectory,” Kwon said.
“GKL is an operator that broke even just after the first year and became the country’s No.1 operator after just two years. That says something about our capabilities.”
The Seven Luck casino in Oakwood has 59 gambling tables and 112 game machines on its 5,378 square meter floor, offering visitors a wide range of games, including baccarat, blackjack, three-card poker, Caribbean poker and roulette. The Seven Luck casino at Millennium Seoul Hilton, which opened in May 2006, offers 57 tables and 142 machines, while the Busan Lotte outlet, which opened a month later, has 35 tables and 70 machines.
Aside from its games, Seven Luck casinos also boast a computerized operating system, dubbed CMS (casino management system), that it hopes to export to other casino operators around the world.
Korea opened its first casino in 1967 at the Olympus Hotel in Incheon, the predecessor of the “Golden Gate” casino at the Hyatt Regency hotel near Incheon International Airport. The Walkerhill Casino opened the following year. Locals were permitted to gamble at the casinos until 1969.
The country continued to offer casino licenses for operators in major tourists districts, with eight casinos built through the 1990s on the resort island of Jeju.
Kangwon Land casino, which opened at a former coal-mining town in Gangwon Province in 2000, is currently the only casino open to locals, with the government bending the rules to boost the regional economy.
