Jeju District Court, located in South Korea, issued a summons to a unit of New Silkroad Culturaltainment, “due to an indictment brought by Jeju District Prosecutor Office for outsourcing management of slot machines… allegedly in violation of the Tourism Promotion Act,” according to a filing to the Hong Kong Stock Exchange from the parent firm on Monday, as reported by GGRAsia.

The action by the District Court is against South Korean firm, Development Golden Beach Co Ltd, which New Silkroad Culturaltainment is a 72 percent owner, is regarding a leasing agreement for slot machines with Global Game Co Ltd. According to the parent firm’s filing on Monday, immediately after Golden Beach sent the company notification of the indictment, its lawyers began to investigate the indictment and begin preparations for the defense. “After making preliminary assessment, the board considers that the indictment would not have a material adverse impact on the business and operation of Golden Beach,” said the parent company. The company also said any further developments would be communicated to potential investors and its shareholders.

In May, Lawrence Ho’s firm, Melco International Development Ltd, announced that consultancy services would be provided by one of its company’s units to a casino in Jeju that will be developed over three years. Per the deal, New Silkroad Korea Development Ltd. will be advised by a unit of Melco International, Melco Gaming Assets Management (Korea). Melco International’s May filing stated that New Silkroad Korea is a 100 percent-owned subsidy of the Hong Kong-listed New Silkroad Culturaltainment.

The largest island off the Korean Peninsula coast, Jeju is somewhat self-governing and offers mainland Chinese tourists traveling directly to the island visa-free entry.

Last month, the South Korean government rejected a local proposal that would have doubled the tax rate on gross gaming revenues to 20 percent for the island of Jeju’s eight casinos. In addition to the tax rate increase, the proposal included restrictions on casino license transferability and the implementation of three-year license renewal audits.

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