In principle, any gambling activities (or speculative activities) are prohibited in Korea. Article 246 of the Criminal Act punishes a person who gambles or bets for the purpose of gaining property by a fine of not more than five million won or a minor fine. Article 247 of Criminal Act prohibits opening of a gambling place for a profit and punishes a person who violates this provision by imprisonment of not more than three years or by a fine not exceeding twenty million won.

However, Korea has allowed certain gambling activities to be operated in the nation under restricted circumstances (e.g., promotion of public welfare, tourism) pursuant to special laws enacted.

For example:

a. Casinos

Casinos are being separately regulated between foreigners and Korean citizens.

Under the Special Act on the Assistance to the Development of Abandoned Mine Areas, Gangwon-land casino located in abandoned mining district in Gangwon province is presently the only casino that Korean citizens may enter. Obviously, this casino is located in a very remote countryside to restrict access by Korean individuals, and there is no casino located in an urban area.

In contrast, the Tourism Promotion Act permits qualified domestic hotels to operate casinos which only foreign nationals are allowed to enter. At present, casinos for foreigners are actively in operation in Seoul, Incheon and Jaeju Island and are supervised under the Ministry of Culture and Tourism.

b. Lotteries

There are two different types of lottery that customers may choose, which are (i) Lotto and (ii) ToTo, which is a type of sports lottery.

The operations of selling lottery tickets are regulated under the Lottery and Lottery Fund Act and are under the jurisdiction of Lottery Commission under the office of the Prime Minister.

Also, the National Sports Promotion Act (the “NSPA”) regulates sale of ToTo tickets that are presently issued by Seoul Olympic Sports Promotion Foundation, which is a public corporation founded pursuant to the NSPA.

c. Racing

Horse racing is permitted under the Korean Horse Affairs Association Act and is under the jurisdiction of the Ministry of Agriculture and Forestry.

Also, cycling and motor boat racing is regulated under the Cycling and Motor-Boat Racing Act, and is under the jurisdiction of the Ministry of Culture and Tourism.

d. Online Gambling

Korea does not yet have laws relevant to online gambling operations, and, as such, no one may legitimately operate online gambling in Korea. Nevertheless, there are unlawful operations of online gambling. The National Policy Agency has established Online Criminal Activity Investigation Team and intensified control of any unlawful activities online.

e. Slot machines

Any operation of slot machines outside permitted casinos is illegal.

f. Skill gaming

Any skill gaming that is too conducive to gambling is prohibited. Thus, any operation of any form of skill gaming (that tantamounts to gambling) outside permitted casinos is illegal.

Under the Act on Special Cases Concerning Regulation and Punishment of Speculative Acts, Etc., if one is to set up speculative business operations (i.e., slot machines, lottery ticket, wheel spinning, etc), he or she would need to obtain a permission from the Commissioner of the Local Police Agency in accordance with the foregoing Act. Generally, the permissions required for speculative operations are granted when they are deemed to promote public welfare, tourism or necessary to advertise goods for sale.

With the rising level of gambling operations, however, the public opinion against such activities has also risen, and, pressured by such public sentiment, Korean government has recently enacted the Act on General Supervisory Commission on Speculative Industries (the “Act on Commission on Speculative Industries”) in the first half of 2007. The Act on Commission on Speculative Industries, which became effective as of Jan. 26 of 2007, is intended to be the law comprehensively regulating the entire speculative industries.

But, as the primary objective of the Act on Commission on Speculative Industries is to rein in expansion of operations of gambling or speculative businesses and further restrict gambling businesses that have large revenue and a high level of speculative nature, many related parties, including owners of gambling and speculative businesses, are already raising objections to the Act, leading to public “speculation” that the Act will not much serve the purpose originally intended.