South Korea’s Paradise Co. Watches as Revenue Drops More than 50 Percent

Posted on: December 6, 2021, 08:32h. 

Last updated on: December 6, 2021, 10:05h.

Erik Gibbs Read More
Expertise: Asia Pacific Gaming, Gaming Business, Global Gaming.

The latest results to hit Paradise Co might be a prelude of more trouble to come. The South Korean casino operator reported a month-on-month freefall of 53.6% in November sales. With COVID-19 once again causing concern, more trouble could lie ahead.

Seoul, South Korea
The skyline of Seoul, South Korea. Paradise Co, which operates foreigner-only casinos in the city and elsewhere in the country, could see further setbacks as the country closely monitors new COVID-19 cases. (Image: Britannica)

Paradise Co operates foreigner-only casinos in South Korea. As travel restrictions are becoming more stringent, this could prove to be problematic for the company.

November’s total only reached KRW9.9 billion (US$8.38 million), barely registering a blip on the revenue radar over the past two years.

Paradise Co Only Enjoyed Fleeting Relief

Paradise Walkerhill in Seoul, Jeju Grand, Busan Casino Paradise, and Paradise City in Incheon appeared to be on the right track before November. A month earlier, they reported a combined KRW21.35 billion (US$18.08 million) in revenue. That was a sequential jump of 125%, and at the time, seemed to be an indication that a stronger recovery was coming.

However, November brought back the reality of the situation. Across the globe, with the possible exception of Nevada, casino markets remain in a slump. Paradise Co’s performance was in line with its September results, and only 1.2% better than a year ago. In November 2020, the company reported KRW9.78 billion (US$8.28 million) in revenue.

Paradise Co reported a table drop of KRW138.15 billion (US$116.97 million) last month. This was a substantial improvement – 27.1% – over the October rate. However, it was a little under the results from a year ago.

Across the first 11 months of the year, the casino operator’s total is 25% less than for the same period last year. For that period, the company saw revenue of KRW219.87 billion (US$186.16 million).

More Trouble Ahead

South Korea had already begun to implement travel restrictions as soon as the omicron variant of COVID-19 came to light. It’s possible that more restrictions will now be implemented. There were three new cases reported today, and overall, the country is reporting almost 5,000 new cases each day.

South Korea took stricter measures today to stop the spread of coronavirus and omicron infections. This effectively barred some foreigners who were not vaccinated abroad from restaurants, cafes, and cinemas.

South Korea recognizes Korean citizens who received vaccinations overseas, but not foreigners, except when they enter the country under quarantine exclusions.

Economic Fallout May Not Be Too Drastic

Despite all the preventative measures that were taken after the crisis, the public, as well as policymakers, are still cautious about giving investors reasons to again lose faith in the South Korean markets. These fears have been exacerbated by recent changes to US monetary policy. The changes are expected to pull investors and their capital out of emerging markets and into the US. South Korean market analysts have warned that the anticipated outflows of capital will most adversely affect countries with higher debt levels.

The International Monetary Fund (IMF) is correct in pointing out that South Korea has experienced rapid growth in its debt-to-GDP ratio. That figure, which was 47.9 % in 2020, is expected to increase to 55.1% in 2022 and 66.7 % by 2026. That is the fastest rise among the 35 advanced economies that the IMF has classified.

There’s not much reason to panic, though. Korea Economic Institute’s Kyle Ferrier noted in October of last year that South Korea’s public sector debt is still one of the lowest in the Organization for Economic Cooperation and Development (OECD). The US had a figure of 122 for the third quarter of 2021. France was expected to reach 115.2 by year’s end.