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Bid to legalize online wagering in Korea gathers pace

Lawmakers on both sides of the Korean political divide have joined growing calls for the swift passing of legislation that would permit online wagering in a desperate bid to save the Korean horse racing industry from collapse. The move comes as local media in reported that the National Assembly has heard evidence that with the shutdown of horse racing in February, illegal gambling in Korea is expected to hit record highs in 2020. 

In late August, a group of lawmakers led by Kim Seung-nam of the ruling Democratic Party proposed a bill to partially amend the KRA Law to allow online sales. The following month, a second Democratic Party Assembly Member, Yun Jae-kap, tabled a detailed bill for the legalization of online wagering. 

The process was boosted on October 6 when former Agriculture Minister Chung Woon-chun and another ten Assembly Members belonging to the main opposition People Power Party, mainly representing rural constituencies, tabled another bill for online wagering to be permitted. This included an amendment allowing for the strengthened punishment for illegal betting operators. 

“As domestic horse racing has stopped, legal players are flowing into the illegal horse racing market” said Chung Woon-chun. “A legal and institutional arrangement must be urgently prepared to create a healthy horse racing industry and protect legal horse racing customers”. 

With no legal option, Korean punters are believed to have turned to the illegal markets with illicit operators offering betting on overseas horse racing as well as casino games. From February 23, the day on which racing was suspended, to October 6, the National Assembly heard that a total of 3176 illegal sites were blocked or shut down by authorities, an increase of 325 on the same period last year. 

The local Kyunghyang Shinmun newspaper reported that the National Assembly was told that according to a study by the Institute for Criminal Policy, the size of the illegal gambling (all kinds, not just horse racing) market in Korea 2019 was estimated at US$70 Billion, four times that of the combined turnover of all legal forms of gambling in the country. With no legal option available, that figure is expected to grow significantly in 2020.

Earlier, a petition signed by a coalition of thirteen organizations representing horse racing and its associated industries was submitted to the National Assembly urging politicians to act. 

The petition, organized by the “Racing Industry Emergency Countermeasure Committee”, reads in part “Most of the breeding and racing industry are in a state of unprecedented depression with their right to a livelihood seriously threatened by bankruptcy or unemployment due to the suspension of racing. We urge you to enact the law as soon as possible so the foundations of our industry will not collapse.”

Korea is an international outlier in online wagering. As both the committee and the supportive lawmakers pointed out, all advanced racing and breeding countries such as the United States, Japan, Australia and the United Kingdom have so far prevented the collapse of their racing industries through the sale of online betting tickets. More than 100 countries worldwide operate a contactless betting system in some form or other.

The committee noted that Korea has been widely praised internationally for its response to the COVID-19 pandemic in part by the way it utilized technology to implement its highly sophisticated and so far, effective test and trace regime. Given that the technology and the online infrastructure that would allow racing to shift to an online model of wagering already exists, it should be unthinkable that an industry which supports so many jobs and provides so much investment in rural communities could be allowed to vanish at the hands of COVID-19. 

Horse racing in Korea had undergone rapid development over the past decade, being elevated to “PART II” under the International Federation of Horse Racing Authorities system as well as hosting the lucrative Korea Cup and Korea Sprint international races. Korean racing is now broadcast live on a weekly basis for wagering across North America, Europe, Singapore, Australia and New Zealand. In all of those countries, customers are able to legally place online bets on Korean racing. 

Racing was suspended in Korea on February 23rd and while it restarted in June, it was halted again at the end of August as it became clear that there was no prospect of fans being allowed entrance to the racecourses and off-track betting centers in the near future leaving the sport with no income stream as well as a massive tax revenue loss predicted to be in excess of 1.2 Trillion Won. 

Racing restarted again with significantly reduced prize money on October 16th. It is hoped that some racegoers may be permitted to enter the courses from Friday October 30th, however, in the absence of legal online wagering, the future continues to be bleak.

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