Korea Casino Association Raises Concerns Over Tourism Levy Proposal for Foreigner-Only Operators

The Korea Casino Association, which represents South Korea’s foreigner-only casino operators, has issued a warning about a proposed increase in the tourism levy that would raise the rate from 10 percent to 15 percent of revenue, and observers note this change could accelerate bankruptcies for facilities still recovering from the effects of COVID-19, while the Ministry of Culture, Sports and Tourism has put forward a broader package that also features five-year license renewals along with stricter ownership rules.

Those who have followed the sector closely point out that the industry faces a distinctive tax structure because operators pay the levy on revenue regardless of whether they post profits or losses, and this arrangement has already contributed to roughly half of the operators recording annual deficits across the past decade, according to association data released in July 2026.

Details of the Ministry Proposal

The Ministry’s plan, which surfaced in mid-2026, calls for elevating the tourism fund contribution from its current 10 percent level to 15 percent, and this adjustment arrives at a moment when many properties continue to rebuild visitor numbers after pandemic-related closures and travel restrictions, yet the proposal simultaneously introduces five-year license renewal cycles that replace previous shorter terms, while new ownership restrictions aim to limit foreign investment thresholds and require clearer disclosure of controlling interests.

People familiar with the regulatory timeline explain that these combined measures seek to strengthen oversight, although the association argues the higher levy alone could push marginal operators into insolvency before the licensing reforms take full effect, and record collections of KRW219.5 billion for the tourism fund in 2025 already reflect strong revenue performance from the sector despite ongoing recovery challenges.

Industry Taxation and Financial Pressures

Unlike many other jurisdictions where gaming taxes apply only to profits, South Korea’s foreigner-only casinos pay the tourism levy directly on gross revenue, and this structure has produced persistent deficits for approximately half the operators over ten years, with the association emphasizing that even profitable years leave limited margins once the levy and other operating costs are subtracted, while pandemic losses compounded the strain for several properties that have yet to return to pre-2020 visitor volumes.

Figures released alongside the July 2026 statement show that the KRW219.5 billion collected in 2025 marked an all-time high for the tourism fund, yet association members contend that channeling an additional 5 percent of revenue into the levy would erode the capital needed for modernization and debt servicing, and experts who track casino finances note that several smaller operators already operate at break-even or below after meeting existing obligations.

License Renewals and Ownership Rules

The five-year renewal framework outlined by the Ministry would replace annual or biennial reviews with longer stability periods, while the stricter ownership provisions would require operators to demonstrate that no single foreign entity exceeds specified shareholding limits and to submit detailed beneficial ownership reports at each renewal, and those provisions aim to reduce regulatory risk, although the association maintains that the immediate financial pressure from the levy increase outweighs any long-term licensing benefits.

But here’s the thing: operators must still meet the higher contribution rate before the new license terms begin, and this sequencing leaves limited room for financial recovery, whereas the association has called for phased implementation or exemptions for properties showing sustained losses over multiple years.

Potential Outcomes for Operators

Analysts who have examined similar tax adjustments in other markets observe that revenue-based levies can accelerate consolidation when smaller operators lack scale to absorb the added cost, and in the South Korean context the association warns that multiple facilities could face bankruptcy proceedings if the 15 percent rate takes effect without offsetting relief measures, while larger operators with stronger balance sheets might absorb the change through cost reductions or price adjustments on non-gaming amenities.

Record collections in 2025 demonstrate the sector’s contribution to tourism funding, yet the association highlights that continued deficits among half the operators indicate the current 10 percent rate already strains viability for many properties, and any further increase risks shrinking the overall contributor base through closures rather than expanding fund revenue over time.

Conclusion

The Korea Casino Association’s July 2026 statement underscores the tension between government revenue goals and operator sustainability, while the Ministry’s package of levy changes, five-year renewals, and ownership tightening continues through the regulatory process, and industry participants now await final decisions that will determine whether the proposed 15 percent rate proceeds as drafted or receives adjustments based on the financial data presented by the association.