Digital content gambling risk, legal consultation safely!

Law firm Veat’s Metaverse platform client A requested a review regarding whether the specific content being conducted by the company (hereinafter “the Content”) falls under the “Act on the Regulation and Punishment of Gambling” (hereinafter “the Gambling Regulation Act”) and whether the company is considered an entity engaging in gambling as a business.

A legal review was required to examine the content, in addition to the Gambling Regulation Act, through in-depth analysis centered on related case law.

Review of the Content's Gambling Nature

 

◾ What does “Gambling Business” mean as defined by the Gambling Regulation Act?

Gambling Regulation Act Article 2 (Definitions) ① As used in this Act, the terms shall have the meanings as follows. 2. “Gambling Business” means a business falling under any of the following subparagraphs. a. Lottery Issuance Business: A business that gathers money and property from multiple people and gives property benefits to winners through a drawing method, including electronic forms using a certificate (including a device with information processing capabilities such as a computer program) and causing losses to other participants. b. Prize Business: A business that collects money and property from applicants in exchange for the condition of giving benefits when answering a specific survey or prediction is correct, and gives property benefits to the correct answerers or winners and causes losses to other participants. c. Other Gambling Business: A business that is conducted for profit using rotating panels, drawings, prizes (incentives), etc., that may induce gambling sentiment, as stipulated by Presidential Decree. Article 29 (Punishment) ① Any person falling under any of the following cases shall be sentenced to imprisonment for five years or less or a fine of no more than 50 million won. 1. A person engaging in gambling as a business using gambling machines or gambling devices with gambling nature other than gambling business.

Law firm Veat first reviewed whether the Content falls under the “Gambling Business” as defined in the Gambling Regulation Act. The Gambling Regulation Act explicitly states that not only lottery issuance and prize businesses but also businesses conducted for profit using rotating panels, drawings, prizes, etc., that may induce gambling sentiment, as stipulated by Presidential Decree, are considered gambling businesses.

Furthermore, even if it does not fall under the Gambling Business described above, one can still be punished under Article 29(1) of the Gambling Regulation Act if engaging in gambling as a business by using gambling machines or gambling devices with gambling nature.

Accordingly, Law firm Veat comprehensively analyzed whether the Content requested by the client falls under the Gambling Business according to the Gambling Regulation Act, and whether it falls under gambling involving gambling machines or gambling devices with gambling nature.

◾ What is the Supreme Court’s position on gambling devices?

Reference to Supreme Court Decision 2006. 11. 23, Case No. 2006do2761 Whether a particular machine or device “induces gambling sentiment” shall be determined not only by the inherent purpose or nature of the machine or device but also by considering the purpose of use, the method and form of use, the scale and nature of property benefits or losses that arise as a result of use, whether it is determined by chance, whether it pays money or exchangeable prizes, and the degree and size and whether it actually exchanges prizes for cash.

The Supreme Court states that in determining whether a machine or device “induces gambling sentiment” (i.e., “gambling device”), it is necessary to consider not only the inherent purpose or nature of the machine or device but also specific criteria such as the purpose of use, the method and form of use.

Law firm Veat, based on the Supreme Court’s case law and a thorough research and review of similar cases, reviewed whether the Content requested by the client falls under the gambling devices prohibited in Article 29(1) of the Gambling Regulation Act.

◾ Possibility of being subject to the Game Industry Promotion Act should also be reviewed!

Furthermore, if the Content’s outcome results in users receiving property benefits or exchangeable assets such as on-chain coins or NFTs, which are not simply in-game assets, then not only the Gambling Regulation Act, but also the “Game Industry Promotion Act” may apply.

Law firm Veat advised the client that additional review of related laws, including the Game Industry Promotion Act, may be necessary regarding the legality of the client’s Content and provided advice on improving the Content’s operating method.

 

Legal advisory of Law firm Veat, possessing expertise in IT areas and related regulations

 

Law firm Veat possesses specialized legal expertise in IT, startups, and the content industry, as well as abundant advisory experience. This advisory case is a result of the firm’s deep understanding of the IT field and years of regulatory response experience.

Law firm Veat provides in-depth analysis of legal issues arising in the rapidly changing digital industry and optimal legal advice based on regulatory laws and precedents. In particular, the firm thoroughly reviews regulatory risks that frequently occur in the content industry, including gambling nature, and supports clients in operating their businesses stably and in compliance with the law.

Thank you.

Law firm Veat