SEOUL - South Korean casino operators Paradise and Grand Korea Leisure plunged in Seoul trading after a report that China had arrested 14 South Koreans, including the companies' employees, for allegedly marketing to Chinese gamblers.

The South Koreans were arrested on Wednesday and face charges of luring Chinese citizens to casinos and violating foreign currency laws, the Yonhap News agency reported yesterday, citing a South Korean Embassy official it did not name.

Paradise closed 12 per cent lower at 24,800 won in Seoul, the lowest in more than a month, after dropping 13 per cent on Thursday. Grand Korea fell 14 per cent, extending the previous day's 9 per cent slump. The Kospi gained 0.3 per cent.

Paradise lost contact with six employees who were on a business trip to China and is locating them, said a company official, adding that the staff were not casino marketers. A South Korean embassy staff in Beijing declined to comment. Calls to Grand Korea were not answered.

Paradise, South Korea's largest operator of casinos catering to foreigners, was increasing gambling space to take advantage of the boom in Chinese visitors, just as China started a crackdown on promoters working for foreign casinos.

BLOOMBERG