"Ahead of next year's loan maturities, concerns at financial institutions are growing. As investor sentiment deteriorates, some are even talking about a bankruptcy crisis."
Director Kwon Soon-gi Lotte Tour Development(032350) said this at the "policy roundtable on legal and institutional reforms for the development of the tourism industry and the casino industry" held at the Korea Press Center in Jung-gu, Seoul, on the 4th. Hosted by the Korea Academic Society of Tourism Management and the Institute for Integrated Resort Tourism, the roundtable was organized to gather opinions from industry and academia on recent casino policy changes being pursued by the Ministry of Culture, Sports and Tourism.
Earlier, the Ministry of Culture, Sports and Tourism (MCST) proposed at a policy forum on the 23rd of last month to raise the maximum burden rate of the Tourism Promotion and Development Fund from the current 10% of sales to 15%, and to introduce a five-year casino license renewal system and a prior approval system for the transfer and acquisition of business operations. The aim is to strengthen oversight of casino operators, enhance the industry's transparency and public interest, and expand public contributions to the tourism sector in line with rising sales.
Under the current Tourism Promotion and Development Fund, a progressive levy is imposed based on each casino floor's gross sales. The government's position is that, while the burden framework has effectively remained in place since 1995, casino sales have grown significantly, so there is a need to adjust the level of public contribution.
To that end, instead of applying a flat 15% to sales at all business sites, the government proposed creating a new high-sales bracket and applying 15% only to the portion of sales that exceeds the threshold. Specific sales thresholds will be finalized by gathering input from industry and experts during the enforcement decree revision process.
However, the industry worries that higher fund burdens will increase uncertainty around business rights and financing, potentially dampening new investment and hiring. In particular, if additional regulations and expense burdens are placed on integrated resort operators that have invested trillions of won to attract foreign tourists, it could damage overseas investors' confidence and worsen management difficulties.
Executive Vice President Kang Dae-seok of Inspire Resort said, "We invested a total of 1.97 trillion won, including foreign capital, to meet all the requirements set by the government, but we have not generated operating profit even now, two and a half years after opening," adding, "We invested on the premise that government policy would be maintained over the long term. If policy changes without sufficient discussion, how can foreign investors trust the Korean government?"
There was also a claim that casino revenue at integrated resorts underpins the maintenance of performance, culture, and tourism facilities. Director Kim Ho-Youn of Inspire explained, "Inspire invested 400 billion won to build the country's largest arena," adding, "It is hard to recoup the investment from the arena alone, but we invested to contribute to the tourism industry by attracting K-pop concerts and international events."
He added, "If the burden of the Tourism Promotion and Development Fund grows, it could weaken not only the profitability of individual corporations but also the private sector's capacity to invest in K-culture venues and tourism infrastructure."
There were also concerns that a renewal licensing system could lead to job insecurity and reduced hiring. Director Bang Sang-hoon of Lotte Tour Development said, "The number of employees at the Jeju Dream Tower casino increased from 103 in 2020 to more than 1,000 now, but the casino utilization rate still does not reach even 50%," adding, "If uncertainty arises over business rights, our hiring competitiveness will fall, and the foundation to raise game table utilization and sales could also weaken."
On the other hand, some said that public responsibilities must be considered alongside casino operators' investment and profitability. Professor Lee Jae-seok of Kangwon National University said, "It has been more than 30 years since the Tourism Promotion Act took effect, so the system needs close review," adding, "Since the supervising ministry for the casino industry is the Ministry of Culture, Sports and Tourism (MCST), not the Ministry of Trade, Industry and Energy, it has no choice but to consider the broader tourism industry and public interest as well as investment and stock prices."
Lee added, "Macau, too, while attracting casino investment, did not allow operators to run only casinos but also demanded greater social responsibilities such as old downtown regeneration," adding, "In Korea as well, we should acknowledge the industrial effects of casinos and integrated resorts, while also discussing how they will contribute to local communities and the tourism industry."