NHN Forced to Modify its Gaming Offer on its Online Gambling Site in South Korea

Next Human Network Entertainment could have its online poker operations in South Korea suspended by authorities.

When it comes to gambling, South Korea has a strict policy. Casinos are allowed, but only one of them is open to local players. Playing for money is only allowed among friends and family, provided the amount of money wagered doesn’t exceed 10 cents. In fact, South Korean citizens aren’t even allowed to gamble outside the country, although it is almost impossible to verify what they do abroad.

So while South Korean gambling laws make it very clear that the state doesn’t want its people to risk losing money on games of chance, online casinos are a grey area. There is no legislation allowing – or forbidding! – internet gambling in the country and this is what sparked an argument between NHN Entertainment and the Game Rating and Administration Committee (GRAC).

The authority threatened to cancel the rating classification of the company’s internet gambling service, which includes card games and poker.

A matter of legal interpretation

As operator of one of the largest online gambling sites in South Korea, NHN Entertainment cannot afford to lose its internet card game business, which accounts for about 40% of the company’s total income.

An NHN Entertainment spokeswoman said: “The company and the game rating committee had a disagreement on the legal interpretation to determine whether our service is illegal or not. We will actively defend and explain our opinion to seek an agreement.”

An affiliated organization of the Ministry of Culture, Sports and Tourism, GRAC announced last week that it had reclassified ratings of the company’s card game offer. The gambling operator’s portfolio is made up of ten card games, including “7 Poker”, “Las Vegas Poker” and “Gostop”. They are all “scheduled to be cancelled” now.

According to GRAC, the online casino allows players to place wagers in excess of 30,000 won ($27.36) per game, which is the upper limit for internet wagers under the current laws. On the other hand, the company said “the system was not illegal.”

All is not lost

For now, the future of internet poker in South Korea remains uncertain. The committee will discuss the matter on November 20, when it will decide whether to finalize the cancellation of the company’s online services or not.

If the committee cancels the rating classification of a game, the operator must suspend it. But according to the GRAC, the internet gambling firm has enough time to adapt its content and offers to meet the current regulations. If it doesn’t, its services could be cancelled.

But for now, the company or its customers need not despair. The cancellation is currently “scheduled”, not definitive. Members of the committee will determine if this is the online poker games should be entirely cancelled, and will hear all objections and explanations during the grace period.

Meanwhile, the firm is waiting for the whole thing to blow over and added that it has already modified its games to follow the recently-introduced regulations. Company representatives said they were told that the ratings would be kept. However, the regulator revised its previous decision and said certain aspects of NHN’s offer are still not in line with South Korean gambling laws.

Officials in Seongnam, the city where the company has set up its headquarters, were asked to issue a warning.

A legal blur

On June 30, NHN Entertainment asked the Suwon District Court to suspend the execution of the warning. Lawyers also requested a court decision on whether the game system was illegal or not. Meanwhile, supporters of the casino industry claim that this is just another example of authorities trying to slow down the growth of gambling companies.

A company spokesperson said: “We will rectify any problem that the court says is illegal. But what matters here is that GRAC has threatened to cancel the rating classification despite the court not issuing a legal determination yet.”

This is not the first time when the lack of clear regulations stands in the way of a gambling company’s growth. If there are no laws forbidding internet betting in South Korea, one would argue that these services are tolerated by state authorities. It is now up to the court to shed light on the matter.