A full revision bill to the Game Industry Promotion Act, proposed by Democratic Party lawmaker Cho Seung-rae (조승래), has entered the National Assembly's deliberation stage.

Hwang Sung-ki (황성기), a professor at Hanyang University Law School, assessed at a March 13 seminar of the Korean Association for Game Policy Studies that the bill amounts to a change that effectively rewrites the basic structure of the game law.

Legal circles expect disputes over scrapping prize regulations, the possibility of allowing P2E (Play-to-Earn), and governance restructuring to generate significant controversy during the legislative process.

◆ 'Sea Story trauma' 20 years on… why a full overhaul now

The current game law was enacted in 2006 after being separated from the Act on Sound Records, Video Products and Game Products. But the same year, the 'Sea Story incident' erupted in May, and the law was revised for the first time on Jan. 1, 2007, after it took effect. At that time, three regulations were introduced as a package: the concept of gambling game products, a ban on providing prizes, and a ban on currency exchange businesses for game results. The problem is that regulations triggered by arcade games were applied as they were across online games in general.

Hwang said these three systems have remained in place to this day, drawing criticism that the current game law has not moved beyond the 'Sea Story trauma.' He said Cho's bill is an attempt to legislatively settle that trauma.

The backbone of the bill is a dual-track regulatory system for games. It legally separates arcade games and online games that had been grouped under a single framework. The bill changes the term 'game products' to 'games' and classifies games into 'fixed-location games' (arcade games) and 'digital games' (online games). Based on the original draft, the substantive effects of the bifurcation are twofold.

It would keep prize regulations only for arcade games while scrapping them for online games. It would also split game ratings so that a private self-rating operator handles online games and the public Game Rating and Administration Committee handles arcade games. Hwang said keeping regulation for arcade games and shifting online games from regulation to promotion is positive in terms of direction.

◆ Scrapping web board prize rules; culture ministry opposes

The most sensitive variable under the bifurcated structure is web board games. Web board games, including Baduki, poker and go-stop, technically fall under digital games because they use internet networks. Under the original draft, they would fall outside the scope of prize regulations.

Hwang said the core of the web board issue is whether to scrap application of the ban on providing prizes, rather than the rating method. He said the Ministry of Culture, Sports and Tourism opposes this part. He said a compromise could be to allow prizes for online games in principle but keep web board games as an exception and maintain existing regulations, adding that such an approach would make passage more likely. Hwang, an attorney, cited a case in which related companies' share prices surged on the possibility of raising monthly payment limits, and said the impact of web board deregulation on the market is not small.

The possibility of allowing P2E games was also a main topic during a question-and-answer session. Since the Game Rating and Administration Committee has refused to rate P2E games on the grounds of the ban on providing prizes, some see the situation changing if prize regulations for digital games are scrapped.

Attorney Kim Won (김원) said companies that had operated P2E games filed lawsuits, but all lost because courts strictly interpreted the prize regulation. He said if the bill passes, the structure that uniformly blocked P2E under the game law could weaken. But he drew a line, saying it would not allow gambling and betting and that crossing the line would lead to other legal regulation.

Hwang, an attorney, put greater emphasis on concerns about a regulatory vacuum. He said deleting the ban on providing prizes would eliminate the basis for regulation itself, potentially resulting in what is effectively unlimited permission. He said he hopes additional legislation to minimize gambling elements is added so the system changes to a limited form in line with global standards.

The need to link P2E with virtual asset legislation was also raised. Hwang said virtual asset-related issues such as money laundering could create a legislative vacuum in the game law revision bill and require careful review. Kim said the direction of the bill is not to actively allow P2E but to remove excessive regulation, adding that virtual asset-related content could be handled in an enforcement decree or separate law rather than in the game law.

Hwang and Kim differed on the possibility of allowing social casino games. Hwang said the provision to refuse ratings for social casinos remains in the bill, so it would remain possible to deny ratings even after delegation to the private sector. Kim said whether something qualifies as gambling is a matter of judgment, leaving room for interpretation that some areas could be eased compared with before.

◆ New punishment for users of hacking programs; non-prosecution-upon-no-wish rule for illegal servers

In his presentation, Hwang singled out the creation of a provision to punish game users as the key issue among clauses related to illegal programs such as hacking programs. The bill includes not only businesses that develop and distribute illegal programs but also users who habitually use them and cause serious disruption to other users' gameplay as subjects of punishment. It adds requirements such as 'habitual' and 'serious disruption' to limit the scope, but Kim said there are concerns about excessive legislation and that discussion will continue. Hwang also expected discussions to emerge on making the clause an offence subject to complaint or a non-prosecution-upon-no-wish offence.

A proviso was added to the clause on illegal private servers that excludes cases in which a game-related business approves after the fact or does not want punishment. This is a non-prosecution-upon-no-wish provision, which does not exist in the current law. Hwang said illegal private servers can be divided into cases run maliciously for copyright infringement and cases run in good faith for nostalgic purposes for games whose service has ended. He said the intent is to punish malicious operation but to prevent punishment in good-faith cases if the game company does not want it. Hwang, an attorney, added that if a game company signs a post hoc licence contract or grants permission, it also has the effect of encouraging legalisation by exempting punishment.

The bill also includes a governance reshuffle that would split off the Korea Creative Content Agency's game-related functions, establish a Game Promotion Agency as an independent corporation, and reorganise the current Game Rating and Administration Committee into a 'Game Management Committee' under the Game Promotion Agency. As digital game ratings are delegated to the private sector, the Game Management Committee would mainly handle ratings and post-management for arcade games. Hwang said governance restructuring must be premised on first weighing the efficiency and limitations of the current system, and pointed to the need to review whether the new structure can substantially solve existing problems.

On the point that placing a regulatory body under a promotion agency is unusual, Hwang replied there is a similar precedent under the Publishing Culture Industry Promotion Act, which places the Publications Ethics Committee under the Korea Publishing Culture Industry Promotion Agency. On some claims that the structure could be unconstitutional, he dismissed them, saying the Constitutional Court has already ruled that the ratings system itself is not prior censorship, so having a single-headed body handle ratings does not violate the ban on prior censorship.

Separately, the bill would abolish the optional shutdown system, introduced first by the culture ministry in 2011 in response to moves by the Youth Protection Committee to push a mandatory shutdown system. It also excludes obligations for identity verification for games rated for all ages and for obtaining consent from legal guardians.

On the legislative timetable, Hwang, an attorney, said if opinions are gathered through a public hearing and other steps, passage by the National Assembly within this year is possible.

Choi Seung-woo (최승우), vice president of the Korean Association for Game Policy Studies, said the key variable for the actual schedule will be whether a public hearing is held in the existing standing committee or the new one, as standing committees are expected to be formed in the second half after June local elections.

Hwang said the Democratic Party's special committee on the game industry regards the bill as the result of strategic discussions at the party level, and he said not a small amount of policy weight could be placed on the legislative drive going forward.