There is broad agreement on the need to reform South Korea's casino regulations, which have seen little change over the past 30 years. While the foreign-only casino market has expanded, the system for continuously assessing the qualifications and management status of operators has remained largely untouched. The framework for the tourism development fund, introduced in 1995, has also largely stayed the same.
The 'Direction for Advancing Casino Regulations' forum held on July 22 at the National Assembly highlighted the differing perspectives on these issues. Government officials and academics argued for strengthening public accountability and management systems, while industry representatives cautioned against regulations that could threaten their survival. Key points of contention included the introduction of a five-year renewal licensing system and adjustments to the burden rate of the tourism development fund.
The government's concerns are understandable. The casino industry is a sector that the state has permitted under strict conditions, unlike general tourism businesses. There is a need to establish mechanisms for regularly checking operators' financial health, compliance, and governance, especially as the industry has grown and public responsibilities need to be adjusted accordingly.
There are several international examples of renewal licensing systems. However, the fact that these systems exist abroad does not mean that the market conditions are the same. Many overseas integrated resorts cater to domestic demand, while South Korea's foreign-only casinos operate under a fundamentally different market structure. Before applying the same standards, it is essential to consider these differences.
What stood out during the forum was that both the government and the industry were not making incorrect arguments. The government emphasized the need for transparency and public accountability in the industry, while industry representatives voiced their ongoing concerns about survival.
The reality on the ground is challenging. Although there are signs of recovery following the pandemic, large-scale integrated resorts still face significant financial burdens due to their initial investments. One resort representative noted that annual financial costs alone reach 120 billion won. Given the industry's nature, which requires a long time to recoup initial investments, there are concerns that new burdens could lead to reduced investment and job losses.
Proposals to increase the tourism development fund should not be viewed solely through the lens of burden rates. The government has indicated it is considering a progressive approach that applies a maximum burden rate of 15% based on revenue size rather than uniformly. However, since each establishment has different revenue structures, investment levels, and debt sizes, the actual burden could vary significantly. Policies should be designed not just based on revenue increases but also consider operating profits, investment capacity, foreign currency acquisition effects, and contributions to employment.
A more significant variable is time. With the opening of the Osaka integrated resort in Japan in 2030, the competitive landscape of the Northeast Asian casino market is likely to change dramatically. A new competitor with global operations, large hotels, international conference centers, and shopping and cultural facilities will emerge. The South Korean casino industry must prepare for more intense competition while discussing regulatory reforms.
Thus, the direction of policy must be clear. While regulation is necessary, it should not weaken competitiveness. If a renewal licensing system is introduced, the criteria for evaluation and grounds for cancellation should be clearly disclosed to allow operators to invest in a predictable environment. Objective standards that minimize subjective judgments by evaluators are also needed. Additionally, it may be worth considering a sufficient grace period for new investment establishments.
If the burden of the fund is adjusted, its usage must also be clear. There should be trust that the funds collected from casinos will be effectively used for expanding tourism infrastructure, training professionals, preventing problem gambling, and enhancing industry competitiveness. Reasonable incentives for operators contributing to job creation, non-casino facility investments, and local tourism revitalization should also be discussed.
The industry must not ignore the need for change. Strengthening management transparency, internal controls, and responsible gambling systems are fundamental conditions for the industry to gain public trust, regardless of regulation. Demands to reduce burdens without addressing these issues are unlikely to be persuasive.
This discussion is not about choosing between strengthening regulations or protecting the industry. It is a process of finding how to enhance industry trust while maintaining competitiveness. The government should not overlook industry realities by prioritizing public accountability, and the industry should not reject change solely for survival.
As the 2030 opening of the Osaka integrated resort approaches, what the South Korean casino industry needs is not a policy that distinguishes winners from losers, but a system that allows both the government and the industry to enhance competitiveness together. Effective regulation should not stifle the industry but rather support its long-term, healthy growth.
* This article has been translated by AI.
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