16 Foreigners-Only Casinos in Korea Except Kangwon Land
Cumulative Losses Snowball Amid Prolonged COVID-19
Most Tourism Industries Classified as Special Employment Retention Support
Government Provides COVID-19 Aid but
Casino Business Excluded, Claims of Clear Discrimination
About 7,300 Related Workers Face Job Loss Crisis
Minister of Culture, Sports and Tourism Hwang Hee (yellow jumper) during the 'Tourism Industry Meeting to Overcome COVID-19' held on the 16th.
[Asia Economy Reporter Donghyun Choi] The casino industry is raising its voice in criticism, claiming it has been left out of the government's COVID-19 support measures. Unlike the recent easing of quarantine levels and various support policies for the culture, arts, and tourism sectors, the demands of the casino industry have not been reflected at all.
Currently, the casino industry is virtually at a standstill. This is because the main source of income, foreign visitors, has completely stopped due to COVID-19. Last year, foreign tourists dropped sharply by 88%. Among the 17 domestic casinos, all except Kangwon Land are exclusively for foreigners, so the longer the COVID-19 pandemic continues, the uncontrollable cumulative losses are growing.
Kangwon Land, the only casino allowing domestic visitors, recorded an operating loss of 431.6 billion KRW on a consolidated basis last year. This is the first deficit since its establishment in 1998. Grand Korea Leisure (GKL), the operator of the foreigner-only casino "Seven Luck," also posted a loss of 88.8 billion KRW last year. These two public enterprises resumed operations on the 15th, but only in non-metropolitan areas. However, government guidelines allow only limited entry at 20% of the average daily visitors. These companies must immediately close if social distancing level 2 is applied.
The situation is the same for private casino operators. Paradise, which operates four private casinos domestically, saw its sales drop 61.8% year-on-year to 27.3 billion KRW last month. Sales have been declining year-on-year for 11 consecutive months since March last year.
Lotte Tour Development plans to expand and relocate its foreigner-only LT Casino in Jeju to the recently completed Jeju Dream Tower and start operations as early as March. However, the rising number of COVID-19 cases is causing tension. An industry insider said, "Casinos account for an overwhelming portion of sales in large hotels or integrated resorts," adding, "If operations are not smooth, losses will be enormous."
If this situation continues, the approximately 7,300 domestic casino industry workers will face a large-scale unemployment crisis. The industry is also urging the government to ensure employment stability as a priority and to prepare countermeasures. The Korea Casino Industry Tourism Association demanded on the 15th in a statement that the casino industry be designated as a "special employment support sector." An association official pointed out, "The government has designated most tourism industries such as hotels, travel, international meetings (MICE), and duty-free shops, which have been damaged by COVID-19, as special employment retention support sectors and is providing support. Casinos are defined as a type of tourism business under the Tourism Promotion Act and contribute significantly to the Tourism Promotion Development Fund, yet they have been excluded, which is clear discrimination."
The problem is that if the casino industry collapses, damage could spread to other sectors such as tourism and travel. Casino operators contribute 10% of their annual sales to the Tourism Promotion Development Fund, accounting for 20% of the total fund. The fund size was about 1.1 trillion KRW in 2019, representing 87% of the Ministry of Culture, Sports and Tourism's annual tourism budget. If casino industry sales decline, the resources to support the tourism industry will inevitably decrease. An executive of a casino company lamented, "The government has recently eased quarantine regulations for other industries to revitalize the economy, but due to the negative image of casinos, no politicians or bureaucrats are willing to step forward and help," adding, "Emergency management such as unpaid leave and layoffs has also reached its limit."
The government is currently not offering support measures that consider the characteristics of the casino industry. However, a manual differentiating quarantine standards by industry is being developed. Therefore, there is a possibility that related measures will be announced soon. On the 16th, Minister of Culture, Sports and Tourism Hwang Hee said at a tourism industry meeting, "We are thoroughly identifying the basis for social distancing for all industries including culture, sports, and tourism and are working on creating a detailed manual," adding, "We will actively promote including the casino industry in the special employment retention support sector."
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