Group Raised Funds by Selling Seed Rights... Operated Gambling Ring Worth 38 Billion Won

Selling Hold'em Tournament Seed Tickets at 100,000 Won Each
Tournament Operator CEO Arrested... 216 People Detained

A group involved in hosting unauthorized Hold'em tournaments and operating gambling games with stakes worth approximately 38 billion KRW has been mass arrested by the police.

The Seoul Metropolitan Police Agency's Criminal Mobile Unit announced on the 11th that they arrested Kim Mo, a man in his 40s and the representative of the tournament operating company, on charges of operating a gambling establishment for holding unauthorized Hold'em tournaments at large hotels in Seoul and Incheon. In addition, 11 employees were also arrested on the same charges. Among them, Kim was detained, while two employees were released without detention and handed over to the prosecution last month.

[Image source=Yonhap News]

Furthermore, 204 people including business owners who operated paid games at Hold'em pubs with tournament participation tickets, ticket sellers, and operators of ticket trading applications (apps) were also arrested by the police on charges of aiding and abetting the establishment of gambling venues.

The police seized approximately 4.6 billion KRW of the revenue earned by the tournament operating company before prosecution and also confiscated a rental deposit of 100 million KRW and one vehicle as part of seizure preservation measures.

According to the police, Kim and others are suspected of setting the price of so-called 'seed tickets,' which represent tournament participation rights, at around 100,000 KRW each and selling them to individual and affiliated Hold'em pubs from January 2022 to January this year.

Investigations revealed that Hold'em pubs that purchased seed tickets awarded them to customers who won their own games instead of cash prizes. They also accepted seed tickets priced at 100,000 KRW as entry fees for their own games instead of cash, encouraging customers to use seed tickets like cash.

Moreover, as winners of Hold'em pub games began selling seed tickets for cash through messenger open chats and other channels, seed tickets started to transform into a kind of currency. Especially, until September 2022, seed tickets were issued only as physical paper coupons, but with the issuance of electronic coupons through applications, trading of seed tickets between individuals became easier. In effect, individual Hold'em pubs became distribution channels for seed tickets.

Kim's group raised the tournament prize money by selling seed rights to Hold'em pubs and individuals at around 100,000 won per ticket.
[Image source=Seoul Metropolitan Police Agency]

The revenue from seed ticket sales became the prize money for the Hold'em tournaments hosted by Kim. Kim held Hold'em tournaments in the metropolitan area where participants had to submit 50 seed tickets to enter. He collected the seed tickets from participants and paid out 80% of the seed ticket sales revenue as prize money. The remaining 20% was recorded as profit for the tournament operating company run by Kim.

In fact, at a tournament held at a hotel in Seoul in June last year, 10.3 billion KRW worth of 10,300 seed tickets were collected from 206 participants. Each participant submitted 50 seed tickets, and a total of 824 million KRW in prize money was distributed on a tiered basis. Using this method, Kim and his group held 47 Hold'em tournaments and sold seed tickets worth a total of approximately 38 billion KRW.

The police estimate that the amount of profit earned from the total stakes of 38 billion KRW is between 8 billion and 9 billion KRW. However, a police official explained that since many transactions were conducted in cash, making it difficult to prove income, the amount subject to seizure preservation was conservatively set.

They evaded legal scrutiny by using an indirect betting method, selling seed tickets instead of accepting cash entry fees to prepare prize money for the Hold'em tournaments. Under current law, gambling charges require that the game be played with property interests at stake, but they exploited the fact that if seed tickets are considered merely tournament participation rights and not property, gambling charges cannot be established.

In April last year, after receiving intelligence that large-scale unauthorized Hold'em gambling was taking place at major hotels in the metropolitan area, the police began an investigation, judging that submitting seed tickets with certain property value and participating in Hold'em games to share prize money constituted gambling.

The police applied for a pre-arrest warrant against Kim and focused their investigation on proving the property value of the seed tickets.

A police official said, "The suspects promoted that seed tickets had no property value and held tournaments, so we tried to prove illegality on the surface. We focused on the fact that seed tickets were the source of the stakes and circulated like cash in Hold'em pubs."

He added, "Holding games with seed tickets that can be cashed out at Hold'em pubs as prize money is illegal. Participants should clearly recognize that such acts constitute gambling and be cautious not to become involved in illegal gambling tournaments in the future."

This content was produced with the assistance of AI translation services.