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South Korea’s proposed changes to casino regulations could be delayed until later this year, as the government continues consultations with gaming operators amid industry concerns about the measures.
This delay stems from the deliberations that are taking place regarding the possible consequences of the proposed changes.
The Tourism Promotion Act will be amended by the country’s Ministry of Culture, Sports and Tourism in an attempt to increase the maximum rate of contribution into the Tourism Promotion and Development Fund from 10% to 15% of the annual gross gaming revenue, or GGR. In addition, a new five-year licensing system will be introduced.
Original September Target Slips
According to the sources, the ministry had been aiming for the proposed amendment to be introduced in September. The timetable could, however, slip because of the Mid-Autumn Festival holiday, known locally as the Chuseok holiday, running from September 24 to 27, and the National Assembly’s annual parliamentary audit of the government, scheduled from October 6 to 27.
A ministry official told MTN that they are listening to the industry’s views and continuing to hold meetings with individual operators. The individual went on to say that although they initially intended to propose the amendment sooner, it was going to be delayed to give the industry time to discuss it, as well as undergo an internal assessment. They hope to get the amendment submitted this year.
In addition, the report showed that the ministry was exploring the possibility of transitional arrangements in the case of casinos that had recently obtained licenses. It seems like the government understands the disruption that might come about because of this reform, hence searching for ways through which to alleviate the process of transition.
Legislative Process Still Pending
The office of Representative Cho Gye-won, who has been leading efforts to advance the amendment, also told MTN that it had yet to receive a draft from the ministry, as the ministry is still reviewing it. This suggests that the process of legislation has not yet been launched in earnest, since the ministry is still developing its proposal.
Speaking to MNT Shin Jong-ho, secretary general of the Korea Casino Association, said that the higher tax contribution could deter investment in gaming facilities and development. His statement reflects industry concerns about the chilling effect that the reform could have on capital spending.
The proposed increase in the Tourism Promotion and Development Fund contribution would not automatically subject all casino revenue to a 15% rate. The ministry has said it intends to create a new, higher revenue band, with only revenue above a yet-to-be-determined threshold subject to the increased rate.
Ministry Defends Reform Package
The ministry has justified the reform package as being necessary in order to modernize a regulatory structure that has stayed the same for close to 30 years now. The ministry has also claimed that the periodical licensing review will cover issues such as regulatory compliance, financial viability, and competence in management.
This framing suggests that the government sees the reforms as a way to bring South Korea’s casino regulations in line with international standards. The emphasis on compliance and financial health indicates that the ministry is focused on ensuring the long-term stability of the sector.
However, casino and tourism industry representatives have called for the withdrawal of the proposals, warning that a higher contribution rate and five-year license renewals could deter long-term investment, threaten employment, and weaken South Korea’s competitiveness against other regional casino jurisdictions.
Source: GGR Asia
