The snowballing gambling scandal, possibly involving a nephew of President Roh Moo-hyun and his aides, is shedding light on the social problems caused by Korea’s rapidly growing gambling sector.
Critics have been questioning why the government in past years eased the regulations on gaming rooms, allowing their business to double in less than a two-year period, while failing to properly monitor irregularities.
Through their recent crackdown on illegal gambling that started this month, police have arrested more than 1,600 people for operating illegal game machines or providing unauthorized gaming software at gaming rooms and commercial computer rooms nationwide.
The number of game arcades that have video slot machines and other „gambling“ game machines currently stands at 15,000, much more than the country’s total number of 24-hour convenience shops, which is around 9,500.
More than 12,000 of the game outlets have „Pada Iyagi,“ or „Sea Story,“ the most popular video slot machine game with 45,000 units sold and currently at the center of the prosecution’s criminal investigation.
Combining the growing popularity of Internet-based gambling, featuring card games such as „gostop“‚ and poker, the vernacular media’s ridicule of the country as a „Gambling Republic“ does not seem so far-fetched.
According to the state-run Korea Game Development and Promotion Institute, Korean video game arcades, most of them having slot machines and other gambling games, earned nearly 3.8 trillion won (USD 3.9 million), last year, doubled from the previous year.
Authorities at the Ministry of Culture and Tourism estimate the market for video slot machines and online gambling games combined tops 17 trillion won (USD 18 billion), about 10 percent of the country’s total budget.
With the recent scandal exploding in its face, the government has recently been under fire for its loose control over the country’s adult gaming sector, which is leaving more people with emptied wallets and addicted to gambling.
Korea had traditionally imposed tight regulations on local gambling. The government allowed casinos to be built in the 1970s but only foreigners were allowed to gamble there. However, in 2000, the government allowed Kangwon Land casino in Kangwon Province, to take Koreans as customers, in an attempt to boost the area’s local economy.
The growth of the country’s video slot machine empire is a result of recent government measures to revive the market for video game arcades, which had previously struggled with the rise of online games and commercial computer rooms.
In 2002, the Ministry of Culture and Tourism introduced a new law that allowed arcades to use gift certificates as prizes for game winners to help them attract new customers.
However, with most arcade operators allowing people to convert their gift certificates to cash, usually on a 10 percent commission, the government measures ended up expanding the country’s gambling landscape beyond recognition.
The country’s thriving gambling business is increasing the concerns over the growing number of gambling addicts. A government report in 2002 identified about 10 percent of Korean adults as addicted to gambling, more than the 3 percent rate of the United States or the 6 percent rate of Australia over the same period.
The problem becomes bigger when considering that most of the addicted gamblers come from the low-income bracket. According to a report in April by the Korean Game Development and Promotion Institute, 43 percent of surveyed customer who used adult-only game arcades earned less than 2 million won per month.