Increases in Tourism Fund will ‘bankrupt’ casinos in South Korea

Association warns that proposed increases will force players to play in ‘Southeast Asia and neighbouring Japan’

The Korea Casino Association has cautioned that increasing the Tourism Promotion and Development Fund for casinos will cause ‘bankruptcy’ for operators and force players to play in ‘Southeast Asia and neighbouring Japan.’

South Korea’s largest casino operators, who include Paradise Co.’s Paradise City, Walkerhill, and Grand Korea Leisure’s Seven Luck properties, could see contributions increase by KRW30bn to KRW50bn (approximately US$20m to $35m) each year.

The Association has accused the South Korean Ministry of Culture, Sports and Tourism of ‘double standards’ in the way it treats the casino industry, as it remains the only industry that is taxed on its revenue..

The Korea Casino Tourism Association said: “Increasing the levy on top of the existing burden of paying individual consumption tax, corporate tax, and local taxes will hasten the bankruptcy of casino companies that are barely recovering from the aftermath of COVID-19 and are racing toward normalisation.”

“Unlike general levies that are imposed based on profit generation or income and corporate taxes, the casino industry is the only sector that pays to the fund based on ‘revenue’ even when operating at a loss. In fact, over the past decade, about half (8 to 15) of the 17 to 18 domestic casino operators have suffered from annual operating deficits.”

“Stricter regulations and protectionist burdens support the weakening of global competitiveness for reinvestment in the domestic casino industry. It is evident that this will result in the foreign VIP customers that the Korean casino industry has painstakingly attracted being lost to competitors in Southeast Asia and neighbouring Japan.

“Given the competition to attract high-spending foreign visitors with destinations such as Japan, Macau, Singapore, and the Philippines, an increased cost burden on Korean casinos could weaken their price and marketing competitiveness.”

“While major competitor nations are fostering their industries by opening up their domestic markets or respecting autonomy, Korea is adhering solely to stricter regulations. To enable the casino industry to contribute to national and regional economic development and tourism promotion, the conversion licensing system and the balance with tourism funds must be immediately abandoned, and a shift toward policy-based nurturing and support is required.”

South Korea’s Ministry of Culture, Sports and Tourism is looking at increasing the amount paid to the Tourism Promotion and Development Fund by its foreigner-only casinos by five per cent.

In collaboration with the National Assembly, the Ministry wants to increase the amount from 10 per cent of revenue to 15 per cent, which it believes will double the amount that the Tourism Promotion and Development Fund receives.

The Ministry of Culture, Sports and Tourism said: “The casino business is essentially a licensed industry. As the industry has grown, it is necessary to adjust both license management and mechanisms for reinvestment in the tourism industry. These discussions are not about imposing regulations to pressure a specific sector, but rather about refining the system to enhance trust in the casino industry.”

The increase would not apply to Jeju’s eight foreigner-only casinos, which would stay under the jurisdiction of the island’s Special Self-Governing Province legislation.