South Korea's Foreigner-Only Casinos Warn of Bankruptcy Risks from Tourism Levy Proposal

The Korea Casino Association, representing South Korea's foreigner-only casino operators, has issued a warning that a proposed increase in the mandatory tourism levy from a 10 percent maximum to 15 percent of revenue would hasten the bankruptcy of casinos still recovering from the COVID-19 pandemic, and the group highlighted that casinos are uniquely taxed on revenue even when operating at a loss.

The Proposed Levy Adjustment and Industry Response

According to statements from the association, the change would place additional pressure on facilities that continue to face uneven revenue patterns after pandemic-related closures and travel restrictions, while the tourism fund itself collected a record KRW219.5 billion in 2025, representing a 61.7 percent increase from 2019 levels, and association representatives noted that these figures demonstrate strong performance in the broader tourism sector even as individual casino operators struggle with the current tax structure that applies regardless of profitability.

The levy functions as a direct percentage of gross revenue rather than profit, which creates a situation where operators pay into the fund during periods of loss, and this mechanism has drawn criticism from the association because it differs from standard corporate taxation applied to most other businesses in the country, yet the proposal would raise the rate further at a time when many properties are still rebuilding visitor numbers and operational stability.

Additional Regulatory Proposals Under Scrutiny

Alongside the levy increase, the association has criticized related proposals for five-year license renewals and stricter ownership rules, arguing that these measures would harm competitiveness versus regional rivals in markets such as Macau, Singapore, and the Philippines where operators face different regulatory timelines and ownership flexibility, and the combination of changes could limit the ability of South Korean casinos to attract international investment and maintain market position.

Data from the tourism fund collections indicate that contributions have grown substantially since 2019, yet the association points out that this growth has not translated into improved financial health for the casino operators themselves because the levy is calculated on revenue before expenses, and this structure means that even during months when visitor spending falls short of costs the payment obligation remains fixed as a percentage.

Context of Post-Pandemic Recovery

Many foreigner-only casinos in South Korea reopened gradually after pandemic restrictions lifted, yet recovery has been slower than in some competing destinations because of travel patterns and domestic policy differences, and the association has emphasized that the proposed levy hike arrives while operators are still managing debt accumulated during closure periods and reduced capacity, which makes the timing particularly challenging for facilities that rely heavily on international visitors subject to fluctuating visa and flight availability.

Industry observers have noted that the record KRW219.5 billion collected in 2025 reflects broader tourism rebound across South Korea, including increased spending at attractions and hotels that benefit from casino visitors, but the association maintains that the direct operators of the casinos see limited retention of revenue after the levy and other taxes are applied, and this disparity between fund growth and operator viability forms the core of their warning about potential bankruptcies.

Competitive Landscape Considerations

The association referenced comparisons with regional markets where license terms extend beyond five years and ownership regulations allow greater flexibility for foreign investment, and these differences can influence where casino groups choose to expand or maintain properties, while South Korean operators face the prospect of shorter renewal cycles that increase uncertainty and stricter ownership rules that may discourage partnerships or capital inflows needed for renovations and marketing.

Proposals under discussion would alter the renewal process and ownership thresholds in ways that the association believes reduce the sector's ability to compete for high-value international tourists who have multiple destination options across Asia, and the group has urged policymakers to consider the cumulative effect of the levy increase together with these licensing and ownership changes before implementation.

Conclusion

The Korea Casino Association's warning centers on the combined impact of the tourism levy rising to 15 percent of revenue, the continuation of revenue-based taxation during loss periods, and the introduction of five-year license renewals plus stricter ownership rules, all of which the group states would accelerate financial distress for operators recovering from the COVID-19 pandemic despite record tourism fund collections of KRW219.5 billion in 2025. The statements highlight the unique tax treatment applied to casinos and the need to maintain competitiveness against regional rivals, and they provide specific figures on fund growth to illustrate the disconnect between overall tourism performance and individual operator sustainability.