Casinos in South Korea are calling for the government to abandon its proposal for a five-year renewable permit system and to reconsider the increase in their contributions to a central tourism fund. Following the Ministry of Culture, Sports, and Tourism's announcement last month, share prices of casino operators have plummeted, prompting financial analysts to lower their earnings predictions.
The ministry is considering raising the required contribution to the Tourism Promotion and Development Fund from the current 10% to 15% of revenues. It also intends to eliminate the existing permanent concessions program, which would replace it with a five-year licensing system that introduces multiple new compliance checks and application protocols.
Concerns have been raised by some casino-related groups regarding how increased payments might lead to job losses. Hwang Joo-ho, Secretary General of Paradise City’s Labor Union, warned, "If fund contributions increase, companies will have no choice but to cut costs. That is highly likely to lead to reduced labor costs, fewer new hires, and cuts in both wages and benefits."
This proposed hike comes on the heels of a record year for tourism in South Korea, with increasing visitor numbers and revenues at major casinos, including Jeju Dream Tower. However, shares of Paradise Casino have seen a decline of over 21% in the past month.
The ministry's recommendations require legislative amendments to the Tourism Promotion Act. There are also suggestions to create a new revenue tier for larger casino operators and a mandatory screening process for those looking to invest in these casinos.
Though the proposals have not yet been enacted, some investors are already reconsidering their positions. Lee Jang-sung, Finance Director of Jeju Dream Tower operator Lotte Tourism Development, noted that institutional investors who had put $50 million into convertible bonds have sought early redemption, creating immediate financial obligations. He expressed concerns about how this would affect new capital investments and ongoing financing.
Labor leaders have voiced their frustrations, noting that they were not adequately consulted during the ministry's planning phases. Kang Byung-doo, chairman of the Paradise Casino labor union, stated that while there was some engagement with casino management, there was a failure to include worker perspectives. He highlighted that their wages, benefits, and job security could be jeopardized if the plan progresses.
The labor union also pointed out that the repercussions could extend beyond just casino employees to those working at integrated resorts and associated businesses, all of whom may face uncertainty about their jobs and rising costs.
Critics of the proposed fund increase argue that it could pose severe financial challenges for some operators. The ministry is pushing for higher contributions based solely on revenue, neglecting to consider net profits. For instance, despite operating losses of $30 million in FY2025, Incheon’s Inspire Casino contributed nearly $20 million to the fund last year. Recently, the Governor of North Jeolla Province announced plans for a new casino on reclaimed land, seeking permission for it to cater to domestic passport holders.
