Korean bill seeks longer tax relief for regional esports events

South Korea's tax break for esports tournaments held away from the capital has ten months left to run, and a bill now asks for more time. Lawmaker Kim Seung-soo introduced an amendment to the Restriction of Special Taxation Act on February 19, 2026, to extend the tax benefits granted to regional esports competitions, Sheep Esports reported on February 24.

The measure in question lets a company that organizes a competition outside the Seoul metropolitan area take 10% of the event's operating expenses off its tax bill. It was written with an end date, December 31, 2026. An introduced bill is a proposal, not a law: the credit and its end date stay as they are unless the Act is amended.

The bill arrived one day before the Korea e-Sports Association, known as KeSPA, presented a 150-page policy report that asks for far more than an extension. Kim's argument, as the outlet relays it, is that government support is essential if Korea is to hold its place in the international market.

Sheep Esports, February 24, 2026; Newsis, March 1, 2025, for the terms of the credit.

What the credit covers today

The rule is recent. The National Assembly passed it in plenary session on February 27, 2025, as an amendment to the same Act sponsored by Kim Yun-deok, a Democratic Party member of the Culture, Sports and Tourism Committee, according to the Korean outlets iNews24 and Newsis.

Their accounts give the same terms. The beneficiary is a domestic corporation. The event is a professional esports competition held outside the Seoul metropolitan area. The game has to be one of the titles selected under Article 12 of the country's E-Sports Promotion Act. The company then deducts 10% of the operating costs of the event from its corporate tax.

The end date was part of the design. The sponsor said at the time that, since the provision lapses at the end of 2026, the effects of the policy would be monitored closely before any discussion of extending or widening it. The sponsor also said that tournament infrastructure in the regions and administrative support would be considered.

Newsis described what the measure was meant to shift. Domestic competitions in League of Legends, FC Online and PUBG: Battlegrounds had mostly been played in the capital area, an industry official told the agency, where Riot Games Korea runs its own arena, LoL Park, in Seoul's Jongno district. The finals of the LCK, the Korean League of Legends league, had already traveled: Gangneung in the summer of 2022, Daejeon in the summer of 2023, Gyeongju in the summer of 2024. The agency cited a 2024 study by the Korea Culture and Tourism Institute, which found consumer spending up 6.2% and visitor numbers up 27.3% in the host region during the period of the 2023 summer final.

How the idea reached the statute book

The credit was more than a year in the making, and its first versions were more generous than the one adopted.

The Korea Times reported the first step on November 26, 2023. A week after T1 won the world championship final at Gocheok Sky Dome in Seoul, lawmakers of both main parties had bills on the table. Yoo Gyeong-joon, of the People Power Party, proposed a 20% corporate tax deduction on the expenses of hosting a tournament, for five years, and wanted the existing deduction for companies that run teams raised to the same level. Jin Sun-mee, of the Democratic Party of Korea, proposed 10% on hosting expenses.

The newspaper noted that the law at that time already gave companies operating sports or esports teams a deduction of 10% of operating costs for three years. Tournaments were the missing piece. The version adopted in 2025 carries the 10% rate and a geographic condition that the newspaper's 2023 account of the two bills does not mention: the event has to leave the capital region.

What KeSPA is asking for

KeSPA's report was delivered in December 2025 and presented in an article on the association's site on February 20, 2026, Sheep Esports reported. It treats the sunset as the starting point of a wider request.

The association's argument is one of equal treatment: Korea's film and audiovisual industries already have comparable mechanisms. The report goes on to propose further credits for arenas, training centers and broadcast studios, for research and development on domestic games and technologies, and for training and talent identification.

It also points to the calendar. Two of League of Legends' international tournaments are due in South Korea, the Mid-Season Invitational in 2026 and the World Championship in 2027, which the report takes as a sign that the country remains attractive, and it names Saudi Arabia, China and France as emerging competitors. Its warning, as Sheep Esports sums it up, is that a country that pioneered esports risks being overtaken unless it moves from cultural promotion to industrial policy.

The same association published new economic estimates on February 20. With a model of its own, it put the effect of the 2023 world championship at about KRW 740 billion, against an earlier estimate of about KRW 200 billion. Sheep Esports, which examined the method on February 23, advised caution: nearly half of the total before multiplication comes from intangible values such as sponsor exposure, and the model's adjustment coefficients are set by KeSPA itself.

The club finances behind the request

The report grounds its demands in the accounts of the clubs. Payroll takes more than 70% of club budgets, it says. The ten teams of the LCK lost more than KRW 100 billion combined, about US$70 million in the outlet's conversion, over 2021 to 2023, the first three years of the league's franchise system.

T1, the best-known of them, is the example given: KRW 32.8 billion in revenue in 2023, about US$25.2 million, for an operating loss of KRW 12 billion, about US$9.2 million. The Korea Times had printed the previous year's figures in its 2023 article: revenue of KRW 23.9 billion and an operating loss of KRW 16.6 billion for 2022. Between the two years, revenue rose by KRW 8.9 billion and the operating loss narrowed by KRW 4.6 billion, but it remained a loss.

The report names what it sees as the main risk: a structural dependence on intellectual property. Based on KeSPA's consultations, game publishers pay on average more than 90% of the operating costs of top-tier leagues. A league is played on a game that a company owns, and that company carries most of the bill.

The Sports Toto question

The second large proposal concerns Sports Toto, the state-run system that is the only legal form of sports betting in South Korea. It covers football, baseball, basketball, volleyball and golf. About 33% of its revenue goes to the National Sports Promotion Fund, which pays for infrastructure, school sports, para-sports and athlete support. Esports is not part of it.

KeSPA wants it included. The money, the report argues, would help fund second-division leagues, regional teams and transition programs for players, and would bring into the legal system a demand that now goes to foreign or illegal platforms. It proposes a royalty of 1 to 2% of that revenue for the publishers that own the games, to be reinvested in Korean esports, and a dedicated integrity body, which it calls K-ESIC, to educate and monitor participants.

The outlet lists what still stands in the way: the law would have to be amended, the concern about minors has not gone away, and the publishers would have to agree, since they hold the rights to the games.

A pyramid borrowed from football

The third part of the report is about where players come from. KeSPA takes its model from the K-League, the country's professional football league, and describes three levels: school programs at the base, with clubs and extracurricular activities; regional semi-professional teams in the middle, backed by local governments in partnership with private companies; and the existing professional leagues, such as the LCK, at the top. The report adds routes for what follows a playing career, in coaching, data analysis or officiating.

The link with the tax credit is direct. A regional layer of teams and events is the kind of activity the 2025 measure was written to encourage, and the kind the report wants the tax code to support for longer and at a higher rate.

What comes next

One date is fixed: December 31, 2026, when the credit lapses if the Act is not amended. Kim Seung-soo's bill is the proposal on the table for avoiding that. Sheep Esports' report gives neither the length of the extension it proposes nor any change of rate, and it reports no committee stage and no vote.

KeSPA's other requests have no bill attached in the outlet's account. The permanent credit, the higher rate, the wider list of expenses and the opening of Sports Toto are proposals in a report, addressed to a government that turned down the last of them less than two years ago.

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