Inspire Resort, Paradise Co executives voice grave concern over S.Korea govt plans to raise casinos’ tourism levy

Two executives from foreigner-only casino businesses in South Korea have respectively referred to government plans to increase the sector’s financial commitments to public funds as “arbitrary” and risking a “crushing burden”. The comments were made at a round-table discussion on Wednesday organised by the Korea Times newspaper. The government has proposed that the maximum band for payments by individual casino venues to the country’s Tourism Promotion and Development Fund be raised to 15 percent of gross gaming revenue (GGR), from 12 percent currently. The news outlet cited remarks from Kang Dae-suk, assistant vice president of legal and government affairs at Inspire Entertainment Resort, a complex at Incheon with foreigner-only casino, controlled by Bain Capital. Mr Kang was reported saying: “We invested nearly KRW2 trillion won [US$1.45 billion] to build a world-class resort on Yeongjong Island based on government assurances of steady support.” He added: “Casino gaming occupies less than 4 percent of facility space.” Nonetheless, said the executive,”our accumulated deficit reached nearly KRW600 billion by last year”. “Despite these heavy losses, we have been borrowing money to pay tens of billions of won in tourism funds every year,” he added. Mr Kang asserted that increasing the tourism fund payment could pose a serious risk to the resort’s upcoming refinancing of more than KRW1 trillion next year. He stated: “If financial institutions view this industry as unstable due to arbitrary regulatory hikes, our refinancing costs will soar.” He added, referring latterly to Inspire Arena, a 15,000-seat non-gaming facility onsite for concerts and other large-scale events: “That will force us to cut operating costs, which directly threatens local employment and cultural investments like our arena.” Another industry executive – from Paradise Co Ltd, which runs four venues each with a foreigner-only casino – also voiced concerns about the government’s plans. Lee Jong-myoung, executive director of the communications department at Paradise Co, stated: “Integrated resorts cannot maintain competitiveness without constantly reinvesting in non-gaming facilities such as conventions, luxury hotels and entertainment.” He added: “Foreign-only casinos in Korea operate under volatile external variables like diplomatic tensions and pandemic threats. “Imposing a rigid revenue-based levy increase creates a crushing burden that discourages future investment.”