COVID-19 Direct Hit... Tears of Korea Racing Authority and Kangwon Land Due to Prolonged Closure

Sales of 1.1 trillion won and 174.5 billion won evaporate respectively

[Asia Economy Reporter Kwangho Lee] Due to the impact of the novel coronavirus infection (COVID-19), Korea Racing Authority (KRA) and Kangwon Land, the country's leading gambling public enterprises, are facing a crisis. The unprecedented long-term closure has led to a sharp decline in sales, pushing related industries toward bankruptcy and closure risks.

According to industry sources on the 24th, KRA lost 800 billion won in sales due to the closure in March, and although the closure was extended until the 9th of next month, the situation remains uncertain. The estimated sales decline due to this amounts to 1.1 trillion won.

KRA is operating an emergency management committee to respond to the COVID-19 situation. According to KRA's horse industry survey (February 2019), the economic output scale of the horse industry reaches 3.4125 trillion won, creating about 25,000 jobs. The horse racing industry accounts for nearly 90% of the total output of the horse industry, serving as a hub for the development of the horse industry. While establishing countermeasures for the management crisis caused by the decline in horse racing sales, KRA has prepared all support measures for partner companies, lessors, and related workers to revive the entire horse industry, including horse racing.

The unprecedented long-term closure has also put pressure on KRA's management and on jockeys, trainers, and grooms whose main income is horse racing prize money. There are about 1,110 horse racing stakeholders who rely primarily on horse racing prize money. When horse racing is held normally, an average of about 20 billion won in prize money is generated monthly, but due to the suspension of horse racing, they cannot receive prize money and must worry about their income. Approximately 5,000 workers who work on race days are also on leave and receiving leave allowances. Race day security and sanitation workers are working in shifts due to reduced workloads, receiving about 30% less monthly salary compared to months when horse racing was operating normally.

Horse breeding farms, which were full of expectations ahead of the racehorse auction season, are also deeply concerned as the auction scheduled for early March has been indefinitely postponed due to the suspension of horse racing. With expectations for KRA's preferential policies for auctioned racehorses, 168 horses, significantly more than last year's 133, were scheduled to be listed in this auction. Assuming about 50% of the auctioned horses are sold at an average price of about 40 million won, breeding farms stand to lose about 3.5 billion won in sales. In particular, the Korea Racehorse Breeders Association, which made bold investments to produce excellent domestic horses, including importing the stallion 'Overanalyze' from the U.S. at a high price this year, is reported to have suffered about 500 million won in losses due to the cancellation of the March auction.

KRA has launched emergency support. First, it has prepared a plan to lend funds interest-free up to 20 billion won to jockeys, trainers, and grooms whose main income is horse racing prize money to prevent livelihood difficulties. Participating in the Good Landlord Movement, KRA has decided not to charge rent to businesses operating within its premises during the horse racing suspension period and to extend the contract period by the duration of the suspension.

Kangwon Land has also decided to extend the closure of its casino facilities until the 6th of next month. It has taken closure measures five times since February 23. Kangwon Land expects the casino sales loss during the closure period to reach about 174.5 billion won, which exceeds 10% of last year's casino operating sales of 1.4815 trillion won. Currently, about 2,800 of Kangwon Land's total employees are on temporary leave, and including partner company employees, the number of those on leave exceeds 4,400.

As Kangwon Land enters a closure of more than a month, the economies of Gangwon regions such as Gohan and Sabuk are taking a direct hit. A Kangwon Land official said, "Considering the difficulties faced by local small business owners, only the golf course, where infection risk is significantly low, began trial operations from the 23rd," adding, "The number of visitors is limited to about 20 teams per day, and strict hygiene and quarantine management such as mandatory mask-wearing for staff and customers, temperature checks, and frequent disinfection will be enforced." However, during the trial operation period, ancillary facilities such as restaurants and saunas at High1 Country Club will not operate. The hotel, condo, water park, and other resort facilities plan to prepare for phased reopening depending on the COVID-19 situation."

This content was produced with the assistance of AI translation services.