False Probability Penalties to Triple Under South Korea's New Gaming Amendment Taking Effect in August

The Ministry of Culture, Sports and Tourism (hereinafter referred to as “MCST”) announced that the partial amendment bill to the Game Industry Promotion Act, introducing special litigation provisions for violations of mandatory labeling requirements for probability-based items, was approved at the State Council meeting on the 21st.

The draft legislation passed the National Assembly plenary session on December 31 last year and was resolved at the State Council meeting on the 21st of this month. It will be officially promulgated on January 31, 2025, and take effect on August 1, six months after promulgation.

This amendment serves as a follow-up measure to the mandatory probability-based item labeling system implemented in March 2024. Damages resulting from game companies' violations of probability-based item labeling obligations are often difficult to prove, exhibiting collective and dispersed characteristics that hinder victim redress. Consequently, an effective victim relief scheme is urgently needed.

This legal revision specifically introduces special litigation provisions for violations of probability-based item labeling obligations and establishes the legal basis for operating a center dedicated to handling game victim relief.

First, the burden of proof for damages shifts to game companies. For infringements involving probability-based items, the law recognizes liability for damages arising from intentional or negligent acts, requiring companies to prove their lack of intent or negligence to avoid liability.

Second, the burden of proof regarding damage amounts is reduced for claimants. When damage amounts are difficult to prove, courts may render judgments based on the overall intent of the proceedings and evidence investigation results, comprehensively considering all relevant circumstances.

Additionally, a punitive damages system is introduced. If courts determine that a game company intentionally violated its obligation to disclose probability information, compensation may be set at up to three times the actual damages incurred.

Finally, the Minister of Culture, Sports and Tourism is designated to oversee a specialized center handling user damage claims and relief. A policy official from the ministry stated: “This amendment is expected to strengthen the protection of game users' rights while enhancing their trust in companies, thereby promoting the healthy development of the game industry.” “ They added, ”We will ensure the smooth operation of the dedicated center for game user damage relief under the Game Management Committee."

Since the new probability disclosure regulations took effect in March 2024, South Korean regulators have intensified enforcement efforts regarding compliance. Even for overseas game products distributed remotely, authorities have collaborated with distribution channels to enforce compliance, compelling overseas operators to address violations and implement timely rectifications. This amendment further refines provisions regarding burden of proof and penalty grounds. Moving forward, enforcement agencies will no longer rely solely on the E-Commerce Act for penalizing probability disclosure violations. Therefore, we continue to advise game companies operating in South Korea to prioritize compliance with all probability disclosure-related details during game operations. In addition to referencing our team's previous publications (Comprehensive Analysis of Probability Disclosure in Korean Games, Q&A Interpretation of Probability Disclosure Business Scenarios in Korea), the following key points serve as a preliminary checklist for self-assessment:

1. For gacha-style mechanics: Probability information must be disclosed for acquiring all types, tiers, and performance levels of in-game items provided through random draws.

2. For enhancement mechanics: Probability information must be disclosed for acquiring all types, tiers, and performance changes provided through such mechanics. Here, “results of type, level, or performance changes” refers to alterations in the type, level, or performance of characters, items, pets, etc., held by materials, occurring according to predetermined probabilities.

3. For synthesis mechanics: For composite/synthesis-type random elements—where multiple game items are combined (including through specific combinations or conditions)—to yield different types, levels, or performance of game items at varying probabilities, the probability of obtaining all possible synthesis outcomes must be disclosed.

4. Probability Display Format: Probability disclosures must be presented as percentages (which may be rounded or displayed to four or more decimal places).

5. Measures for In-Game Probability Disclosure Limitations: A direct link to the random item probability disclosure webpage must be provided. If no official website/homepage exists, display on the homepage is optional. However, probability disclosure must be completed in-game as required. Probability disclosure may also be conducted via operational blogs, social media, or other channels.

6. Interface Design for Probability Information Display Across Game Channels:

(1) In-Game Probability Disclosure: Information must be directly displayed on the purchase, inquiry, or usage interface of probability items.

(2) Notification Methods for Probability Changes: If probability disclosure information for random elements requires modification, changes and their effective dates must be announced in advance on relevant game products and their official websites. Notification must be completed before the updated probability information officially goes live.

(3) Advertising Materials: Ads featuring random gameplay elements must disclose such elements. For video advertisements, text prompts indicating probability-based features must appear at the beginning of the video for at least 3 seconds.