Dream of Becoming Nouveau Riche Overnight

The gambling industry is showing signs of overheating in Korea, causing concerns of a break down in family and social ills on a large scale.

It has been analyzed that the national social and economic cost of gambling addiction total 80 trillion won, despite the country going through a long period of recession. The data signals that an increasing number of people are resorting to the absurd pipe dream of becoming rich overnight without trying to enjoy the fruits of labor. More and more unemployed people and those harassed by debt are attempting to gain a sizeable amount of money in one shot, only to see their hollow wish go up in smoke and their families leave.

That is why some experts are insisting that the government step in to control the industry, in order to prevent gambling addiction and treat addicts in a systematic way.

Six Gaming Sectors Grew Three-fold in Last Decade

According to the National Gaming Control Commission (NGCC) under the Prime Minister’s Office, the six major segments of the domestic gambling industry recorded 17.327 trillion won in combined revenue last year. The amount is equivalent to 1.5% of the country’s GNP over the same period. This year, the figure was 12.772 trillion won until the end of the third quarter.

The industry is increasing in size every year, having almost tripled in size since 2000. The horseracing segment accounts for 43.7% of the total followed by the lottery (14.6%), cycle racing (14.1%), casino (13.0%), Sports Toto (10.8%) and boat racing (3.8%). In 2010, the number of customers, excluding the lottery and Sports Toto, totaled 39.54 million.

Lottery Revenue Soon to Surpass Three Trillion Won

The lottery sector, although considered somewhat less addictive than other sectors, is also fueling the boom. The Korea Lottery Commission (KLC) recently announced that total lottery sales between January and November posted 2.794 trillion won. This is approximately 115.5% the previous year’s gross proceeds (2.421 trillion) and just 9.8 billion won short of the yearly issue limit advised by the NGCC (2.804 trillion). If the current pace continues, sales are estimated to top 3.1 trillion won by the end of December, exceeding the current record of 2.752 trillion won set in 2005.

The KLC believes such a rapid increase can be attributed above all to the advent of the pension-type lottery in July. Since day one, the product has continued a sellout streak and stoked people’s interest in the Lotto again. The Lotto is the most widely-known lottery ticket product in Korea, accounting for 95% of total lottery sales.

In the meantime, it has been pointed out that the craze has much to do with the current soaring inflation that has made people’s lives harsher than ever. “There is no other option but to turn to the lottery once it is felt that there is no exit from a laborious and exacting routine,” said sociology professor Lee Seung-hyup from Daegu University. He added, “For most people, monthly pay does not guarantee a carefree life in old age, and that is the cause of the popularity of lottery products across the country.”

The authorities, on its part, are moving to put a brake on it. The NGCC recently advised the KLC to restrict online sales of lotteries so as to comply with the annual ceiling. The Lotto is currently issued without limits.

However, the KLC is claiming that such restrictions are out of the question. “Let’s assume we halt lottery sales abruptly. Then, not only are we exposed to petitions from those wanting to buy tickets, but also lottery sellers, most of whom fall under the category of small-scale businesses, who will see their incomes decrease substantially,” said the agency. Im Deok-geun, who works for the Spa Convenience Store located in Seoul, stated, “Lotteries are characterized by common people spending petty sums of money to find some solace of mind. I think it is something we can’t call speculative or unwholesome, and so the government doesn’t have to take it away from us or our customers.” His store is located in an area currently boasting the largest lottery ticket weekly sales.

The government is wary of the opinion that people pinched by the ongoing recession are leaning on the ticket. Since most of the proceeds are included in its fiscal revenue, it might be thought that the government aids and abets the craze derived from the economic slump. “Looking at research data, we can see that lottery sales have little to do with economic conditions, and the ratio of low-income earners buying tickets is falling,” remarked KLC secretary general Kim Seung-gyu. He emphasized, “Therefore, the popularity as of late should be regarded as a temporary boom ignited by the new pension lottery.” This year, the pension-type product and Lotto rollovers boosted sales to the point of the NGCC urging the KLC to suspend lottery issuance until the year end.

Nevertheless, the advice has no binding force. The commission has only to contribute more addiction prevention and treatment or simply reduce next year’s sales target.

Illegal Unlimited Betting in Full Swing

Fortunately, the gambling sectors authorized by the government are in relatively good hands, and the extreme cases of addiction have been quite rare. What is worrying is that illegal gambling activities are rearing their head.

According to data from the Korean Institute of Criminology and lawmaker Ahn Gyeong-ryul of the Grand National Party, unlawful sports gambling Web sites are mushrooming, reaching 13 trillion won in market size. The number of reported sites skyrocketed from 40 in 2007 to 7,971 in 2010. In legal sports betting, a single bet is limited to 100,000 won (US$87) and participants are supposed to guess the scores or winners of some selected events. However, in illegal games, the scope is unrestricted and the betting sum limitless, capitalizing on the get-rich-quick mentality of many people.

Expedition gambling is another serious problem. Referring to NGCC data submitted to Democratic Party lawmaker Kim Jae-yun, Koreans spent 2.28 trillion won at casinos in Macau and the Philippines in 2010 alone. During the period, 221,269 Korean nationals visited the casinos with 183,742 to Macau and 37,527 to Philippines.

Social Cost Reaching 80 Trillion won and Poised to Exceed 10% of GDP in 2050

With gambling all the rage across the nation, the social cost of gaming addiction is surging. Professor Jeon Jong-seol’s research team at Ewha Womans University analyzed that social and economic cost totaled approximately 78 trillion won in 2009, which is around 7.3% of the country’s GDP that year. Simply put, 73,000 won out of every million won was spent on gambling and addiction treatment.

The annual social and economic cost of gambling sector amounted to 50 trillion won, accounting for 64.3% of the annual aggregate. Following were the economic and fiscal sector (21.5 trillion, 27.5%), the health and welfare (six trillion, 8.1%) and the crime and legal sector (60 billion, 0.08%).

The cost had stood at 48.444 trillion won in 2000, with the growth rate between then and 2009 reaching 62%. According to a simulation by the research team, the total cost is predicted to account for more than 10% of GDP by 2050.

“The Korean society is encountering the challenges of a low birth rate and aging population. It is undoubted that the negative effects of gaming addiction will continue to snowball in reverse proportion to the consistent decrease in working population,” said the professor. “What we need at this moment areaggressive countermeasures on the national level and more addiction prevention and care services in the local community setting.”