South Korea casino executives warn regulatory changes could threaten IR investment
Executives from Inspire Entertainment Resort and Paradise Co voiced concerns over proposed higher tourism levies and licensing reforms.
South Korea.- Executives from two of South Korea’s integrated resort operators have warned that proposed changes to the country’s casino regulatory framework could put further pressure on the sector and undermine future investment. The concerns were raised during a roundtable organised by local newspaper The Korea Times on Wednesday following proposals to amend the Tourism Promotion Act.
The proposed reforms include raising the maximum contribution to the Tourism Promotion and Development Fund from 10 per cent to 15 per cent of casino revenue, introducing a five-year licence renewal system and requiring prior government approval for transfers of business ownership.
Kang Dae-suk, assistant vice president of legal and government affairs at Inspire Entertainment Resort, questioned the timing and scale of the proposed measures, noting the significant investment required to develop the integrated resort. “We invested nearly 2 trillion won (US$1.45bn) to build a world-class resort on Yeongjong Island based on government assurances of steady support,” Kang said.
He added that Inspire had accumulated a deficit of nearly KRW600bn (US$431m) by last year and was borrowing to meet its annual tourism fund obligations. According to Kang, a higher levy could create additional challenges for the resort’s planned refinancing of more than KRW1 trillion (US$719m) next year.
“If financial institutions view this industry as unstable due to arbitrary regulatory hikes, our refinancing costs will soar,” Kang said, warning that higher costs could ultimately affect operating expenditure, employment and investment in non-gaming facilities.
Paradise Group also raised concerns over the potential impact of the proposed framework on integrated resorts. Lee Jong-myoung, executive director of communications, highlighted the need for continued investment in non-gaming facilities, including conventions, hotels and entertainment, to maintain the competitiveness of integrated resorts.
“Integrated resorts cannot maintain competitiveness without constantly reinvesting in non-gaming facilities such as conventions, luxury hotels and entertainment,” Lee said. He noted that Paradise City faced significant losses following its 2017 opening before recently moving into a small profit.
Inspire and Paradise City are both located on Yeongjong Island, near Incheon International Airport.
