Korea to crack down on pseudo-casino acts at 'hold'em pubs'

This photo distributed by the Incheon Seobu Police Station in December shows guests at a hold'em pub in Incheon that provided illegal gambling. (Incheon Seobu Police Station)

The South Korean government said Friday that it has devised a guideline to clamp down on businesses that run "pseudo-casino operations," addressing the legal loophole that has allowed de facto gambling at drinking establishments such as the poker-themed bars commonly called "hold'em pubs."

The guideline on bans of pseudo-casino operations was jointly developed by the Ministry of Culture, Sports and Tourism, the National Police Agency and the National Gambling Control Commission, outlining the criteria for such operations based on a recent revision of the Tourism Promotion Act.

In February, Article 26 of the act was revised to add a clause that stated that such casino-like operation shall be defined as "one where a non-casino operator provides casino business to grant financial benefit to a certain user while inflicting financial deficit on others." Violators face up to seven years in prison or a 70 million won ($51,000) fine.

Gambling is forbidden in South Korea by Article 246 of the Criminal Act, except for small bets placed for fun and at a few facilities authorized by the government. The only legal casino for South Koreans is the Kangwon Land Casino in Jeongseon-gun, Gangwon Province, which was granted the exception by the Special Act on the Assistance to the Development of Abandoned Mine Areas in the 1990s.

But several local "hold'em" pubs -- in reference to the poker variant Texas hold 'em -- have been providing gambling services where users can exchange their points for cash or various other benefits, effectively functioning as a small-scale casino.

The government guideline stated that such actions are to be regarded as pseudo-casino operations, specifying that the law revision was provided to "cease the illegal activities at hold'em pubs."

Even if the games do not provide immediate tangible profit for the operator, certain acts that encourage future visits through games can be seen as profit-seeking operations that can be punished. For example, if a casino-type game at a hold'em pub gives out points that can be used as credit to the customers, this also can be seen as an illegal profit-seeking operation by a non-casino operator.

The rules attached to Article 26 of the Tourism Promotion Act specify which types of games fall under the category of casino business. The 20 games include slot machines and most forms of table games including roulette, blackjack, dice or craps, poker, baccarat, bingo and mahjong.

By Yoon Min-sik(minsikyoon@heraldcorp.com)