South Korea has some of the strictest gambling laws on earth. As a result, it also has a problem with illegal gambling operations which it must resolve. In this article, we discuss how South Korea could benefit from the lessons of other countries that have embraced online gambling.
South Korea is one of the most technologically advanced nations on earth. Yet it has had a rocky relationship with modern online gambling. Harbouring some of the toughest laws on the subject in the developed world, the country even has a habitual overseas gambling law that prevents citizens from wagering when abroad. You can find hotels with casinos in the country, but they are strictly for foreigners and citizens are forbidden from entertaining. This has led to the rise of unregulated, illegal casinos.
South Korea’s Issues with Illegal Gambling
Laws have relaxed somewhat over the years but not that much. Horse racing, boating, and cycling can be bet upon and it has a national lottery. Online casino sites remain illegal in the country, and many people use offshore and foreign services. This does require the use of a VPN and e-Wallet, and it does make accessing the sites more tricky than normal.
The result is that South Korea is now in the midst of a black-market epidemic. From 2019 to 2023, when the rest of the world’s iGaming industry has made vast improvements in security and safeguarding its customers, South Korea has gone backwards. Illegal online wagers have gone from 13,000 to 39,000 per year in a four-year period. Among the illegal wagers made, 80% of them came from online sources which are unregulated.
Seo Won-Seok is a Professor of Hospitality at Kyung Hee University. Late last year, he predicted the forthcoming dilemma. His argument was that global events of the last four years shrank the use of the legitimate, regulated offshore gambling business. This created a balloon effect for unregulated options.
A Change of Approach for South Korea
Online bookmakers and casinos have changed a lot over the past ten years. Aside from the gaming options they provide and the improvements in the usability of websites, they have also adapted approaches to security and social responsibility that may be of benefit to South Korea.
These changes can be seen in the sector’s acceptance by major global payment providers. Once, the gambling industry was on a list of high-risk niches many payment services would not approach. Going on this list is for industries that have high numbers of transactions, which could be used for refunds and fraud. You may be surprised at some of the sectors on these lists, such as furniture retailers and other retail sales. Yet by increasing its commitments to security, most of the major casino providers now work collaboratively with a range of the top payment gateways. This can include Visa and Mastercard, along with dedicated PayPal casino options. The latter is known for safety and processing times across the globe. Essentially, if big tech and major payment gateways trust the industry, South Korea could as well.
Secondly are the approaches to fair practice and responsible gaming that the major casino groups have adhered to. These have often been overseen by various gambling authorities, be it the Malta Gaming Authority or the UK Gambling Commission. In Europe, you would be foolish to join any casino that does not comply with these regulations. But by having a total ban on online betting and casinos, South Korea has no commission like this of its own. Setting one up, even one for offshore casinos to join, would help its illegal gambling industry.
Finally, some tips can be taken from the seven US states that allow online casinos. Here, casinos have to put certain amounts of money into tax and social responsibility funds, such as those that help problem gambling. Gambling exclusion schemes such as Gamstop have been set up in the UK to prevent people with problems from signing up for UK-registered gambling companies. The industry has been told to police itself or face the consequences, and it has. With this, South Korea is now left trying to face a huge illegal gambling problem on its own, without the help of experts and the funds of the casino industry to help it.
However, it is also foolish to apply business and cultural practices that fit in the West to those of this country. In Korea, gambling problems and addictions are viewed with the gravest repercussions. This week, comedian Lee Jin-Ho announced he had issues with gambling and was removed from Netflix content in the country. This is very different to the approach that would be taken elsewhere, which would opt for rehabilitation and responsibility over cancellation.
The situation is a complex one and will not be resolved overnight. Korea has laws and values against gambling that should be respected. However, by allowing black market gambling to proliferate it could be doing more harm than good. The only way to combat this could be to relax its laws and speak to the industry it is so reluctant to accept.
