Should Korea's casinos allow its citizens?

Gambling and the law

Gambling in Korea is in principle illegal, falling under articles 246 and 247 of the Criminal Act. There are exceptions to these laws, however, including the two national lotteries Lotto and Toto, horse, motor and cycle racing and casinos.

While the country has 17 legally operated casinos, just one of these, Kangwon Land in a remote mining area of Gangwon province, permits entry to Korean citizens. The rest are foreigner-only, established to attract overseas tourists to the country. Not only are all but one of Korea's casinos closed to locals, but the rest of the world's are too ? it is crime for a Korean citizen to gamble in any overseas casino.

But more liberal gambling laws could be on the horizon. Minister of Culture, Sports and Tourism Choung Byoung-gug last month announced his intention to allow Koreans to enter foreigner-only casinos in the country. Choung called it an absurdity to permit foreigners to do something off limits to Koreans, and cited the need to stop gamblers taking their money overseas as reasons for why the law should be liberalised.

Making favourable references to Las Vegas, Choung insisted the move could lead to spin-off industries aside from casinos and greater economic activity. But the announcement met with some backlash, with one local newspaper editorial warning: "Lifting the casino ban may bring about catastrophic consequences to the nation, not to mention gambling addicts."

Kim Do-gon.

Yes: Korea should be in step with the world

By Kim Do-gon

Recently, the question of whether to allow locals access to foreigner-only casinos has been raised in the media. As of now, Kangwon Land is the only place in Korea that allows access to Korean citizens. All other casinos in Korea ? three in Seoul, two in Busan, 8 in Jeju and one in Incheon, Daegu and Sokcho ? forbid access to locals. Currently, Korea and Monaco are the only two countries that only restrict access to locals.

Most jurisdictions, including Macau and Las Vegas, home to many major casinos, do not distinguish between locals and foreigners when it comes to access.

The casino industry has grown to be a major engine of the tourism service industry. Korea should allow local citizens access to casinos. However, it would be necessary to ensure that potential social problems are addressed by implementing effective controls. Considering the negative impact on some, allowing local access during limited hours and in specific areas are two of the many ways to address this issue. But as a proverb runs, "If you don't make mistakes, you don't make anything." Casinos should not be considered in solely negative terms. Casino should be understood as the central axis of the tourism industry now and for the foreseeable future.

Large numbers of Chinese tourists now visit Korea. However, the specific policies and plans to attract Chinese tourists are insufficient. Restrictions on visas for Jeju Island have eased considerably, but South Korea still lacks the leisure culture to attract tourists.

The first reason why foreigner-only casinos should allow local customers is that it would curtail the flight of foreign currency for gambling abroad. Some studies suggest that Koreans have spent billions of dollars on casino gambling and golf abroad. Second, it would deter illegal business such as online gambling, and ensure that casinos move within the confines of the system.

Let's take the example of Singapore. The Singapore Government seriously considered prohibiting locals from casinos, but finally decided against it. A parliamentary report on allowing locals to gamble outlined the rationale for legalisation and five measures to regulate the industry:

"We seriously considered banning Singaporeans altogether from gambling in the IRs, but decided against it. This is because there is no reason to exclude locals who can afford to gamble and would otherwise just go elsewhere. Further, some Singaporeans feel strongly against such discrimination against locals. The operators also told us that they need some local business, although they know that this cannot be their main market. However, we will put in place comprehensive measures to minimise the social impact of casino gambling.

First, we will restrict the admission of locals. We studied many alternative ways to do this, and finally decided to use price, and charge a high entrance fee, US$100 (S$120) per day or US$2,000 a year. This will apply only to Singaporeans and permanent residents.

Second, we will implement a system of exclusion. Those in financial distress, or receiving social assistance, will not be allowed entry. Singaporeans can also exclude themselves or close family members.

Third, the casinos will not be allowed to extend credit to locals, so as to make it harder for them to lose more than they can afford.

Fourth, we will make sure that some social good comes out of the gambling at the IRs. For other forms of gambling like horse racing, Toto and 4D, the profits are channeled to the Totalisator Board, which uses the money for charitable and worthy causes. For the IRs, we will similarly channel revenue collected from the entrance fee to the Totalisator Board for charitable purposes.

Fifth, we will set up a national framework to address problem gambling. This will include a National Council on Gambling, and also programmers to counsel and treat problem and pathological gamblers."

South Korea needs large multi-complex casino resorts, to set up "free economic zones" in Yeongjong Island and Saemangeum, and vitalise Jeju's tourism to gain more investment from foreigners and increase the number of tourists. Multi-complex resorts are a new worldwide trend in the casino business.

South Korea has a casino market worth 1 trillion won (S$1.14 billion) but in comparison to other competing countries, Korea's market is tiny. We need multi-complex resorts that tie in MICE industry, international convention centers, and leisure facilities. Philippines and other nearby countries are now building and planning multi-complex resorts. Singapore's multi-complex resort gained US$10 billion in its first year, which is several times larger than that of South Korea's casino market's profits.

Prohibition is not the best way. South Korea's casino business needs to walk in step with the world's casino business.

Kim Do-gon is director of the public relations department at GKL.

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