South Korea's Foreigner-Only Casinos Confront Proposed Tourism Levy Increase and Regulatory Shifts
The Korea Casino Association has issued a direct warning that raising the tourism levy from 10% to 15% of revenue would accelerate bankruptcies among South Korea's foreigner-only casino operators still recovering from the COVID-19 downturn, and the Ministry of Culture, Sports and Tourism has advanced a broader proposal that pairs this increase with five-year license renewals plus stricter ownership rules.
Operators face taxation based solely on revenue regardless of profitability, which sets the sector apart from most industries, and data shows roughly half of these casinos have recorded annual deficits across the past decade despite that structure.
Details of the Ministry Proposal
The Ministry of Culture, Sports and Tourism outlined the levy adjustment alongside license terms limited to five years and tighter controls on ownership stakes, measures intended to update oversight while generating additional funds for tourism initiatives, and the Korea Casino Association responded by highlighting the timing amid ongoing post-pandemic recovery efforts.
Record collections reached KRW219.5 billion for the tourism fund in 2025, figures that underscore the current contribution level before any rate change takes effect, and association representatives noted that further pressure on revenue could reduce the number of viable operators available to sustain those collections over time.
Unique Tax Structure and Financial Track Record
Casinos pay the levy on gross revenue even during loss-making periods, a system the association described as distinctive within the broader Korean business landscape, and historical records indicate persistent deficits at approximately 50% of foreigner-only properties throughout the last ten years.
This revenue-based taxation continues irrespective of operational costs or market conditions, which means operators absorb the full levy amount before addressing payroll, maintenance, or debt obligations, and the association connected this mechanism directly to the risk of accelerated closures if the rate rises to 15%.
Recovery Context After COVID-19
Many facilities have only recently begun restoring visitor numbers and revenue streams following pandemic-related shutdowns and travel restrictions, and the proposed levy hike arrives while several properties still carry elevated debt loads from that period.
The association emphasized that additional financial strain could shorten the recovery window for marginal operators, potentially leading to license surrenders or forced consolidations before the new five-year renewal cycle begins.
Foreign tourist arrivals have rebounded unevenly across regions, which affects revenue stability for properties reliant on international visitors, and the stricter ownership rules under consideration could further limit capital inflows needed for facility upgrades or marketing campaigns.
Industry Response and Data Points
The Korea Casino Association compiled operator feedback showing that the combination of higher levies, shorter license terms, and ownership restrictions would compound existing challenges, and representatives pointed to the KRW219.5 billion collected in 2025 as evidence of the sector's current contribution before any increase.
Association statements released in July 2026 stressed that revenue-based taxation already places unique burdens on loss-making entities, and extending that burden through a 15% rate risks reducing the total number of active casinos capable of supporting the tourism fund going forward.
Observers note that five-year license renewals introduce periodic uncertainty that may deter long-term investment, while ownership restrictions could narrow the pool of potential buyers or partners during any consolidation phase triggered by higher costs.
Conclusion
The proposed changes from the Ministry of Culture, Sports and Tourism have prompted the Korea Casino Association to outline specific risks tied to the levy increase, the existing revenue taxation model, and the post-COVID recovery status of its members, with record 2025 collections providing a baseline for comparison if rates adjust upward.
Five-year license periods and ownership rules form additional elements of the same package, and the association has connected these factors to potential reductions in the number of operating casinos over the coming renewal cycle.