Inside Asian Gaming

INSIDE ASIAN GAMING | June 2008 market’onshore bookmakers appear to have been operating with either the collusion or support of individuals or organisations inside the state sector. An example is Vietnam, where one of the masterminds of a sports index turned out to be a senior official from the country’s road development authority who got arrested, presumably because he either fell out with or failed to pay off someone higher up the food chain. If the logic for states cracking down on unregulated sport betting is the protection of public morals (China banned gambling in 1949 after the communists took over), then it is a bit of a paradox that many of them have created their own domestic gambling industries in the form of lotteries. China’s welfare lottery has been going since 1987 (a lot longer than the United Kingdom’s National Lottery) and the sports lottery began in 1995. Flawed logic If the logic of police action is to curb tax evasion and anti-social behaviour, then it conveniently ignores some important facts. Asian gamblers are choosing offshore and unregulated gambling not because they have a desperate desire to thumb their nose at authority, but because it’s fun, and because most state-sanctioned gambling doesn’t offer anything nearly as exciting. There’s evidence from Hong Kong, though, that when consumers are offered alternatives to offshore or unregulated betting, they are happy to take them up. There’s also evidence from Hong Kong that Asian consumers are also willing to move beyond the regional obsession— Asian handicap betting—if they are offered the right products. Hong Kong success The daily volatility of working capital associatedwithAsian sport bettingdid cause some initial problems for the authorities in Hong Kong. When the Hong Kong Jockey Club (HKJC) introduced fixed odds and ‘in play’ soccer betting in late 2003, the government was thrown into panic on the first day of business after the HKJC recorded a trading loss for the day amounting tomany millions of Hong Kong dollars, according to an industry source. The source told IAG:“For some reason— I’m still not quite sure how—the people running it managed to persuade the HKJC hierarchy and the government to persist with soccer betting, and it’s now turned into a very good business for them.” In 2001, the Hong Kong Government conservatively estimated annual turnover on illegal football betting to be approximately HK$20 billion. Two surveys conducted in 2001 and 2005 found that some 4.2% and 2.1% respectively of Hong Kong’s adult population had bet on football with a local illegal or unauthorised offshore bookmaker in the year preceding the surveys. Tax take Since the introduction of regulated football betting by the Hong Kong Jockey Club in late 2003, the proportion of people betting with illegal bookies has decreased, according to the government. HKJC now offers a wide range of ‘in play’ fixed odds betting products including Asian handicap andHiLo (where a playermay bet onwhether the total number of goals scored in a match is higher or lower than the number specified by the operator), as well as traditional forms of soccer betting such as first half and full time score predictions. After the new products came on the market, tax revenues from regulated football betting in Hong Kong have risen 64.3% from HK$1.65 billion (US$211 million) in the 2003-04 season, to HK$2.71 billion (US$347 million), according to the local government. Olympic bets AGTech, a Hong Kong-based company that provides technical support to China’s sports lottery, said recently that the mainland government was considering the introduction of fixed-odds sport betting via the official sport lottery. It seems unlikely, however, that this will include betting on Olympic events—not even during the Olympic soccer tournament. The International Olympic Committee (which has itself not always been a beacon of virtue when it comes to corruption and business ethics) actively discourages betting on Olympic events, though a wide variety of online companies across the world will offer such services. There are no restrictions, though, for Olympic-themed products. In March the Chinese government announced trial sales of an Olympic-themed instant lottery game in four provinces with ticket prices set between five and ten yuan. Ostrich-like Incorporation,ratherthancriminalisation, is the only sensible way forward for sports betting in Asia. Police raids look good on television but tend to mask an important truth. Non state-sanctioned sports betting is hugely popular in China and other countries in Asia because it is fun for players,rewarding for operators and satisfies a need not filled by most state-sponsored betting products. The Greek philosopher Aristotle once observed that in the physical world nature hates a vacuum.What he meant,say scholars, is that in nature something will always move to fill up an empty space. It’s the same principle with goods and services. Unless or until governments have the courage and foresight to enter the sports betting market with good quality products that players find exciting, then they and the rest of the world really cannot complain if Asian punters seek their thrills in the offshore or unlicensed betting world. Sports Betting 24