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S Korea Sees Illegal Online Betting Surge

by Mary Swire, Tax-News.com, Hong Kong

23 December 2009


Illegal gambling on horse racing in Korea, primarily online, could have increased to KRW30 trillion (USD25.5bn) – up to 10 times the 2004 level, according to Korean Institute of Criminology research.

The research, commissioned by the Korean Racing Authority (KRA), which operates a legal monopoly in horse-race betting in Korea, estimated the illegal turnover to be between KRW9.3 trillion and KRW30 trillion in 2008, up from KRW3.4trillion in 2004. The 2008 figure could be more than four times the legal (KRA) turnover.

The availability of private gambling opportunities through the Internet is blamed for the surge, and the local Korean press refer to overseas Chinese groups in Vietnam being heavily involved in gambling websites.

Legal horse-race betting is subject to a KRW100,000 limit and a 27% tax; the KRA told the Joongang Daily that it considered the limit too low and should be raised; otherwise, criminal sanctions are relied on to deter illegal gambling operators – up to five years in prison and maximum fines of KRW50m.

The KRA operates three race tracks – in Gwacheon, south of Seoul, Busan and Jeju – and 32 betting outlets. Racing takes place at weekends and the largest course in Gwacheon runs 12 races a day, with 1,420 licensed horses.

A comprehensive report in our Intelligence Report series examining the new possibilities that offshore e-commerce open up for business, and analysing the offshore jurisdictions that have led the way in offering professional e-commerce regimes for international business, with a particular focus on e-gaming, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report6.asp

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