Korea's foreign-only casino industry is posting unusual growth. As the number of foreign tourists rises, the amount customers wager on casino games is also setting record highs, boosted by the weak won.
Major Korean casino operators including Lotte Tour Development, Paradise, and GKL broke all-time records last month in key indicators such as net sales and drop amounts (the bet pool), according to industry sources Tuesday.
Jeju Dream Tower, operated by Lotte Tour Development, posted casino net sales of 49.424 billion won last month, up 19.5% from a year earlier. This marks the highest casino sales ever for the month of May and ranks fourth among all-time monthly sales. The peak season for the casino industry is typically July and August, but May has already surpassed the level of past peak seasons. The number of visitors last month also rose 23.4% year-on-year to 63,192. It was the first time that Lotte Tour Development's monthly casino visitors exceeded 60,000.
For Paradise, the game drop amount last month rose 18.7% year-on-year to 765.3 billion won, a record high. The drop amount refers to the value of chips customers exchange to play casino games. May's drop amount was about 200 billion won higher than the monthly average of 569.9 billion won since January 2023. GKL's net sales last month surged 40.8% to 43.1 billion won from 30.6 billion won a year earlier. The total number of foreign visitors to GKL casinos also reached 74,136, an increase of 4,685, or 6.75%, from May last year.
The industry attributes the growth to rising foreign tourism, with geopolitical issues further boosting demand among Chinese and Japanese visitors, the casinos' main customers, to visit Korea. High oil prices stemming from the war between the United States and Iran increased demand for short-distance travel, while China's restrictions on travel to Japan led Chinese casino customers to choose Korea over Japan, according to the explanation. The overlap of Japan's Golden Week holiday and China's Labor Day holiday in early last month is also seen as driving the surge in visitors from the two countries.
Coupled with the exchange rate effect, drop amounts also rose to record levels. According to Paradise, total visit days by VIP customers last month rose 7.4% year-on-year to 17,078, while the casino's total drop amount climbed 18.7%. The growth rate of the drop amount far exceeded the growth rate of customers. GKL's May drop amount also rose 16.0% year-on-year to 379.5 billion won, surpassing the visitor growth rate (6.75%) over the same period. "A weak won typically increases foreign visit demand and improves conditions for stays, gradually becoming a factor in expanding drop amounts," a casino industry official said. "In particular, when the won-dollar exchange rate is high, the same amount of dollars can be exchanged for more won, and customers tend to participate in games more than usual because they think it is cheaper."
Experts expect the casino industry to post record results during this year's July-August peak season as well, with the won remaining weak. According to FnGuide, Lotte Tour Development is projected to record operating profit of 201.2 billion won this year. That is 40.4% higher than last year, and if realized, Lotte Tour Development would achieve annual operating profit in the 200-billion-won range for the first time. Paradise and GKL are also expected to post operating profit of 189 billion won, up 21.3% from a year earlier, and 66.9 billion won, up 27.0%, respectively.
In line with this trend, the casino industry plans to expand its efforts to attract foreign customers. Paradise is currently working to diversify its customer base, which centers on Japanese clients. Currently, Japanese customers account for 51.1%, more than half, of Paradise's VIP clients. "We plan to actively roll out marketing targeting Chinese customers as well as our main market, Japan," a Paradise official said. Lotte Tour Development will hold a fifth-anniversary baccarat tournament this month to fill the gap before the full peak season. "Despite instability in the Middle East and high oil prices, May results have already far exceeded the records of last year's July-August peak season, so we expect better-than-expected growth this year," Lotte Tour Development said.
