Foreign gaming companies must appoint local reps in Korea under new law

Foreign-based game companies in South Korea will be required, starting later this year, to designate a domestic representative for legal compliance with gambling-related statutes and other rules, if they grow to a certain size in terms of sales or number of users.

The change is in line with a revision of the Game Industry Promotion Act, set to take effect on Oct. 23, according to the Ministry of Culture, Sports and Tourism. Companies subject to this measure will be notified individually, the ministry said.

The new mandate applies to foreign-based companies that recorded 1 trillion won ($700,000) in total annual sales the previous year, or averaged at least 100,000 Korean users in the final three months of the year. Some companies not meeting those criteria can also be required to designate a domestic proxy if they were previously involved in an incident that caused substantial damage to their users or if they are deemed to pose a substantial risk.

Domestic proxies of foreign game companies will have to follow requirements stipulated by the Game Industry Promotion Act, which include restrictions on "speculative gaming content" -- a legal term referring to games that include gambling elements, and government guidelines on disclosing probability information for gaming items that involve chance.

South Korea prohibits gambling for its citizens with few exceptions such as the Kangwon Land Casino and government-certified lotteries. As such, it has banned gambling content in several multinational online video games, such as in the global hit Grand Theft Auto Online.

Domestic proxies that violate the law will be liable for legal responsibility, and companies that are mandated to designate a domestic representative but do not comply will be fined up to 20 million won ($14,000).

The Game Rating and Administration Committee under the Culture Ministry will be entrusted with determining which companies must designate a domestic representative.