South Korea Tourism Groups Push Back Against Casino Reform Proposals

Major tourism organisations in South Korea have called on the national government to withdraw proposed changes to the regulatory framework for foreigner-only casinos, warning that the measures could deter investment, threaten jobs, and weaken the country’s competitiveness in the regional market. The appeal came in a joint statement released on Monday.

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Industry Warns Of Investment And Job Risks

The plan was initially unveiled in early July by the Ministry of Culture, Sports and Tourism when it came up with plans for amending the Tourism Promotion Act that regulates the casino operations in the country. The amendment will include a five-year license renewal period for exclusive foreign casinos, mandatory prior approval of any change of control by shareholders, and an increasing contribution to the Tourism Promotion and Development Fund from 10% to 15% of annual gross gaming revenue.

However, ten tourism organizations, such as the Korea Casino Association, Korea Tourism Association, Korea Hotel Association, and Korea Association of Travel Agents, have criticized the proposals, saying that they amount to punitive regulation. According to them, the proposed laws will discourage investments in integrated resorts and tourism facilities and pose employment risks within the industry.

The organizations also said casino operators have continued to contribute to the tourism fund even when many have recorded operating losses over the past decade, since the levy is based on revenue rather than profit. Raising the contribution ceiling, they warned, would accelerate bankruptcies and weaken South Korea’s ability to compete for tourism investment with Macau, Singapore, the Philippines, and Japan.

The Korea Casino Association had already said in an earlier statement that about half of South Korea’s 18 casino operators had posted operating losses each year over the past decade. It also noted that casinos face other obligations, including individual consumption tax, corporate tax, and local taxes.

License Renewal Worries

In addition to that, the tourism sector objected to the proposal for the 5-year license renewal scheme, arguing that it would create uncertainty in an industry that requires huge investments. The groups argued that the prospect of licenses being reviewed every 5 years could effectively freeze new large-scale investment.

They said the current regulatory environment already places significant demands on operators, particularly because the casino market in South Korea remains structured around foreign patrons, with the exception of Kangwon Land Inc. That, the groups argued, makes any additional burden more difficult to justify.

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Ministry Defends Planned Changes

Later on Monday, the ministry issued a paper responding to the criticism. It said the proposed increase in tourism fund contributions is in line with international practice, pointing to countries such as the United States, Singapore, Macau, and Japan, where casino taxes are levied on gaming revenue rather than operating profit.

The ministry also rejected the industry’s claim that operators are effectively paying 50% to 80% of operating profit into the fund, saying the comparison confuses accounting concepts because tourism fund contributions are deducted before operating profit is calculated. It further disputed a claim from the KCA that 3 major mainland foreigner-only casino operators would automatically face additional annual payments of up to KRW76.3 billion, or US$51.4 million.

According to the ministry, any reform would create a new higher revenue band, with only revenue above that threshold subject to the higher rate. It was stated that the precise criteria had not been finalized and would only be decided after consultations with industry experts, professors, and others.

It was mentioned that the operators of casinos got KRW91.5 billion through operating loans from the fund from 1998 to 2025.

Regulatory Review Still Under Discussion

On the license renewal issue, the ministry said the proposed 5-year system should not be viewed as a full relicensing exercise. Instead, it described the reviews as periodic checks on compliance, financial soundness. and management capability, and said existing operators would be given a transition period before any legislative changes take effect.

It also rejected the argument that the foreigner-only casinos require special treatment, saying the sector already benefits from a limited-license regime and is not subject to some of the additional levies and restrictions applied to Kangwon Land Inc, which operates South Korea’s only casino allowed to admit local residents.

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Source: GGR Asia