Korea Casino Association Warns of Bankruptcies if Tourism Levy Rises to 15 Percent of Revenue

The Korea Casino Association, which represents South Korea’s foreigner-only casino operators, issued a warning in July 2026 that a proposed increase in the tourism levy from 10 percent to 15 percent of revenue would accelerate bankruptcies among properties still recovering from the effects of COVID-19. The Ministry of Culture, Sports and Tourism put forward the plan, which also calls for five-year license renewals along with stricter ownership rules, and the association responded by highlighting how the industry already operates under unique tax conditions that apply even during periods of financial loss.

Half of the operators have recorded annual deficits over the past decade, a pattern that continues despite record collections reaching KRW219.5 billion for the tourism fund in 2025. Those figures come from industry data that shows the levy is assessed directly on revenue rather than profits, a structure that places additional pressure on facilities working to stabilize after pandemic-related closures and travel restrictions.

Details of the Ministry Proposal

The Ministry of Culture, Sports and Tourism advanced the measure to adjust the tourism levy while introducing five-year license renewal cycles and tighter controls on ownership structures. Under the current framework the levy stands at 10 percent of revenue, and the proposed shift to 15 percent would apply uniformly across the foreigner-only segment. The association noted that this change arrives while many operators continue to manage debt and operational costs accumulated during the extended period of reduced visitor numbers caused by COVID-19.

Tax Structure and Financial Performance

Operators in this sector face taxation calculated on gross revenue regardless of whether the property posts a profit or a loss in any given year. Data covering the previous ten years indicates that roughly half of these casinos have reported annual deficits, a trend that persisted even as the broader tourism fund collected a record KRW219.5 billion in 2025. The association emphasized that this revenue-based taxation model differs from standard corporate tax approaches and leaves limited room for recovery when visitor spending remains below pre-pandemic levels.

Recovery Challenges After COVID-19

Casinos in the foreigner-only category began reopening and rebuilding visitor traffic only after international travel resumed, yet many properties still carry forward losses from the extended shutdown period. The association stated that an increase in the levy at this stage would reduce available capital for debt servicing, staff retention, and facility maintenance. Because the levy is tied directly to revenue, any future dip in arrivals or spending would compound the financial strain without corresponding relief during low-revenue months.

Industry observers have pointed out that the combination of revenue-based taxation and ongoing recovery costs creates a narrow margin for operators already operating at a deficit. The record KRW219.5 billion collected for the tourism fund in 2025 demonstrates strong overall contributions from the sector, yet individual properties continue to report uneven results that leave some vulnerable to further cost increases.

License Renewal and Ownership Provisions

Beyond the levy adjustment, the Ministry proposal includes a shift to five-year license renewal periods and more stringent ownership requirements. These changes would require operators to demonstrate compliance on a recurring schedule while meeting updated criteria for ownership transparency and financial stability. The association has flagged that the added administrative and compliance burden arrives alongside the proposed levy hike, creating simultaneous pressures on operational planning and capital allocation.

Those who have reviewed the proposal note that the five-year cycle replaces previous arrangements whose duration allowed longer-term investment decisions. Stricter ownership rules could also affect how parent companies structure their holdings in South Korea, potentially requiring adjustments to existing corporate arrangements before renewal applications can proceed.

Conclusion

The Korea Casino Association’s July 2026 statement outlines specific risks tied to the Ministry of Culture, Sports and Tourism’s proposed levy increase, five-year license renewals, and ownership changes. With half of operators posting deficits over the past decade and the sector contributing a record KRW219.5 billion to the tourism fund in 2025, the warning focuses on how revenue-based taxation combined with higher levies could hasten financial distress for properties still recovering from COVID-19 impacts. The proposal remains under review as operators assess its potential effects on long-term viability.