SEOUL (AFP) - South Korea opened its tightly controlled gambling market on Tuesday and approved a US$697 million (S$880 million) investment plan by foreign investors to build the country's biggest casino town.

LOCZ Korea, a joint venture between Las Vegas-based Caesars Entertainment and Indonesia's Lippo Group, has been given permission to open a foreigner-only casino in 2018, the culture ministry said.

The casino will be the first to be owned and operated by any foreign investors in South Korea.

The new casino town will feature hotels, convention centres, and shopping malls, and will be located near Incheon International Airport, South Korea's main gateway, the casino operators said.

The firms will invest 744 billion won (S$877 million) in the project.

The airport is on an island about 40 kilometres west of Seoul and handles about 35 million passengers a year.

The ministry hopes the casino will attract more foreign tourists into South Korea.

LOCZ Korea plans to turn the casino town into an integrated resort city with more investments by 2023, it said.

Casinos provide a consistent source of hard currency revenue and fuel tourism. But South Korea strictly limits entry to its own citizens.

Of South Korea's 17 licensed casinos, only one - Kangwon Land Resort - is open to locals.

Last year the foreigner-only casinos pulled in 2.7 million visitors with their combined revenue standing at 1.37 trillion won.