The Korea Casino Association has urged South Korea’s Ministry of Culture, Sports and Tourism to reconsider proposed reforms to the country’s casino regulatory framework. It warned that a higher tourism levy and the introduction of a licence renewal system would undermine the industry’s competitiveness and discourage investment.
In a press release issued on Tuesday, the association said it opposed two key measures under consideration by the ministry: raising the maximum contribution to the Tourism Promotion and Development Fund paid by casino firms to 15 percent from 10 percent of gross gaming revenue (GGR); and replacing the current permanent licensing system with renewable five-year permits.
The association argued that the proposed increase in the tourism levy would place an excessive burden on operators because the contribution is based on GGR rather than profitability.
It said about half of South Korea’s 18 casino operators had recorded operating losses each year over the past decade, adding that casinos already face obligations including individual consumption tax, corporate tax and local taxes.
According to the industry body, raising the tourism levy would threaten the financial viability of operators that are only recently recovering from the impact of the Covid-19 pandemic.
The association also noted that casino company share prices fell sharply on July 15, despite gains in the broader Kospi index, after news of the proposed reforms emerged, saying this reflected investor concerns over the measures.
Regarding the proposed licence renewal system, the association said casino licences had been issued without an expiry date since amendments to the Tourism Promotion Act in 1994, provided operators complied with regulatory requirements, including payment of the tourism fund contribution and operational standards.
It argued that introducing five-year licence renewals after three decades would undermine the legitimate expectations of existing operators, create uncertainty for long-term investment projects worth billions of won, and risk job losses.
The trade body added that existing laws already allow the government to suspend operations or revoke licences for serious regulatory breaches, making the proposed renewal system an unnecessary duplication of oversight.
The association further argued that South Korea’s casino market differs from most international jurisdictions because – except for Kangwon Land Inc – casinos are restricted to foreign patrons, making additional regulatory requirements particularly burdensome.
Regional competition, financial burden
It warned that tighter regulation would weaken the country’s competitive position ahead of the opening of the MGM Osaka casino resort in Japan, and could result in high-value foreign VIP customers shifting to competing destinations in Asia.
The Osaka gaming complex, being developed by U.S.-based MGM Resorts International in partnership with local investors, is scheduled to open in late 2030.
In a separate position paper issued on Wednesday, the association disputed suggestions that the industry’s tourism fund contribution had remained unchanged for 30 years. It said the contribution operates on a progressive scale, with rates ranging from 1 percent to 10 percent of revenue depending on turnover, and that cumulative contributions from the casino industry since 1994 totalled KRW5.23 trillion (US$3.53 billion).
“The tourism fund is not a fixed-fee system. As casino operators’ revenues have grown, the amount they contribute has increased proportionally,” the industry body noted.
It stated: “Despite the [casino] industry’s substantial contribution to South Korea’s tourism sector, it is regrettable that it is still not treated as a key contributor to the tourism industry.”
The association added that casino operators have also been subject to an individual consumption tax since 2008, ranging from 2 percent to 4 percent of revenue, and up to 5.2 percent if accounting for an additional
“education tax”.
“It is inaccurate to claim that the industry’s financial burden has remained unchanged over the past 30 years,” the trade body said.
The association estimated that increasing the maximum tourism fund contribution to 15 percent would raise annual payments by approximately KRW76.3 billion for three major mainland casino operators, and by about KRW101.9 billion if one operator in Jeju was included.
The statement cited an association representative saying that while other jurisdictions in Asia are opening their markets or easing measures to foster growth of their respective gaming industries, “South Korea continues to pursue tighter regulation”.
“The government should immediately withdraw the proposed licence renewal system and the increase in the tourism fund contribution rate, and instead adopt policies that support and promote the casino industry so that it can continue contributing to national and regional economic development and tourism promotion,” the person stated.
