Inside Asian Gaming

INSIDE ASIAN GAMING | June 2008 22 the word ‘illegal’ when discussing Asian gambling in general and sport betting in particular. Many governments have a tendency to define any form of betting they do not directly control as ‘illegal’ regardless of whether this assertion has been tested in the courts. In the case of online operators, all the reputable companies are licensed and do pay tax, albeit offshore and often at a lower rate than the official onshore gambling industry. Given that many governments dislike the fact they’re missing out on a source of potential taxation, an obvious question is why don’t they simply set up shop as sports bookmakers and go head to head with the competition? An important factor against this strategy seems to be that many are concerned about the business risk. Excitement for punters comes at a price, and that price is a decent margin for bookmakers, but also significant commercial hazard.Losses from trading on any given day can be significant with implications for the bookmaker’s working capital and liquidity. When several of the bigwestern bookmakers tried to enter the Asian sports market they took a bit of a spanking. Volatility One reason for the volatility is that traditionally in this region the format for football betting has been the ‘Asian handicap’ system. Here, customers are offered bets based on notional handicaps placed on stronger teams playing weaker ones.An example would be for a bookmaker to offer a three-goal start to this season’s English Premier League no-hopers Derby County in a fixture against Manchester United. The handicap automatically eliminates a draw result and means anyone betting on United to win would need at least a 4-0 victory. ‘Win’ bets on Derby, the EPL’s worst ever team, would pay out on any United score inferior to that. The Asian handicap came about because of the nature of soccer game scoring. Given that there are normally only a limited range of outcomes for result and score in a soccer match, odds based only on final outcomes tend tobe short,andmargins for bookmakers and returns to player on such betting tend to be low. In Europe, one of the answers to this problem was spread betting, where the pay- off is based on the accuracy of the wager, rather than a simple ‘win or lose’ outcome. A spread is a range of outcomes, and the bet is whether the outcome will be above or below the spread. In Asia though, where trust of institutions tends to be low, spread betting is simply considered too complex and too vulnerable to fraud. Groupthink Group logic from the government sector seems to be that sports betting means Asian handicap betting and that things will stay that way until doomsday. The public sector by its nature tends to be risk averse, and is populated by career civil servants, not entrepreneurs, which is essentially what a bookmaker really is. Civil servants think the Asian handicap is too commercially risky and that the forms of sports betting that are less risky from a government perspective won’t be popular with punters. So, instead, most Asian governments seem to prefer standing by the touchline, booing the industry players who are already out on the pitch. Part of this campaign involves briefing media sources about alleged levels of ‘illegal’ sports betting. Raids As the first cuckoo song heralds spring in Europe, so the arrival of UEFA’s European Football Championship on Asia’s television screens this month is almost bound to provoke a ritual of police raids on alleged gambling dens in China, Vietnam, Malaysia and elsewhere, just as the advent of FIFA’s World Cup in 2006 did. While in some countries backstreet bookmakers and even agents channelling funds to legitimateonlinebettingcompanies may be at risk of breaking specific laws, the patchwork of different national regulations means that in the Internet age it is very hard for online betting companies to knowwhere they stand. One of the few exceptions is Hong Kong, where it’s black and white clear that online offshore gaming is illegal. Collusion In other jurisdictions, allegedly ‘black Manchester United is often given a heavy handicap by bookmakers in Asia