Seoul - A South Korean crackdown on illegal gambling parlors is facing an uphill battle due to widespread mistrust of the government and the huge amount of money involved in the country's booming gaming industry.
The crackdown began last week after local media reported that a major distributor of a popular illegal gambling machine was linked to a relative of President Roh Moo-Hyun.
Top executives of two companies that distribute slot-machine-like equipment called Pada Lyagi, or Sea Story, have been indicted. Roh's nephew, Roh Ji-won, was a managing director at Woojyun Systec, which distributes the Pada Lyagi game.
The widely unpopular lame duck president denied any link with the scandal, which has been dubbed 'Gambling Gate' by the local media. 'My nephew has nothing to do with it,' he insisted at a meeting with ruling party leaders on Sunday.
But his denials have failed to stop speculation about his alleged links to an illegal gambling market that has mushroomed into a 20-trillion-won (21-billion-dollar) industry in the past two years.
Gambling industry insiders are scoffing at the on-going crackdown by prosecutors that they believe will do little in rooting out the illegal gambling parlors that have already grown too powerful and too popular, with strong connections to organized crime rings.
Most of the gambling parlors that had installed the Sea Story machines had already shut down before police began their crackdown.
'I get the impression that such a crackdown is like trying to bury your head in the sand like an ostrich,' said the owner of an internet cafe in Seoul. 'If you crack down on the Sea Story machine operator, it would only benefit other gambling machine operators.'
The success of the Sea Story machines, which earned its developing vendor the equivalent of 126 million dollars in sales and 17 million dollars of net income in 2005, is believed to be just the tip of the iceberg. Gambling industry experts indicate that the Sea Story machines account for only 3 per cent of the country's total gambling machine market.
One of forces that fuels the growth in gambling is the thirst for quick winnings. Prosecutors say that Pada Lyagi machines and similar games are illegally programmed to make larger than legal pay-outs to gamblers.
Under current laws, gambling parlors are supposed to give gift certificates instead of cash prizes to winners, but many machines have been re-programmed to give cash prizes as high as 3,100 dollars.
At the moment, there are 19 companies that issue such gift certificates to the gambling parlors. These certificates are easily exchanged for cash at the parlors. The exchange of certificates for cash is illegal but this takes place so often that few gamblers are even aware that what they are doing is illegal.
Meanwhile, the proliferation of illegal casino-like gambling parlors is stealing online game players from the traditional internet cafes, which are called 'PC-bang' in South Korea. The spread of illegal casino cafes has also caused grief for many of around 20,000 internet cafes that have sprung up across the country since the economic crisis of 1997.
In a country where 13 million homes have a broadband internet connection, a shift in preference from playing at internet cafes, or PC-bangs, to playing at home also has hurt business at these cafes.
'The broadband merit of a PC-bang is gone,' said Bae Moon-Hwan, a owner of PC-bang in Seoul.
In the face of shrinking revenues, many of these internet cafe owners have been tempted to switch their business to gambling, which can earn more money if they install the slot-machine-like equipment.
As a result, the online game industry has suffered a setback in it's once-booming market for fantasy and adventure multiple role-playing games like NCSoft Corp.'s Lineage.
Promoters of online gaming say the move toward gambling machines has threatened South Korea's current position as king of the online game market. They warn that the way things are going, mainland China may replace South Korea as the online game leader by the end of this decade.
source : http://news.monstersandcritics.com/
