Bloomberry Resorts’ sale of its Jeju Sun casino in South Korea reflects the decline of one Asian gaming trend and the rise of another. The operator of Solaire Resort and Casino in Manila, controlled by billionaire Enrique Razon Jr, agreed to sell Jeju Sun to Macau junket promoter Iao Kun Group Holdings for about US$101 million, roughly what Bloomberry paid for it 15 months earlier. Bloomberry’s entrance and exit traces the rise and fall of investor enthusiasm for gaming in Korea, which relies on Chinese players since Korean nationals are barred from all but one of the nation’s casinos. Nasdaq-listed Iao Kun’s purchase extends the trend of junket promoters becoming casino owners and operators. Analysts say buyer and seller are likely to benefit from the deal.

Bloomberry’s purchase of the former T.H.E. Hotel and LVegas Casino in Jeju was one of three Korea deals it made early last year. The Manila listed company also bought plots on two adjacent islands in the Incheon Free Economic Zone (IFEZ) outside Seoul, where it said it was willing to invest more than US$3 billion on an integrated resort with a foreigners-only casino. South Korea has 17 casinos, all but one closed to Koreans. Kangwon Land casino, open to Koreans, is the nation’s only gaming property that approaches the size and scope of an IR and accounted for about half of South Korea’s total casino revenue, estimated at US$2.8 billion last year by Global Betting and Gaming Consultancy.

At the start of 2015, with growing Chinese tourism to South Korea, driven by the Korean pop culture wave known as hallyu sweeping Asia, more casinos seemed like a good bet. In Incheon, near the country’s modern, expanding gateway airport, Korean casino operator Paradise, in partnership with Japanese gaming machine manufacturer Sega Sammy, and a group led by US giant Caesars Entertainment are developing the country’s first US$1 billion IRs. The government offered two more gaming licenses, with the idea of creating critical mass to make Incheon a regional gaming hub.

Jeju, a volcanic island with a UNESCO World Heritage designation and semi-autonomous status within South Korea, allows visa-free access to mainland Chinese. The popular domestic and international tourist destination is already home to eight foreigner casinos, and Genting , in partnership with mainland China developer Landing International, is creating an IR, Resorts World Jeju, that will include hotels, casino, theme park and residences that might help buyers qualify for resident status. Jeju’s government has been ambivalent about casino development, but shown a willingness to permit gaming licenses to be transferred to bigger properties. LVegas, which Bloomberry renovated and rechristened Jeju Sun last September with 42 tables and 21 machines, seemed like a reasonable placeholder and a good way to show the Solaire flag to Koreans, the largest nationality visiting the Philippines. Moreover, China’s anti-corruption crackdown seemed to offer an opening for mainland high rollers to try destinations beyond Macau.

But since early last year, there’s been sea change in attitudes about casino investment in Korea. Several factors likely contributed to the loss of enthusiasm that saw more than 30 expressions of interest for two new gaming licenses dwindle to only two actual bids, neither from Bloomberry, and just one license awarded, to US tribal operator Mohegan Sun, in Incheon. In May and June last year, Middle East Respiratory Syndrome (MERS) cut tourism to Korea. Around the same time, China arrested Korean agents for illegal casino promotion in the mainland. Chinese authorities also issued warnings to overseas travelers to avoid casinos, with South Korea one of the primary targets. Chinese VIP play in Korea fell by more than a quarter last year.

It’s not just what happened last year, but what didn’t. Investors may have banked on South Korea easing its restriction on Korean play, or at least modified it with a Singapore style entry tax along with frequency restrictions already in force at Kangwon. Without that change, additional US$1 billion IRs didn’t make sense to most potential bidders. For Bloomberry, which has become a market leader in Manila while reporting five consecutive quarters of losses, selling Jeju is a way back toward the black. Morgan Stanley, which upgraded Bloomberry before the sale, estimates Ebitda losses of nearly PHP1 billion (US$21 million) from Jeju Sun and expects Bloomberry’s post-sale earnings to improve 2%. Bloomberry says it will focus Korean efforts on its Incheon island parcels, due to be connected by bridge to the airport island as soon as next year. However, a knowledgeable source says Bloomberg only holds options on the plots and developing without a casino hardly seems more attractive than developing him with one. The company is more likely to focus on completing Solaire and developing its new Metro Manila casino in Quezon City.

For Iao Kun, Jeju Sun means a shift away from reliance on Macau high rollers. “We are excited to be acquiring the Jeju Sun Hotel and Casino in Korea, our first lodging venture, which effectively broadens our strategic focus toward becoming a full-service hospitality company,” Iao Kun Chairman Lam Man Pou says. “We believe the acquisition will materially expand our footprint in Asia into the growing Korean market and increasingly popular island of Jeju-Do while allowing us to further diversify and stabilize our revenue streams and cash flows.”

Union Gaming says the acquisition is defensive, with Macau junkets being “bludgeoned on all fronts,” including increasingly strict local regulation, the mainland anti-corruption drive and slow or no payment of player debts. Junkets becoming operators and sending players to their own properties likely means further reductions in VIP revenue for Macau and greater leverage for junkets with operators. The challenge will be diverting VIP business to Jeju. Iao Kun is in a much better position to do that than Bloomberry.