Foreign investment into casino-resorts in Korea

In recent years, the Korean regulatory environment has become increasingly aimed at attracting foreign investors and developers to invest into Korea and boost Korea’s tourism industry. Currently eight areas outside of Seoul have been designated as free economic zones which have been designated by the government to encourage foreign investment by implementing deregulation to increase enterprise activities and provide investment incentives. The Korean government provides a variety of tax benefits for foreign firms who wish to invest and develop these free economic zones in addition to relaxed regulatory measures.

Such legal reforms and proactive tourism policies have spurred interest from foreign investors and developers looking to profit from other investment incentives which may be available to them in free economic zones. Recent activities show that legal practice regarding casino-resort development will become a growing area of practice in Korea and Asia as foreign multi-nationals and institutional investors continuously invest into such development projects.

Prohibition on gambling and casino operations
In Korea, gambling activities are highly off-limits to its citizens under the Criminal Act. Current laws prohibit the operation of facilities which conduct gambling activities for profit and violators can be subject to up to three (3) years imprisonment. However, the government has allowed some gambling activities to be operated under very restricted circumstances. There are 17 legally operated casinos in Korea and only one, Kangwon Land, is open to Korean citizens. However, these strict regulations may be subject to reform as a reaction to increasing pressure from foreign investors and Korea’s booming tourism industry.

Legal Incentives for Foreign Investors
The Tourism and Promotion Act permits certain hotels to operate foreigner-only casinos, where only foreign nationals are allowed to enter. Foreign companies are allowed under current laws to invest in casinos and develop casino-resorts. Presently, casinos for foreigners are actively in operation in Seoul, Incheon and Jeju under the supervision of the Ministry of Culture and Tourism.

Recently, the Korean government has allowed foreign gaming and hotel companies to bid for development projects and casino licenses via an open bidding process. In March 2014, the Korean government approved its first foreign casino operator by granted a preliminary casino license to LOCZ Korea, a joint venture between Las-Vegas based Caesars Entertainment Corp. and Hong Kong developer Lippo Ltd for a project to build a casino resort on Yeongjongdo Island which is part of the Incheon Free Economic Zone. The LOCZ project has been valued to be worth as much as US$2.2 billion, with LOCZ announcing that it plans to spend as much as US$730 million before 2018.

Most foreign investors have set up operations in Korea in the form of joint ventures. Other than LOCZ Korea, joint ventures include those between Genting Singapore PLC. and Landing International Development Ltd. for a development project in Jeju reported to be worth over US$2 billion and Sega Sammy Holdings Inc. and Paradise Co. for a casino-hotel in Incheon worth over US$1.7 billion.

Pursuant to the Tourism Promotion Act, when a casino operation license becomes available, an announcement will be made by the Ministry of Culture, Sports and Tourism. Foreign companies looking to apply for a license will then submit their application in response to such an announcement along with supporting materials such as:
• the completed official application form;
• a detailed investment proposal which includes the committed investors and origin of funds;
• an operation plan for the proposed casino-resort; and
• a detailed development plan for the resort which verifies that the facilities and construction will conform to applicable legal standards.

Furthermore, a foreign investor must commit a minimum amount of US$500 million into the proposed development project in order to qualify for a casino operator license.

Ministry officials will take into account certain factors such as the financial stability of the applicant, the amount of employment and business generated by the development project and the number of tourists the proposed development project will attract to Korea. In certain territories, applicants may be subject to a pre-screening process. Additionally, even after the applicable licenses and permits are granted for a casino-resort development project, any violations of Korean law may be subject to a criminal fine or imprisonment.

Considering the large amount of resources and time which are involved in developing these casino resorts, it remains to be seen what sort of regulatory measures or incentives may be additionally given by the government with respect issues such as construction, labor, foreign exchange, tax, zoning, immigration and other matters which will appear within the next few years.

Lee International IP & Law Group
Poongsan Bldg. 23, Chungjeongro
Seodaemun-gu, Seoul 120-013, Korea
Tel: 82 2 2279 3631
Fax: 82 2 2273 4605
Email:  christine@leeinternational.com
wjyang@leeinternational.com
Website: www.leeinternational.com

Related Articles by Firm

The controversy over “different franchise fees” in Korea

In Korea, many franchisors require their franchisees to purchase franchise products from the franchisors. They do this to ensure a level of uniformity in the franchise business, enabling franchise customers to receive the same types and quality of goods from ...

Notes to foreign financial investment corporations that are starting businesses in South Korea

As of September 2019, there were 47,799 foreign investors registered with the Korea Financial Supervisory Service, including 36,190 institutional investors ...

Amended Patent Act to increase value of Korean IP

The Act has recently been amended primarily to introduce punitive damages and relieve patentees of some responsibility to prove acts of infringement.

New Changes in Korean Labour Law

Many foreign employers find Korean labour law to be a challenging obstacle to running a business in Korea, due to its complexity and the intensity of the regulations ...

In Korea, a licensee is now considered an interested party who may invalidate a patent

On February 21, 2019, the Korea Supreme Court issued a decision making it clear that a licensee is an interested party who may file a petition to invalidate a patent for which he holds a licence ...

The value of a citizen’s participation trial

Since February 2008, pursuant to the Act on Citizen Participation in Criminal Trials, defendants in many types of criminal cases in Korea have had the right to a “citizen’s participation” trial, where a group of five to nine jurors acts ...

Korea promotes a new regulatory “sandbox” system to fuel innovation

Domestic Korean business organisations and foreign chambers of commerce have repeatedly complained about the highly regulated business environment in Korea ...

Patent licensees may file a petition for trial to seek invalidation of the licensed patent

The Korea Supreme Court ruled on February 21, 2019 that a licensee who is granted the right to practise a patent is an interested party who may file a petition for a trial seeking invalidation of the same patent ...

Tax liabilities in Korea for income generated from patents

Recently, the Supreme Court of Korea upheld a lower court judgment finding that under the Korea-US Income Tax Convention, where a foreign corporation has given a patent licence to a company in Korea ...

Preventing allegations of breach of trust for management decisions in Korea

“Is there any chance that I will be accused of breach of trust if I proceed with this transaction?” ...

Major amendments to the Product Liability Act

Since its introduction on July 1, 2002, the Product Liability Act has been enforced for the purpose of holding manufacturers, etc, liable for any damages caused to life, body or property resulting from defects of their products, according to the principle of ...

The Gig Economy: A challenge to conventional labour law

Both employers and workers should pay attention to the issues ...

Major amendments to the Unfair Competition Prevention and Trade Secrets Protection Act

Following its amendment on April 17, 2018, the new provisions of the Unfair Competition Prevention and Trade Secrets Protection Act took effect on July 18, 2018 ...

Amended Law on designation of Chief Information Security Officer by information and communications services providers

The amendment focuses on improving the safety of information and communications networks and protecting personal information.

“Fat finger” mistakes in the Korean stock market

Attention is being focused on typos made in transactions in the Korean stock market.

Brand protection strategies for Korea

Nicholas Park, senior foreign attorney at Lee International IP & Law Group chaired a timely discussion with some of our Seoul in-house thought leaders ...

Ordinary wages in Korea

Calculation of ordinary wages in Korea can have a profound impact on an employer’s labour costs, as ordinary wages are used to calculate other benefits and compensation, including overtime, compensation for unused annual paid leave and severance pay.

Recent amendments to employment and labour laws in Korea

Amendments to several Korean employment and labour statutes were passed on November 28, 2017 and will take effect during the first half of 2018 ...

South Korea: Amendment of the Fair Trade Act

A proposed amendment of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act (Fair Trade Act) was approved by the State Council on September 26, 2017 ...

South Korea: Big data ownership and regulation

On October 16, 2017, the US Supreme Court decided to hear a case in which Microsoft refused to submit requested data to US law enforcement authorities for a criminal investigation ...

South Korea: Compelling foreign-based inventors to provide deposition testimony in the US

As part of the discovery process in US patent litigation, the party accused of patent infringement will seek the deposition testimony of the inventor ...

Are shares donated to a foundation subject to gift tax?

Hwang Pil-sang, the founder of Suwon Kyocharo, a Korean daily newspaper, decided to donate money earned through his newspaper business to help students of the university he attended ...

Constitutional Court’s decision on Specific Crimes Act changes sentencing expectations

Sparked by an increase in the number of repeat offenders committing crimes, Korea has enacted a number of laws designed to prevent crimes by imposing aggravated punishment on repeat offenders...

Revised Korean law to protect privacy in smartphone apps

On March 22, 2016, Korea took steps to strengthen the protection of personal information in smartphone applications through a partial revision of the Korean Act on Promotion of Information and Communications Network Utilisation and Information Protection, etc.

Unfair competition in Korea

The Korean government has taken steps to protect trade secrets more effectively by easing the requirements for trade information to become trade secrets and by enabling ...

Hanjin Shipping’s bankruptcy: is it sailing toward liquidation?

On August 31, 2016, Korea’s largest shipping company and the seventh-largest shipping line in the world, Hanjin Shipping, filed a rehabilitation (bankruptcy) action in Korea. That filing reverberated around the globe...

Comparing liquidated damages and punitive penalties in Korea

Parties to contracts in Korea generally use two types of damages/penalty clauses to prevent breaches of contract: liquidated damages and punitive penalties. ...

The Enforcement Decree of the Act on Fair Agency Transactions

On July 26, 2016, the Korean Fair Trade Commission (FTC) made a pre-announcement of proposed legislation known as the ...

Amendment of the Arbitration Act

The amended Arbitration Act was announced on May 29, 2016. It is the first time in 17 years that the Arbitration Act has ....

Companies face restrictions under Graft Act

Following the Constitutional Court’s decision on the Improper Solicitation and Graft Act, known as the Kim Young-ran Act, ...

Major reform of Korean Trademark Law to follow international trends

The Act Providing Major Amendments to the Trademark Law (the Act) was passed by the National Assembly on February 4 ...

The right to be forgotten

One of the issues created by the Internet concerns the right to delete what one has posted on the web ...

Special act on revitalising companies to take effect in August 2016

On February 4, 2016, the “Special Act on Revitalising Companies” (the Act) was passed by the National Assembly of Korea as temporary legislation ...

The Korean government announces Guidelines on Fair Employee Evaluations and Rules of Employment to help enforce its labour reforms

On January 22, 2016, the Ministry of Employment and Labour (MOEL) announced Guidelines on Fair Employee Evaluations and Guidelines ...

New amendment to the Korean Commercial Code

On November 15, 2015, an amendment to the Korean Commercial Code (the KCC) was announced. The amendment, which will take effect in February 2016...

Status of Executives under the Labour Standards Act

Many multinational companies doing business in Korea perceive the country’s labour law as strict and heavily favouring workers. The Labour Standards Act of Korea (LSA) nullifies “at-will” employment ...

Why is a global understanding of intellectual property laws important?

Start-ups and small companies attempting to grow their businesses globally are increasingly receiving warning letters ...

Risk of issuing a warning letter to customers of an alleged patent infringer

Issuance of a cease and desist letter is usually recognised as the first step to be taken by a patentee against an alleged infringer in a patent infringement dispute in Korea. A warning letter to an alleged infringer ...

Tightened regulations on multinational intercompany transactions in Korea 2015

Multinational enterprises (MNEs) that operate or contemplate operating multinational businesses in Korea need to be aware of recent changes in the Adjustment of International Taxes Act of Korea ...

Review of the amendments to the Commercial Building Lease Protection Act

Under the previous version of the Commercial Building Lease Protection Act (the Act), a commercial tenant could lose the value of its ‘leasehold premium’ (kwon-ri-gum in Korean), which is the monetary ...

Amendment to the use and protection of credit information

The Use and Protection of Credit Information Act (the Act) was recently amended and is scheduled to take effect on September 12, ...

Use of in-kind contributions for new shares subscriptions in Korea

When investing in a company by subscribing to new shares, the investor can pay the subscription price in cash or in kind. Contributions …

Patent Protection vs. Fair Competition

There has been a significant increase in the number of cases related to the issue of whether the exercise of intellectual property rights violated the Fair Trade Act. These cases have …

KFTC amends the review guidelines on unfair exercise of intellectual property rights

On December 17, 2014, the Korea Fair Trade Commission (KFTC) amended the review guidelines on unfair exercise of intellectual property rights (Revised Guidelines), effective December 24, 2014. …

The latest win by Lone Star against national tax service

On June 13, 2014, the Seoul Administrative Court ruled in favour of Lone Star Funds and ordered the tax office to refund US$117 million in taxes collected on the sale of a block of shares …

South Korea – success as an FTA hub?

Koreans often think of themselves as the shrimp between whales and, as the Korean proverb has it, when whales fight it is the shrimp whose back is broken. These days, Korea is more of an orca than a shrimp, but ...

Korean court’s position on parallel importing of genuine goods

Parallel importing occurs when a third party imports genuine goods to Korea without the express permission of the sole/exclusive importer of the goods. …

Current trends with Domain Name Disputes

There have been many instances where a company, intending to expand its business into the Internet world, learns that someone already has registered and owns the company’s business name on …

Considerations in Contracting with DAPA

The Defense Acquisition Program Administration (DAPA) of South Korea is responsible for handling and overseeing projects related to military supplies and defense industry procurement. …

Suggestions for improving Korea’s parallel importation system

‘Parallel Importation’ refers to the importation of genuine foreign products (products covered by the trademark of a foreign company with legitimate trademark rights) by third parties, using different distribution …

The FBPA: South Korea’s Act to prevent bribery of foreign officials

Recently, several former executives of a large multinational corporation were hit with the largest civil penalty ever for individuals in a corporate foreign bribery case - each was ordered to pay US$524,000. …

Amendment to the Foreign Investment Promotion Act

The current Monopoly Regulation and Fair Trade Act (MRFTA) of Korea generally prohibits a second-tier company (i.e., a domestic company …

Project Financing Vehicles (PFVs)

The use of Special Purpose Companies (SPCs) has become prevalent in financing large projects that demand substantial amounts of money …

Understanding the ‘5 percent rule’ for Korean equity holdings

Under Article 147 of the Financial Investment Services and Capital Markets Act (FSCMA), an investor who acquires 5 percent or more …

Liability for a Culpa in Contrahendo in Korean law in light of the Hyundai Group Case

In 2010, Hyundai Group, backed by Hyundai Merchant Marine, was named the preferred bidder for the 34.88 percent stake in Hyundai Engineering & Construction (Hyundai E&C)…

Working with ‘Inter Partes Review’

On September 16th, 2012, the US Patent and Trademark Office (USPTO) initiated a new procedure called Inter Partes Review or …

Worker’s compensation rights and ‘Ordinary Wages’

Under Article 6 of the Enforcement Decree of the Labor Standard Act (the Labor Act), ‘Ordinary Wages’ is defined as …

Franchising in Korea: areas for consideration

Over the past decade the number of franchises launched by domestic and foreign companies in Korea has increased significantly …

IHC Magazine: Dec 2024 issue with Counsel of the Year Awards 2024 and focus on Dispute Resolution

In this issue, we celebrate the IHC Counsel of the Year Awards, featuring insights from winning teams, delve into the future of dispute resolution with insights from in-house counsel, and sit down with Ben Bury, General Counsel of Gammon Construction, ...

The Greater China IP Updates – September 2024

The Greater China IP Updates – August 2024