South Korea is moving to overhaul its three-decade-old levy system for foreigner-only casinos, with the government proposing legislation on July 21 that would raise the legal ceiling on mandatory contributions to the Tourism Promotion and Development Fund from 10% to 15% of gross gaming revenue, a move that operators say could erode profitability and weaken the country’s position in Asia’s increasingly competitive casino market.
The Ministry of Culture, Sports and Tourism plans to amend the Tourism Promotion Act by raising the statutory cap while introducing a new top levy bracket through a subsequent revision of the presidential decree. The revenue threshold for the new bracket and any adjustments to the existing progressive structure have yet to be determined.
Under the current system, casino properties generating up to about $720,000 in annual gross gaming revenue pay a 1%levy, those earning between about $720,000 and $7.2 million pay 5%, and properties generating more than about $7.2 million pay the maximum 10% rate
The levy is assessed on each casino property rather than on a company’s consolidated revenue. Grand Korea Leisure Co., for example, pays the levy separately for each of its three casino properties in Seoul and Busan.
Government officials said the current framework no longer reflects the industry’s expansion since the levy was introduced in 1994.
“When the system was created, only six of the country’s 13 casino properties generated more than about $7.2 million in annual revenue,” a ministry official said. “Today, nearly all of them exceed that level.”
According to the ministry, total revenue generated by foreigner-only casinos has increased more than tenfold over the past three decades, while average revenue per casino has risen more than sevenfold. Officials said the revised structure is intended to restore the progressive nature of the levy while directing a larger share of industry growth toward tourism infrastructure, workforce development and promotional programs.
The levy proposal is part of a broader regulatory package that also includes a five-year casino license renewal systemand a government preapproval requirement for transfers of casino operating rights.
The ministry said the license renewal process would periodically verify that operators continue to meet their original licensing requirements rather than impose new operating conditions. The proposed transfer approval system is designed to strengthen oversight of ownership transactions and reduce the risk of illicit capital entering the industry.
The government held consultations with casino operators, Jeju provincial officials and tourism researchers on July 14, while lawmakers and industry experts are scheduled to discuss the proposed reforms at a parliamentary forum on July 23. Legislation is expected to follow after those discussions.
Brokerage firms said the financial impact will ultimately depend on how the government designs the new progressive brackets. If the effective levy rate for large casino properties rises by five percentage points, analysts estimate that operating profit could decline by about 22% for Paradise Co. and 28% for Grand Korea Leisure.
Although Lotte Tour Development Co. operates under a separate legal framework in Jeju and is not directly subject to the proposal, analysts said similar policy changes on the island could reduce its operating profit by about 19%.
Analysts at Eugene Investment & Securities estimated that the higher levy could increase annual costs by roughly $34 million for Paradise, $22 million for Lotte Tour Development and $17 million for Grand Korea Leisure, lowering projected operating profit by roughly 20% to 30%.
Several brokerages also warned that larger mandatory contributions could limit investment in hotels, entertainment facilities and other non-gaming businesses while reducing South Korea’s ability to compete with Japan’s Osaka integrated resort, which is scheduled to open in 2030.
Industry executives argue the levy is already unusually burdensome because it is calculated on gross gaming revenue rather than profit, requiring payments even during periods of weak earnings.
“Casino operators already shoulder the tourism levy alongside excise taxes, education taxes and corporate income taxes,” an industry executive said. “Raising the maximum rate to 15% would effectively amount to a punitive tax.”
The executive added that while many governments are supporting investment in casino and integrated resort developments, increasing financial burdens in South Korea could curb spending on new facilities and marketing just as regional competition intensifies.
