USFK responds to illegal-gambling reports
Stars and Stripes January 30, 2008
YONGSAN GARRISON, South Korea — U.S. Forces Korea is taking stringent new measures to prevent illegal gambling and loan profiteering off slot machines at military bases, USFK and Morale, Welfare and Recreation officials said.
USFK officials have ordered 100 percent identification card checks at all gambling facilities; base access rosters showing guest and sponsor names are under review; and commander Gen B.B. Bell will release a new gambling regulation no later than March 24, USFK spokesman Col. Franklin Childress said last week.
The action comes on the heels of a Stars and Stripes investigation into the slot machine program and a Stripes memo sent to USFK and Installation Management Command-Korea officials seeking comment on the depth of alleged wrongdoing.
Stripes learned from numerous sources over several weeks of reporting that much of the slot machine gambling on bases is illegally conducted by South Koreans escorted by people with authorized base access.
Military and MWR officials said those claims remain unsubstantiated, but a full investigation is ongoing with the goals of keeping the game rooms safe, abiding by the law and ensuring no one is using any MWR facility as an illegal business venture.
“Since these allegations have come to light, we have dramatically ramped up enforcement activities,” said Dan Ahern, chief of MWR for IMCOM-Korea. “The allegations are taken very seriously and frankly, we appreciate them coming to light so we can talk about aggressive action. With your help and your readers out there … I think it’s a problem we can put a stop to.”
The U.S. Army and Air Force generated more than $83.6 million in revenue via 1,191 slot machines in South Korea in fiscal 2007, according to data provided by the Army’s Family MWR Command and the Air Force Personnel Center.
The Army, which also runs the machines on Navy facilities in South Korea, earned the lion’s share: about $73.5 million with 927 machines. As a comparison, the Army’s 1,550 machines in Europe, including machines the service runs on Air Force and Navy installations, brought in $38.5 million during the same time period.
And since military slot machines offer a payout rate of about 95 percent, the $83.6 million in South Korea represents only 5 percent to 6 percent of the total money gambled in the machines that year. Although exact figures weren’t provided by the services, the total gambled in slot machines in South Korea would be about $1.4 billion in 2007 based on those machine return percentages.
Many community members brought their stories to Stripes by answering an online request seeking information. Almost every one did so on the condition of anonymity; many said they feared possible retribution.
They claimed the military wasn’t adequately preventing the decades-old practice of South Koreans gambling on base, which is illegal under the U.S.-South Korea Status of Forces Agreement.
They said an underground business involving escort fees and high-interest loans in gaming rooms on the American bases flourished and brought in untold numbers of South Koreans who often borrowed money from their escorts — military family members with base access — to feed their habits and the machines.
That money, in turn, has put millions of dollars into military budgets that pay for entertainment and family activities on bases, they claimed. Some asked where the command would find funding if the slots were banned, as proposed by U.S. Rep. Lincoln Davis, D-Tenn.
Gaming money helps pay for hotels, movie theaters, discounted cultural tours, bowling alleys, children’s sports leagues, hobby shops and other military and family services on overseas bases, according to MWR Web sites.
Ahern said it was too early to know whether the current investigation and stricter rules would affect gaming revenues.
And Rich Gorman, chief operating officer of Army MWR, said by telephone Wednesday that if revenues do fall, MWR will try to make up for the loss through cost savings and other methods.
Some say there are hidden costs that the military has ignored.
Some of those who talked to Stripes, including former servicemembers and military contractors, complained that loan-sharking and other improper practices in the gaming rooms have cost some military families thousands of dollars.
One former soldier, who now works at an Army camp near the Demilitarized Zone, said his wife depleted family finances and borrowed money at interest rates as high as 30 percent from loan sharks who linger in the gaming rooms.
“They just sit in there and loan money out,” said the retired sergeant first class, who served many tours in South Korea before retiring. “My wife borrowed $15,000 from these leeches.”
All told, she has gambled away more than $60,000, he says. He said she wouldn’t talk to Stripes.
Others told similar stories.
A former command sergeant major said his wife borrowed money in the gaming rooms as well. After 30 years in the Army, the retired soldier said he’s angry that the military seems to ignore this practice but expends so much energy on combating black marketing.
“As long as they are making money, they don’t care,” he said.
Nearly three years ago, a South Korean woman, identified only as Kim, was charged with running an illegal currency exchange business after local officials found she had charged entrance fees in exchange for signing in almost 180 Koreans onto base.
She was accused of charging 30,000 won (at the time, about $30) for access an estimated 900 times between 2002 and 2005, Seoul police said at the time. The police suspected she racked up 1.2 billion won, or more than $1 million, from the illegal business.
Seoul police said the woman got access to the base through a cultural friends group. As a member, she had permission to be on the base, but not in the gaming rooms.
A police lieutenant with the foreign affairs section of the Seoul Police said last week that he remembered the case and believed that the woman received a suspended sentence. He was unable, however, to provide any specifics.
The lieutenant spoke on the condition of anonymity, which is common practice in South Korea.
He said that although her case was the last officially investigated, he believes that other people are committing the same sort of crime on U.S. bases in South Korea.
The problem, he said, is that the Korean police don’t have access to the base to conduct their own investigations.
Ahern and Gorman said gambling rules have long been enforced, referring to spot ID card checks as one example of enforcement.
However, one source said base employees warn illegal players before the spot checks occur.
“That clearly defeats the purpose of internal control,” said Gorman, who said anyone who witnesses employees warning illegal players should call a black marketing and illegal gambling hot line at DSN 738-5118.
As of Jan. 20 all Army bases in South Korea were ordered to begin checking IDs for anyone in the game rooms and base clubs. In the past 18 months, only Camp Humphreys and Daegu-area bases have periodically conducted 100 percent ID card checks, Ahern said.
In 2003, one person was permanently barred from base and 10 others were suspended for six months on the assumption of illegal gambling, MWR officials said.
Gorman, who managed the Dragon Hill Lodge from 1998 to 2005, said some allegations of illegal South Korean access could be directed toward authorized users of Asian descent. That would be taken into account during enforcement, officials said.
“We’ll be careful to ensure there is no discriminatory aspect to this,” Gorman said.