YOON&YANG

On July 10, 2026, the Game Rating and Administration Committee (hereinafter "GRAC") held a briefing session on the Domestic Representative system. The session sent a clear signal: the GRAC is intensifying its scrutiny of overseas game companies’ compliance with probability-type item disclosure rules and is moving to strengthen the Domestic Representative system through legislative reform. This alert summarizes the key takeaways and their practical implications for overseas game companies operating in Korea.

1. Rising Violations Among Game Companies and Stronger Inspection Ahead

2. Legislative Reform to Strengthen the Domestic Representative System

3. Other Compliance Pitfalls Flagged by the GRAC

4. Practical Implications for Overseas Game Companies

1. Rising Violations Among Game Companies and Stronger Inspection Ahead

A. Non-Disclosure of Probability Odds: the GRAC’s Top Concern

The GRAC identified the failure to disclose the odds of probability-type items as the compliance issue it treats most seriously. The violation rate among overseas game companies rose from 67% in 2024 to 72% in 2025, and non-disclosure — whether partial (40%) or complete (14%) — now accounts for more than half of all violations identified.

B. Common Violation Patterns Cited by the GRAC

The GRAC pointed to the following as representative violation patterns identified in actual corrective-action cases:

• Disclosing probabilities only within the game itself, without posting them on the company's official website

• Disclosing probabilities only by grade or tier, without item-specific detail

• Failing to disclose probabilities to four decimal places

C. Disclosure Standards for Dynamically Changing Probabilities

For structures where probabilities are not fixed — for example, where the odds increase with each attempt following ten consecutive failures — the GRAC clarified the applicable disclosure standard:

•  Where the change follows a fixed rule, the rule itself should be disclosed.

•  Where the change depends on individual user-specific factors, the real-time probability should be disclosed.

•  Where disclosure is difficult due to a complex business model or mechanism, companies may consult the GRAC for guidance on an appropriate method.

D. Enforcement Outlook

The GRAC announced plans to publish foreign-language (English and Chinese) violation case studies — a clear signal that inspections targeting overseas game companies will intensify. No specific release date has yet been announced.

2. Legislative Reform to Strengthen the Domestic Representative System

A. Current Compliance Status

Of the 81 companies currently subject to the Domestic Representative designation obligation, 80 have completed designation, with corrective measures underway for the one remaining company. Even so, the GRAC is not satisfied with the status quo and is pursuing legislative reform to reinforce the system’s effectiveness.

B. Key Provisions of the Pending Amendment Bill

A partial amendment to the Game Industry Promotion Act (the "GIPA") — Bill No. 2211759, sponsored by National Assembly Member Cho Seung-rae — is currently pending before the National Assembly. Its key provisions would:

•  Require priority designation of a domestic corporation as Domestic Representative where an overseas game company has established, or exercises a controlling influence over, that domestic corporation

•  Impose supervisory duties on the overseas parent company, requiring it to train and inspect its Domestic Representative's performance

•  Grant the Minister of Culture, Sports and Tourism authority to request materials — such as user numbers and revenue — to verify whether a company meets the designation criteria

•  Strengthen enforcement by empowering the government to deny, suspend, or restrict a company's use of information and communications networks, and to impose administrative fines, where a company fails to comply with a corrective order relating to Domestic Representative designation or probability-type item disclosure

C. The GRAC’s Position

The GRAC expressed support for the direction of the pending amendment and stated that it is separately reviewing additional measures to further strengthen the system.

3. Other Compliance Pitfalls Flagged by the GRAC

Beyond probability disclosure, the GRAC flagged the following recurring issues involving game terms of service ("ToS"):

•  ToS not provided in Korean — Korean must be the controlling language; foreign-language versions may be provided alongside it

•  ToS not separately displayed — many companies address only their privacy policy, without a standalone ToS

•  Poor accessibility — a ToS URL exists but is not linked from the company's website

•  Incomplete in-game coverage — ToS for some operating titles are missing; the GRAC recommends disclosing terms for every game currently in operation, ideally through a single, unified ToS format

4. Practical Implications for Overseas Game Companies

Taken together, these developments confirm that Korea's Domestic Representative system is entering a period of stricter enforcement. Given the rising violation rate and the GRAC's plan to circulate foreign-language case studies, overseas game companies should treat probability-type item disclosure — including the four-decimal-place requirement and the dynamic-probability disclosure rules — as an immediate compliance priority, alongside a review of their Korean-language terms of service for completeness, accessibility, and coverage of every title currently in service.

Companies with a controlling domestic affiliate should also monitor the pending GIPA amendment, which would introduce mandatory priority designation of that affiliate as Domestic Representative and impose new supervisory duties on the overseas parent company. More immediately, the GRAC is expected to issue new Domestic Representative designation notices around October 2026 to any company with global annual revenue of at least KRW 1 trillion or average daily downloads in Korea of at least 1,000 — meaning overseas game companies approaching either threshold should begin preparing their Domestic Representative designation now. Companies subject to the designation obligation that fail to designate a Domestic Representative will face administrative fines of up to 20 million Korean won(about 13 thound USD) per year.

Yoon & Yang has the highest number of game Domestic Representative contracts among domestic law firms of Korea.

Yoon&Yang Game Center consists of professionals and experts with rich practical experience in relevant bodies, specializing in the game industry. We proactively monitor issues and are ready to respond quickly to all legal matters regarding the game sector. For inquiries, please contact us at any time.