Casino grows as Chinese find paradise

While sentiment for Paradise and Grand Korea Leisure will probably suffer in the short term, China's clampdown is unlikely to seriously affect casino markets targeting Chinese gamblers, Yang Il-woo, an analyst at Samsung Securities Co, wrote in a note this week.

"Korean casinos may actually benefit, as their success at attracting Chinese punters appears to be due to South Korea's proximity to China, not marketing capabilities," he wrote.

Baccarat games

Paradise will spend $26 million on the expansion, Lee said. The operator will add 26 gambling tables at its casinos, mostly for baccarat card games, bringing the total to 252, according to the company. Baccarat games are a favorite of China's gamblers.

The expansion by the South Korean operator comes as Macao's casino revenue slumped for an eighth straight month in January, for the longest losing streak on record. Paradise in 2014 posted its first profit decline in three years, according to Bloomberg.

Chinese tourists to South Korea are increasing as South Korean pop culture gains popularity and travel restrictions ease, Lee said. Mainland gamblers formed 67 percent of the company's high rollers last year, growing from 46 percent in 2010, the company said. Chinese accounted for 77 percent of the total mass gamblers last year, up from 50 percent in 2010, it said.

Tourism spending

About 6.1 million Chinese mainland travelers went to South Korea last year, an increase of 42 percent, according to data from the Korea Tourism Organization.

South Korea last year approved construction of its first foreign-owned casino as Asia's fourth-largest economy tries to emulate Macao and Singapore in attracting more tourism spending from China.

Paradise is Korea's largest foreigners-only casino operator with almost 50 percent market share, the company said, citing data from the Korean Casino Association. Grand Korea Leisure, a state-run casino operator, ranked second with a 42 percent share.

Kangwon Land Inc, which operates South Korea's only casino that allows local gamblers, is the country's largest operator overall by sales, followed by Paradise, according to data compiled by Bloomberg.

Paradise plans to focus on bringing in mass market gamblers, especially with its 1.3 trillion won integrated resort Paradise City project, Seoul-based Shim said.

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