Mandatory Disclosure of Game Probability Information with Punitive Damages?... Divergent Reactions from Game Companies and Gamers

Seungsoo Kim, People Power Party Lawmaker, Proposes Bill on Punitive Damages and Burden of Proof Shift for Game Companies
Industry: "Are Regulations Piling Up... Overseas Game Companies Will Face Increased Discrimination"

Despite the introduction of the mandatory disclosure system for game item probability information, errors in displaying probability information by various game companies continue to occur. In response, a bill has been proposed in the National Assembly to hold game companies liable for damages if they display false probability information and cause harm to users. While users welcome the bill, game companies are opposing it, calling it excessive regulation.

According to industry sources and the Legislative Information System on the 24th, Kim Seung-su, a member of the People Power Party, recently proposed an amendment to the "Game Industry Promotion Act." The main points include imposing compensation liability on game companies if they fail to disclose probability information for probability-based items or post false information causing damages, and introducing punitive damages up to twice the amount for damages caused intentionally. The bill also includes shifting the burden of proof to the game companies to prove that there was no intent or negligence on their part.

Game users have welcomed the proposed amendment. Lee Cheol-woo, a lawyer and president of the Korea Game Users Association, said, "Unless the game company admits fault themselves or there is a whistleblower from inside, it is practically impossible for users to objectively prove manipulation of probabilities against game companies. Since game companies selectively submit only favorable evidence in lawsuits, there are high expectations for the shift in the burden of proof."

Although the mandatory disclosure of probability information was implemented earlier this year, errors in displaying probability information persist. Recently, Krafton released paid collaboration products with NewJeans and PUBG called ‘PUBG X NewJeans Loot Pack’ and ‘PUBG X NewJeans Premium Bundle.’ Despite the ‘pity system’?which guarantees rewards after a certain number of attempts?not being applied, the products were presented as if the system was in place, causing controversy.

Earlier, Wemade faced user complaints for increasing the appearance rate of the item ‘Radiant Element of Harmony Extraction’ in the MMORPG ‘Knight Crow’ from 0.002% to 0.00396%.

The game industry opposes the bill, arguing that it adds regulation on top of existing regulations. An industry official stated, "Even before the mandatory disclosure of probability information, a culture of voluntary disclosure was already established. The compliance rate among domestic developers was as high as 97%, with only occasional mistakes. Adding further regulations on top of the existing mandatory disclosure could further stifle the development of the game industry."

The industry is particularly concerned about increased reverse discrimination against overseas game companies. The current mandatory disclosure system exempts game companies with sales under 100 million KRW from the disclosure obligation. To verify the sales of overseas game companies, cooperation from app markets like Google and Apple is required, but these app market operators claim that sales figures are sensitive customer information and are difficult to provide. An industry representative expressed concern, saying, "Punitive damages laws will likely not apply to overseas game companies. In the end, this bill will only tighten restrictions on domestic game companies."

The Ministry of Culture, Sports and Tourism plans to address the reverse discrimination issue by promoting the ‘Domestic Agent Designation System’ as the first bill of the Ministry in the 22nd National Assembly. However, both the industry and game users remain skeptical about whether game companies that fail to comply with the probability information disclosure obligation will adhere to the domestic agent designation requirement.