The online gambling market in South Korea has formed a unique dual structure under strict bans, with the legal market and the gray area coexisting without contradiction.
As one of the few countries globally that comprehensively bans online gambling, South Korea only allows limited legal sports betting projects operated by Sports Toto and the Korea Racing Association (KRA), with the legal market size in 2023 estimated at about 4.3 trillion Korean Won (approximately 3.2 billion USD).
However, according to estimates by the Korea Gambling Association, the gray market, operated through overseas platforms and underground networks, is valued at up to 8 trillion Korean Won (about 6 billion USD), nearly twice the size of the legal market.
This distorted development stems from the huge gap between the comprehensive ban under Article 246 of the Criminal Code of Korea and market demand, with the 20-39 year-old male group having a robust annual betting average of 1.2 million Korean Won (about 900 USD), primarily directed towards English Premier League and K-League sports betting, as well as online casino games.
Despite the government's continued efforts to strengthen regulation, including blocking payment channels of 127 overseas gambling websites in 2023 and requiring cryptocurrency exchanges to monitor suspicious transactions, the gray market continues to thrive through highly localized operations, including Korean customer support, Korean Won settlement systems, and innovative methods such as encrypted payments.
It is noteworthy that South Korea's gambling ban for its citizens has clear exceptions, such as the physical casinos in Jeju Island and Gangwon Land, but online operations remain strictly prohibited.
This contradictory policy environment has given rise to the unique phenomenon of "gambling tourism" and has also prompted regulatory authorities to continuously adjust strategies, such as the "Gambling Addiction Prevention Act" to be introduced in 2024, which requires financial institutions to conduct additional scrutiny on suspicious transactions.
With technological advancements, the Korean police have recently focused on cracking down on underground gambling networks operated through encrypted communication tools like Telegram, with a criminal gang involving 40 billion Korean Won busted in March 2024 using a Philippine license as a cover.
Despite the high legal risks, the allure of the South Korean online gambling market remains strong, as evidenced by the continuously growing size of the gray market and constantly evolving evasion tactics.
Industry observers point out that the real challenge facing the Korean market is finding a balance between the conservative legal framework and the actual demand for gambling, and recent discussions about partially opening online sports betting may indicate the beginning of a policy relaxation.
