Prosecutor General Choung Sang-myoung on Monday instructed Lim Chai-jin, head of the Seoul Central Prosecutors’ Office to make a thorough investigation into the ongoing scandal over gambling game machines.
The prosecution is reportedly considering ways to seize from gambling parlors 60,000 illegally reprogrammed video slot machines, including “Sea Story” and “Golden Castle.”
The Sea Story Game
Sea Story, or “Bada Iyagi” in Korean, is a highly addictive arcade gambling game, and was introduced in December 2004. Soon after, the video slot machine enjoyed great popularity and was distributed nationwide. The game parlors are basically gambling dens. Each machine unit costs up to 7 million won ($7,400). Similar to conventional slot machines, if a user hits the jackpot, the gambling machine offers gift certificates worth up to 3 million won. With the beautifully designed visual imagery, the game machines soon came to control the game room market nationwide. However, the surge in Sea Story’s popularity, in fact, is attributed to the illegal reprogramming of them. Amid the nation’s sluggish economic performance, the overall video gambling business recorded approximately 20 trillion won in sales in one year, a figure almost equal to the nation’s annual defense budget.
“Foreshadowing” and “Double Hits”
The developers of “Sea Story” manipulated the memory systems of the game machines to allow jackpot winnings of more than 3 million won, far above the legal limit of 20,000 won. The game foreshadows jackpot events by showing figures of giant jellyfish, sharks and whales on the background of the screen, which makes it harder for addicted gamblers to leave when they see such signs. When a certain picture appears, a player double-hits the jackpot, earning 20,000 won two times. Due to the illegal reprogramming, one can win even 3 million won.
Gift Certificate Coupon
Gambling is prohibited in Korea. So, when a player earns more than 20,000 won, the machine spits out gift certificate coupons. Under a law that regulates gambling for locals, people winning jackpots at gambling parlors are given gift certificates from the arcade’s operators, as it is illegal to trade chips for real money. The problem is that gamers can cash them at counters just outside the game mall for a 10-percent commission. That commission is the main income for the operators. According to the prosecutors, the “Sea Story” machines give 95 percent of the game money back to gamers. The return rate is much higher than horse racing and the lottery.
The gambling game scandal shows all the signs of an influence-peddling. There are roughly three allegations: (1) Why were the illegally reprogrammed game machines distributed nationwide? (2) Why are gift certificate coupons allowed to be used? (3) Where did all the profits go?
Distribution of illegal game machines
-The Korea Media Rating Board permitted the problematic video slot machines without apparent reason
-“Influential figures” in the ruling party and the government have a “stake” in the manufacture/distribution of the game machines
- Influential party/government figures own game parlors, in disguise
- President Roh’s nephew did play a “role” in related companies’ M&A
Distribution of gift certificates
- Many unqualified companies are designated as issuers of gift certificate coupons
- Gift certificate businesses allegedly lobbied the government
Use of profits
- Tax evasion (for alleged “slush fund”)
- Little dividends (unclear about the use of profits)
- Alleged flow of slush funds to politicians