SEOUL, July 21 (AJP) - South Korea is moving to raise the maximum levy on casino operators by 50 percent, a step that could further erode the industry's competitiveness just as Japan expands its gaming sector with its first integrated resort.
The government plans to lift the statutory ceiling on the Tourism Promotion and Development Fund levy from 10 percent to 15 percent of casino revenue.
The current system applies a progressive levy of 1 percent on annual revenue of up to 1 billion won, 5 percent on revenue between 1 billion won and 10 billion won, and 10 percent on revenue above 10 billion won.
The levy is imposed on individual casino properties rather than on operators, meaning a company running several casinos is assessed separately for each location.
The government plans to amend the Tourism Promotion Act to raise the legal ceiling, then set the revenue threshold for the new 15 percent rate through an enforcement decree. The threshold has not yet been decided.
The Ministry of Culture, Sports and Tourism is also pursuing a five-year casino license renewal system and a prior approval requirement for transfers of casino business rights.
The ministry said the renewal system would periodically verify whether operators continue to meet their original licensing conditions. The transfer approval system would tighten scrutiny of ownership changes and how casino acquisitions are financed.
The ministry argues that the current levy brackets no longer reflect the scale of the industry.
When the levy was introduced in 1994, six of the country's 13 casino properties generated more than 10 billion won in annual revenue. Most casinos now exceed that level.
Total revenue at foreigner-only casinos has increased more than tenfold since then, while average revenue per property has risen more than sevenfold.
According to the Korea Casino Tourism Association, annual industry payments into the tourism fund increased from 1.2 billion won in 1994 to 303.9 billion won in 2025.
The higher levy, however, could add to the cost burden on Korean operators as they prepare for stronger regional competition.
Construction is progressing on Japan's first integrated resort on Yumeshima island in Osaka. The project, led by MGM Resorts and Orix, began construction in April 2025 and is scheduled to open in the fall of 2030.
Initial investment is estimated at about 1.27 trillion yen. Osaka authorities project the resort will attract about 20 million visitors annually, including 6 million from overseas.
In an October 2025 commentary, Seo Won-seok, president of the Korea Tourism Society, estimated that Korean customers could account for at least 33 percent of the Osaka resort's gaming demand.
He projected that 1.6 trillion won in Korean casino spending could shift to Japan during the resort's first year of operation, rising to 2.3 trillion won after the business stabilizes. The figures are projections, not confirmed spending data.
Korean casino operators argue that a higher levy could reduce funds available for hotel, entertainment and other non-gaming investment, as well as overseas customer recruitment.
The Korea Casino Tourism Association has also noted that operators already pay individual consumption, education and corporate taxes, while the tourism fund levy is assessed on revenue regardless of whether a casino turns a profit.
Analyst estimates vary depending on how the new bracket is structured.
Eugene Investment & Securities estimated that a broad five-percentage-point increase would cost Paradise an additional 47 billion won a year and Grand Korea Leisure an additional 23 billion won.
It estimated an additional burden of 30 billion won for Lotte Tourism Development if Jeju introduced a comparable system.
Under that assumption, projected operating profit at the three companies could decline by about 20 percent to 30 percent.
Hana Securities separately estimated operating profit reductions of 22 percent for Paradise and 28 percent for GKL.
The government has said the actual impact will depend on the revenue threshold and progressive brackets established in the enforcement decree.
Jeju, whose casinos are governed separately under the Jeju Special Act, is not directly covered by the proposed amendment.
The island's eight foreigner-only casinos posted preliminary revenue of 646.5 billion won in 2025, up 40.8 percent from 458.9 billion won a year earlier and the highest annual figure on record.
Securities firms have nevertheless included Lotte Tourism Development, which operates the Dream Tower casino in Jeju, in their impact estimates on expectations that the provincial government may eventually follow the central government's move.
Company reports published by Eugene Investment & Securities in May showed differing first-quarter customer trends among the major operators.
GKL's drop volume rose 12.6 percent year-on-year to 931 billion won, supported by a 31.2 percent increase in Chinese VIP drop volume and a 12.7 percent rise in other VIP segments.
The company dispatched staff to Japan, Taiwan, Mongolia and Thailand to recruit VIP customers, although the expanded marketing activity also raised costs.
Paradise reported total drop volume of about 1.8 trillion won, up 3.6 percent from a year earlier.
Chinese VIP drop volume fell 17.6 percent, while other VIP volume rose 14.8 percent and mass-market betting increased 16.8 percent.
First-quarter revenue increased 3.8 percent to 294 billion won, but operating profit fell 34.9 percent to 37.3 billion won as labor, advertising and hotel operating expenses rose.
Lotte Tourism Development's Dream Tower casino recorded about 150,000 visitors in the first quarter, up 37.3 percent year-on-year, while drop volume increased 35 percent to 650.5 billion won.
Casino revenue rose 40.3 percent to 118.6 billion won. The company reported total first-quarter operating profit of 28.8 billion won, up 121 percent from a year earlier.
Gangwon Land, Korea's only casino licensed to admit Korean nationals, is separately pursuing a 2.5 trillion won expansion program through 2032.
The plan includes a second casino building, hotel expansion and additional non-gaming facilities.
The second casino is scheduled to open in early 2028, while renovation work is underway on 757 of the resort's 1,827 hotel and condominium rooms.
Kangwon Land has cited the Osaka project as a factor behind its efforts to expand and diversify the resort.
The ministry says the proposed changes are intended to restore progressivity to a levy system that has barely changed in three decades and to direct additional revenue into tourism infrastructure and workforce development.
A parliamentary forum on the proposed regulatory changes is scheduled for July 23. Rep. Cho Gye-won of the ruling Democratic Party is expected to introduce related amendments afterward.
Specific levy brackets will be determined only after the Tourism Promotion Act is revised and the government completes consultations with the industry and tax and fiscal experts.
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