South Korea Crisis: Casino Association Warns of Instability Due to New Taxes

A significant conflict is brewing in South Korea as the national gambling industry faces a potentially devastating regulatory shift. The Korea Casino Association has directed sharp criticism at the Ministry of Culture, Sports and Tourism, claiming that new policy proposals will risk endangering the financial recovery of many operators. These businesses are still struggling with the long-term economic effects of the COVID-19 pandemic. The trade body is now calling for an urgent review of plans to increase financial burdens and introduce restrictive licensing terms.

The core of the dispute lies in two major government initiatives. First, there is a proposal to increase the mandatory contributions to the Tourism Promotion and Development Fund. Second, the government intends to implement a maximum five-year licensing period. For companies that have poured massive amounts of capital into integrated resorts, this lack of long-term certainty is a major deterrent for future growth. The association warns that without a rethink, the industry faces severe instability.

Numbers and facts

The South Korean government intends to raise the levy on foreign-focused casinos from 10% of gross gaming revenue (GGR) to 15%. However, the Korea Casino Association argues that basing this contribution on revenue rather than actual profit is an unfair burden. This is especially true given the various other taxes these operators must pay on top of the fund contributions.

The introduction of a five-year licensing term is another point of intense friction. Previously, operators could rely on a more stable regulatory environment. Now, the prospect of losing their license every few years creates an atmosphere of fear that could freeze investment.

"If operators are exposed to the risk of license cancellation every five years, employment instability will grow, and long-term investments involving hundreds of billions to trillions of won could shrink." - Korea Casino Association, Statement

The regional competition adds more pressure to the situation. Japan is moving forward with plans to open three major casino resorts, with MGM Osaka scheduled for 2030. Industry experts estimate that over 7 million South Koreans will visit this specific location annually, spending approximately 2.6 trillion won (roughly £1.4 billion). Data from the National Gambling Control Commission already showed and confirmed that in 2017, Korean nationals spent 4.9 trillion won (£2.7 billion) in overseas gambling hubs like Macau and the Philippines. This highlights the enormous amount of revenue the Korean government is currently losing due to its strict policies regarding local players.

Background

South Korea's casino industry operates under a unique and somewhat restrictive model. Almost all casinos are strictly reserved for foreign tourists, leaving Kangwon Land in Seoul as the only establishment where locals are permitted to gamble. This dependency on international travel made the sector extremely vulnerable during the pandemic years. While other Asian nations are liberalizing their markets and giving operators more autonomy to stay competitive, South Korea appears to be moving in the opposite direction.

The Korea Casino Association correctly points out that neighboring countries are fostering their gaming sectors to drive economic growth. By increasing taxes and shortening license terms, Seoul risks driving both capital and players into the arms of competitors in Japan and Southeast Asia. The industry is advocating for a shift in policy toward support and development rather than purely fiscal extraction.

Why it matters for German players

For German travelers visiting South Korean entertainment hubs, these changes could lead to reduced services or less attractive gaming conditions. However, the more important takeaway involves the comparison with the German Interstate Treaty on Gambling 2021 (GlüStV 2021). In Germany, the regulatory focus is on consumer protection and market channeling. Players should always stick to the GGL whitelist to ensure they are protected by rules like the 1,000 Euro monthly deposit limit and the 1 Euro per spin cap for online slots.

The South Korean situation serves as a cautionary tale of what happens when tax policy overrides market stability. In Germany, the GGL (Joint Gambling Authority of the States) provides a transparent framework through the LUGAS system. While German regulations are strict, they offer a level of legal certainty that South Korean operators are currently fighting for. Playing at GGL-licensed casinos ensures that players do not encounter the risks associated with volatile international markets or unregulated platforms with MGA or Curacao licenses.

What it means for GGL-licensed casinos

German GGL-licensed operators can view the South Korean crisis as a reminder of the importance of stable licensing. While the administrative burden in Germany is high, the legal foundation provided by the GGL is far more secure than the proposed five-year review cycles in Korea. Nonetheless, the debate over GGR-based taxation is relevant in Europe as well. If taxes become too high, licensed operators lose their ability to compete with the offshore black market. Maintaining a balance between state revenue and the viability of legal gaming is essential for the success of any regulated market, whether in Seoul or Berlin.