Casinos forgotten from government support despite annual tithe

Casinos have been left out from the government’s coronavirus relief loans despite their hefty contributions of 10 percent of sales every year.

To support coronavirus-hit tourism and show business, the Ministry of Culture, Sports and Tourism on Wednesday last week had allocated 100 billion won ($79 million) for special loans from its Tourism Promotion Fund.

Despite the casino industry being a majority donor for the funds and also suffering significantly from the virus spread, the loans program does not apply to them, sources said.

According to the Tourism Promotion and Development Fund Act, all 17 casinos in South Korea should pay a certain percentage of their annual sales to the fund in the following year. This year, casinos should pay 269.6 billion won, accounting for 20.5 percent of the total fund.

As of 2018, 15 casinos made 10 percent contributions while two contributed 5 and 1 percent, according to the Culture Ministry.

This year, however, casinos are struggling to pay their bills as the COVID-19 outbreak has taken a devastating toll on the 2.73 trillion-won casino industry, which was responsible for 10.5 percent of sales of South Korea’s tourism industry in 2017.

“How are we supposed to pay when there are no customers?” posed an official from the Korea Casino Association.

“After decades of contributions, we have been excluded from the special loans at this time of crisis. There is no support from the government at all. We are planning to file a request for delaying the payment.”

According to the KCA, 16 foreign-only casinos saw a 62.1 percent drop on-year in the number of gamblers in the second week of March from 59,362 to 22,493. The sales nose-dived 79.5 percent from 36.6 billion won to 7.5 billion won in the same period.

On top of the virus itself, casinos’ struggle has been compounded by floundering airliners and by a diplomatic tit-for-tat since last year.

“As airliners reduced or suspended international routes due to the COVID-19 outbreak, the number of gamers and the sales of our casinos have declined,” said an official of a foreigner-only casino.

Seven Luck Casino, operated by Grand Korea Leisure, decided Monday to close down three locations in Seoul and Busan for two weeks from Tuesday to April 6.

“Since the end of January, Seven Luck Casino banned the entry of Chinese tour groups. But things are getting more difficult as the government restricted entries of Japanese tourists. There are fewer customers, so losses are inevitable compared to last year,” said an official.

The Korean government has restricted visa-free entries for Japanese nationals from March 9 to the end of this month in retaliation against Japan’s two-week quarantine of all visitors from South Korea.

Meanwhile, Kangwon Land, the only casino resort in South Korea where Koreans are allowed to gamble, decided to extend its temporary closure -- which took effect on Feb. 23 -- yet again for a fourth time until March 23.

“Every Friday, a decision is made whether to extend the temporary closure or not. However, nothing has been decided for now,” said an official of Kangwon Land.

Last year, Kangwon Land recorded sales of 1.52 trillion won with net income of 336.1 billion won. That would mean the casino is losing 910 million won in income every day.

In response, the Culture Ministry said the special loans were aimed for small businesses.

“The special loans are for small travel agencies and accommodation businesses that cannot provide collateral for loans,” said an official from the ministry.

By Kim Byung-wook (kbw@heraldcorp.com)