South Korean financial analysts have cut earnings forecasts for casino operators after the government announced plans to raise contributions to the Tourism Promotion and Development Fund from 10% to 15% of revenue. Lee Hye-in of Samsung Securities said a drop in profit is 'inevitable' if the changes take effect next year.
Operator forecasts
The analyst expects operating profit to fall across all three major foreign-only casino operators. Grand Korea Leisure faces a 30.1% decline — the company has a 'relatively low operating profit margin to revenue'. Paradise is forecast to drop 17.2%, Lotte Tourism Development 13.9%. Seoul also plans to replace permanent licences with five-year contracts renewable on approval and require regulatory sign-off for major shareholder changes.
The market has already responded. Paradise shares fell 30% over the past month, Lotte Tourism Development 22%, GKL 12%. Late last week GKL and Lotte recovered almost 3%, outpacing the KOSPI index, which gained 0.7%. Paradise slipped 0.2%.
Medium-term growth intact
Lee assigned casino stocks an overweight rating — shares typically expected to outperform benchmarks over six to twelve months. Hotel revenue continues to grow, and rising foreign tourist arrivals may lift demand. The analyst's 'top pick' is Lotte Tourism Development: operating profit in the second quarter may rise 52% year-on-year. Dream Tower posted record sales in March, and increased flight capacity to Jeju should strengthen momentum in the second half of 2026. Paradise carries high costs after acquiring Grand Hyatt Incheon West Tower in January and building a new complex in central Seoul, but handle in the second quarter is likely to reach a record.
