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Can South Korea become the next Vegas or Macau?

South Korea's first foreign-owned casino has sparked excitement over the country's potential to rival the likes of Vegas, Macau or Singapore as a casino hotspot, but analysts told CNBC strict regulations are dampening its chances.

South Korea's casino revenues are roughly a sixth of the size of revenues from Las Vegas's casinos alone, analysts told CNBC, but the country only allows foreign passport holders to gamble at present, a key obstacle for growth.

(Read more: Lippo, Caesars get approval for casino in South Korea)

"Today it's a foreigners-only market," said Grant Govertsen of Union Gaming Research Macau Limited.

Bloomberg/Contributor | Bloomberg | Getty Images

"The gaming [casino] market in South Korea generates roughly $1.3 billion, while Singapore's comes in slightly over $6 billion and Macau's at $45.1 billion. Until regulations are changed to allow locals to gamble, South Korea will pale in comparison, and it doesn't look like that is going to happen any time soon," he added.

The new resort is a joint venture between Las Vegas based Caesars Entertainment Corporation and Hong Kong based property developer Lippo, and will be built near Incheon International airport, west of Seoul, South Korea's tourism ministry said in a briefing Tuesday.

President Park Geun Hye recently enabled foreign operators to compete against South Korea's 17 existing casinos as part of an effort to rebalance the economy away from being dependent on exports.

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