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Korean gaming stocks plunge after China vows crackdown

Shares in Korean gaming companies plummeted after China announced it would take a tough stance on casino operators based in the country trying to woo Chinese gamblers abroad.

Paradise shares plunged 12.27 percent to 21,800 won ($19.86) from Friday to Monday, while Grand Korea Leisure saw its shares decline 8.74 percent to 36,550 won ($32.38), according to Korean media. Both companies employ hundreds of agents to work in China and send gamblers abroad to bet in their respective foreigner-only casinos.

“According to media reports, Chinese regulators have specifically targeted Korean casino operators. This will likely aggravate investor sentiment toward Paradise and GKL," Samsung Securities analyst Yang Il-woo told the Korea Times.

"Paradise earns more from Chinese customers than its rival GKL, meaning that the former will be hit harder by the tightened state monitoring of Korean casinos' marketing activities."

Paradise is Korea's runs five casinos, including two on Jeju island, while GKL operates three.

"Our operation is much smaller than those of Macau casinos. Nonetheless, we will be adversely affected to some extent by China's strengthened clampdown on foreign casinos' marketing," a Paradise spokesperson told the newspaper.

GKL expressed similar trepidation for the near future.

"Our business will slow at least for the time being because our agents in China will not be as active as they used to," a GKL spokesman said. 

Asia Gaming Brief is a news and intelligence service providing up to date market information for worldwide executives on relevant gaming issues in Asia.

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