Saturday, November 25, 2006

South Korea reiterated its tough stance on the gaming industry Friday after
an audit agency held the government responsible for rampant illegal gambling
and referred a list of big names to the prosecution. Controversy over video
arcades has rocked the nation since August, leading President Roh Moo-hyun
and Prime Minister Han Myeong-sook to offer apologies. The major opposition
Grand National Party accused the government of bending the rules to feed the
gaming industry. South Korea strictly regulates gambling. It has only one
casino available for locals, while 16 others exist for foreigners. While the
government loosened rules to help boost its game industry in recent years,
its loose oversight also let illegal gambling prosper in video arcades and
Internet cafes. The arcade game industry surpassed 20 trillion won (US$20.9
billion) last year, an amount that is almost equal to the country's national
budget, with the majority of consumers being in the lower-income bracket.
Current Culture Minister Kim Myung-gon accepted the criticism and reiterated
the current stance to crack down on illegal gambling.
"As the main government branch in charge of the gaming industry, we offer an
apology to the public for causing such a big controversy," Kim said in a
press conference. The intense inspection forced nearly 9,500 game parlors
and 5,000 Internet cafes nationwide to be closed for illegal operations, he
said, and the police have arrested over 3,600 illegal operators. Also, the
ministry will abolish all gift certificates circulating in game parlors.
Gift certificates, used as cash equivalents in arcades, have fed the game
operators with vast commissions. After a months-long investigation on
Thursday, the Board of Audit and Inspection of Korea held the government
accountable for failing to curb illegal gaming. It transferred a list of
former and incumbent top officials to the prosecution on allegations of
overseeing illegal gambling or bending the rules. The list reportedly
included Chung Dong-chae, the former culture minister and lawmaker from the
Uri Party, and two former vice culture ministers, Bae Jhong-shin, who held
the post from 2002 to early 2006, and his successor Yoo Jin-ryong.

The prosecution refused to disclose the names on the list, saying the
investigation is now in its budding stage, but suggested the accused may be
summoned for questioning.

"If they were on the list, the prosecution will decide whether to summon
them after analyzing related documents," a prosecutor who asked not to be
named said, referring to Chung and two others.

The controversy centers on the "Sea Story," an arcade gambling program
released to game cafes in 2005 with government permission. When a player
inserts cash into a machine with the program, images of squids, clams,
sharks and other sea creatures spin and stop. If they form a certain
arrangement, the player hits the jackpot.

The game machines paid out larger winnings than were legally permitted,
which made the program highly addictive.

The issue has gained public and media attention after the vice culture
minister Yoo Jin-ryong, who sought to curb illegal gambling, was dismissed
just six months into his tenure in August. The Grand National Party claimed
his dismissal was a retaliatory act by the presidential office because he
allegedly clashed with aides of President Roh over administrative issues,
including his initiative to root out gambling with arcade games.