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The bets are on for gambling in China

Thursday, November 7, 2013 | By:

Technically illegal in China, there is no doubt the nation loves to gamble. Whether it is over extended games of Mahjong in Chengdu, or sleazy gaming tables in Vegas, if there is a chance to bet, a Chinese won’t be far away. For many that want to gamble, a trip to Hong Kong (horses) or Macau (casinos and greyhounds) is often the order of the day. Or there is always a chance to bet on the national ‘lotteries’.

The legality of gambling in China is complex and its legacy is based on a set of specific historical circumstances. For one, like many things, gambling is believed to have originated in China. According to Urbino Gaming Management:

“The very first accounts of gambling were recorded in China. According to a report by Access Asia Limited (2002), keno, a form of gambling product, was first played in China 3,000 years ago. The basis of many of today’s favorite card games such as blackjack and poker are also thought to have been invented in China.”

During  the Mao era, gambling activities faced a strict ban, but after the Cultural Revolution gambling made a comeback and it became hugely popular again. By the 1980s people were gambling on anything. Then, it was taken back off the menu and became illegal again.

However, on realizing the huge profitability of gambling, the government decided to allow the establishment of a special gambling zone in the country, which was founded in Macau. There was no mistake in government predictions. Since 1999, the city became a world capital of gambling, even out-gambling Las Vegas every year since 2006.

For the rest of the China, however,  things are little less clear and several attempts at establishing more gambling zones have been proposed, most recently in Hainan. The Sydney Morning Herald reports:

“The closest Hainan has come to legalising casinos came this past February, when Zhang Baoquan, a Chinese property tycoon, told Reuters about a cashless casino bar in his Mangrove Tree resort in Sanya. There, gamblers could exchange winnings for items like luxury goods, jewellery, artwork, and accommodations. Zhang told the reporter that China was not yet ready to legalise casino gambling, but my personal opinion is, in future, there is a big possibility that they will”.

Perhaps unsurprisingly, shortly after Zhang’s interview his ‘casino bar’ was closed.

For the time being nobody is quite sure if and how the gambling industry might develop in China. Will it become legal? Or will there be, at least, more gambling zones established? Or will China only stick with Macau?

And this is where the national lotteries come into play; there are two national lotteries in the country – fully official, legal and are conducted on a massive scale – The China Sports Lottery and The China Welfare Lottery. Both are supported and supervised by the government. Some people would argue the terms ‘lottery’ and ‘gambling’ are just a matter of semantics and it is all the same, but on the Chinese mainland the differentiation is essential: it is that the former is legal and the latter illegal.

Aside from such national lotteries there are numerous online betting websites. The World of Chinese interviewed the owner of such a website who wished to remain anonymous. He told us that while poker and other casino games are totally illegal, online or offline, when it comes to sport and lotteries, there is a space for companies to act.

However, our online gaming mogul was eager to point out that there was a right way and the wrong way to go about the business. One way, he says, is to cooperate with the government while the the second one involves being more selfish and putting “all the profit gained in to your own pocket”.  The latter group has to hide and operate behind closed doors but gets more money. “We belong to the good side”, says our interviewee, “we are not so greedy, we cooperate with the government and help them to promote sports betting around the country.”

While many are frustrated about the future of gambling industry in China, the owner of the website says:

“You won’t be able to see casinos in mainland China even in 20 years. They might allow gambling in some special areas though. In order to operate a business in China you need to get a licence from the government. Companies are trying to get it for the sake of establishing casinos, yet, still unsuccessfully. Foreign companies want to get in too; but the only foreign company that got a permission to operate in China, was only successful after agreeing to cooperate with the China Sports Lottery. They have to be part of the lottery and can’t use their own name for marketing and promotion.”

As to sports betting and lotteries, the future seems to be much brighter:

“The potential here is huge. Last year the whole market for both China’s national lotteries  was 260 billion RMB and this year it will be 300 billion. Every single year the market sees a 30 percent rise.”

A lot of people don’t understand why the government in China doesn’t want to legalize gambling – as the profit potential is enormous and will boost economic development. Others believe there are good reasons for not doing so: Chinese people are very passionate about gambling, and it is justifiable to be afraid of a massive gambling addiction on a national scale, which could greatly disrupt a still developing society.

Legalizing the industry would mean taking it under government control. It is claimed that the underground gambling industry in China is currently worth one trillion RMB, which equals the entire economic output of Beijing. Legalizing it would mean boosting the Chinese economy with a significant amount of investment and destroying powerful gambling cartels (or at least diminishing their power).

In the end, it is  up to the government to decide what to do with the gambling industry in China. But in a country where no vice is legal but every vice is tolerated there will always be a space for maneuvering, legal or otherwise.

Image courtesy via flickr.com

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