Online Gambling in South Korea

South Korea often makes the headlines solely for its rocky relationship with its northern neighbours, but it is in fact one of the most technologically advanced countries in East Asia - second only to Japan. Despite this, online gambling sites based within South Korea are illegal and heavily targeted by government crackdowns, leaving citizens to seek services from online operators licensed in other countries.

The Legal Landscape

Since the creation of the Republic of Korea at the end of World War II, when the American-controlled area of Korea voted to separate from the Soviet-controlled North, gambling has slowly become part of the lifestyle there.

Historically, the Korean Peninsula had enjoyed betting on native board games and sports such as janggi (similar to chess) and ssireum (similar to sumo wrestling). However, with the formation of a new government came strict legislation on gambling - citizens were not allowed to bet within the country, or even at casinos in foreign countries they visited (under the 'Habitual Overseas Gambler' law).

While physical laws have gradually been relaxed over the decades, the same cannot be said of online gambling. It is illegal for a company or individual to run an online casino within the country, though citizens can nevertheless gamble online at bookmaker and casino sites based overseas.

Despite the firm restrictions on Korean sites, individuals are able to sign up at websites such as Ladbrokes and 888, which accept Korean players and fall outside of the jurisdiction of South Korean law. However, connection to these sites can be temperamental as the government seeks to ban access. Players within South Korea, therefore, tend to bypass these blocks by setting up an e-wallet and masking their origins with a VPN service.

There are, however, many companies within South Korea that still choose to set up illegal sports betting and casino operations online, with the government estimating the illegal gambling market as a whole to be worth US$66billion in 2012. Most companies have found this to be a risky enterprise, with the South Korean police having made a number of high-profile raids on illegal online betting rings in recent years.

Popular Markets

One notable exception to the strict legislation was made relatively early on, with betting on horseracing made legal soon after the laws were implemented (this had been popular in the country since the 19th century). This was soon followed by gambling on boat-racing and cycling, while a national lottery (lottoilbo) was also introduced.

Casinos were completely illegal until 1967, when large hotels were finally permitted to offer casino games to foreign guests. There are now 17 casinos across the country, featuring classic options like slots, roulette and blackjack. Korean citizens are forbidden from entering the majority of these, with the first and only land casino for Korean natives, Kangwon Land casino, being opened in 2000. As a testament to the popularity of gambling among South Koreans, this single casino brings in more than all 16 foreigner-targeted casinos collectively.

In the 1990s, South Korea's gambling laws were relaxed further with the creation of SportsToto, a government-backed betting service. This allows South Koreans to bet on a variety of sports that are popular in the country, including football, baseball, basketball and golf, at land-based machines that can be found in shops and other establishments. However, wagers are limited to KRW 100,000 ($89), and SportsToto has no online presence, meaning Koreans often turn to overseas bookmakers for higher betting limits, more markets and the convenience that internet gambling brings. As SportsToto is state-owned, any other gambling operation threatens the government’s monopoly on betting, and this has led to a number of government crackdowns on illegal rings.

Major Gambling Events

Despite the strong-armed approach, there has been notable progress by the government in relaxing gambling laws, especially most recently. In 2012, the country’s capital, Seoul, played host to a high stakes poker tournament, which was sponsored by online poker site Poker Stars. Just over 250 players competed, each paying an entry fee of KRW 3,000,000 (just under $3,000). The eventual winner was American Andrew Kim, who walked away with a prize of KRW 145,000,000 ($131,000).

The Future of Gambling in South Korea

The government is obviously keen on maintaining its monopoly on sports gambling, as a large percentage of the profits from this are ploughed back into the sports that are bet on. However, despite the step-up in criminal captures and convictions, illegal gambling (both online and on land) is still a thriving business in the country. With the gradual relaxation or repeals of physical gambling laws, the South Korean government will no doubt look to see if the integration of online gambling could be beneficial to its SportsToto franchise.