Haengbok Lottery consortium dropped as preferred lottery operator and announces lawsuit

The Haengbok Lottery consortium, which was selected as preferred negotiating partner for South Korea's next lottery concession covering 2024 to 2028 and then excluded over the submission of false documents, said on February 28, 2023 that it would file for an injunction at the Seoul Central District Court that afternoon seeking to preserve its status as preferred negotiating partner for the lottery trusteeship business¹.

A co-chief executive of Haengbok Lottery, identified only as Mr. A, said in a statement distributed to media that the Ministry of Economy and Finance, having learned through a search for the source of a tip that he was a public interest whistleblower who had reported internal irregularities, delayed signing a contract that law required to be concluded by February 3 and then unilaterally notified him that negotiations had stopped, amounting to retaliatory disadvantage¹. He said he had reported to the Anti-Corruption and Civil Rights Commission, and tipped the media, that ministry officials and the current operator Donghaeng Lottery had covered up an error and fraudulently sold about 25 billion won worth of tickets whose winning expected value was damaged¹.

The ministry rejected the account as false. It said calling the Public Procurement Service's legitimate action over wrongdoing in a competitive bid a disadvantage did not match the facts, that the Lottery Committee had no authority to exclude a preferred negotiating partner, and that it had simply notified the procurement service without addition or omission of content found to differ from fact during due diligence on the proposal¹.

The ministry said the penalty imposed on a Haengbok Lottery official was not a light matter given that the responsible executive was dismissed and trading in the company was suspended on the Kosdaq market for a period, and that the penalty could easily be checked through computer records¹. It said Haengbok omitted the penalty history of the largest shareholder of a constituent company and falsely stated a co-chief executive's lottery-related career¹. A ministry official said the change of preferred negotiating partner had nothing to do with the public interest report, and that the reported matter had already been explained in 2021¹.

The ministry said in November that year, after the recall became known late, that tickets then on sale at retail outlets were normal tickets with no problem¹.

What it means for players

The dispute concerns who runs the lottery trusteeship business, not the validity of tickets already sold. The ministry has said tickets currently on sale at retail outlets are normal tickets with no problem¹. The recalled tickets were from the 58th round of Speetto 1000 in September 2021, where the printed result and the computer result differed on six tickets¹. The outcome of the injunction application will not change the rules for buying or claiming prizes, and no change to prize terms has been reported.

What happens next

Haengbok Lottery said it would file the injunction application at the Seoul Central District Court on the afternoon of February 28, 2023¹. No hearing date or ruling has been reported. The ministry has said the preferred negotiating partner was changed to Donghaeng Lottery¹.