Special Report – Fighting the “opium of the 21st century”

Diplomacy, education and law enforcement are key tools employed by mainland Chinese authorities to crackdown on illegal gambling, particularly online gambling, labelled by a mainland Government spokesperson as “a most dangerous tumour in modern society detested by people all across the world” 

MB October 2020 Special Report | The Chinese Gambler

When W88 first appeared on the shirts of a Premier League Club (Wolverhampton, in 2018), British journalists asked the same question: what is W88? 

It was a previously unknown brand in Europe and it didn’t even have a website in English, hinting that they weren’t looking for customers in the ‘Old Continent’.  

Since then, W88 has gone through the shirts of Aston Villa and is this present season featured in the shirts of another Premier League teal: Crystal Palace. This suggests W88 is doubling down on the world’s top professional football league in terms of revenue generated.  

This continued bet steps from a clear rationale: “a rapidly growing brand in the gaming industry with a strong presence in Asia, specialized in sports betting, live dealer casino, poker, slots and lottery games”, W88 has found a way – apparently effective – to enter China, as Premier League matches are broadcast on a number of local platforms. 

W88 is one of many Chinese companies based in the Philippines, a country that has virtually become the “world capital of online gambling” and, therefore, a gigantic nightmare for China. According to the latest available data (pre-Covid-19), POGO – or a Philippine Offshore Gaming Operator attracted more than 100,000 Chinese nationals who work in virtual casinos catering to players back in China. 

“Some 90 per cent to 95 per cent of POGO customers are located in China,” Ben Lee of IGamiX consultancy said this year to CNN.  

“Casinos in overseas cities attract Chinese tourists to go abroad for gambling activities, disrupting the order of China’s outbound tourism market, and endangering the personal and property safety of Chinese citizens” – Chinese Ministry of Culture and Tourism  

According to Chinese laws, this is illegal. Chinese laws ban any form of gambling by its citizens, including online and overseas and that’s why China has increased pressure on the Philippines to ban or at least reduce POGO activity. 

One year ago, the Chinese embassy in Manila released a statement saying online gambling in the Philippines had led to increased crimes and social problems in China, because “some gambling crimes and telecom frauds are closely connected”. The statement also said “hundreds of millions of Chinese Yuan” of gambling-related funds were flowing illegally from China to the Philippines. At the same time, the spokesman for the Chinese Ministry of Foreign Affairs expressed a desire to see Manila crush the POGOs, stating: “Online gambling is a most dangerous tumor in modern society detested by people all across the world.” 

But this battle front seems lost: the POGOs represent a source of revenue that is too important for the Duterte government, which limited itself to imposing moratorium on new licenses without moving on to more drastic measures, such as banning all activity. “They (China) can’t dictate to us,” answered Philippine ambassador to China. “Those are sovereign decisions. That is where we stand.” 

This is, however, only one front of the war China is wedging on gambling. 

Another battlefront is on education, as Canadian researcher Elisabeth Papineau underlines: “There are regular propaganda campaigns in China, often accompanied by dramatic, larger-than-life accounts in the press that attempt to denounce and eradicate gambling.” 

It is no accident that the official press sometimes labels gambling as “the opium of the 21st century”. “Due to the social acceptance of gambling within Chinese culture, there has been an increase in the participation rates of all forms of gambling. When gambling is considered as a recreational activity, it does not pose a threat. However, gambling can be addictive, and can result in irresponsible gambling and eventually Problem Gambling, which can lead to financial, emotional and relational stress.” 

What would just be an effectively “national pastime”, is decreed to be socially unacceptable and outlawed. Hence the public education campaigns in an apparent effort to deter such offenses. 

“China cracks US$184 million criminal syndicate bringing Chinese gamblers to Macau” is an example, among many others known in recent years, of information conveyed by China’s security services. The fight against crime underlying illegal gambling is the third front of this war. 

This particular operation, known four months ago, stands out for its depth and width. It is not limited to eliminating “an illegal criminal syndicate in Nantong city, Jiangsu Province”, which participated in illegal underground gaming (namely through an online gaming club in Haimen city for players to bet via the internet and by phone), but also involves Macau as the group brought in high-rollers to gamble in the MSAR, providing accounts in local casinos, and taking commissions ranging from 1 per cent to 2 per cent. 

China regards cross-border financial transactions linked to VIP gambling, as a national security risk, but the fact that the Macau market is still very dependent on high-rollers, means that steps are taken carefully. 

Last August, Beijing played the last card: the government established a “blacklist” system for cross-border gambling tourist destinations. “Casinos in overseas cities attract Chinese tourists to go abroad for gambling activities, disrupting the order of China’s outbound tourism market, and endangering the personal and property safety of Chinese citizens,” said the Ministry of Culture and Tourism. 

The announcement didn’t list the places concerned, nevertheless JP Morgan Securities (Asia Pacific) Ltd said: “We read this as a gentle warning to emerging jurisdictions in Southeast Asia – such as Cambodia, the Philippines or Vietnam, where proxy/video bets are allowed – and possibly to Australia, where a vast majority of VIP demand comes from China, predominantly via junkets.” 

According to the director-general of China’s Ministry of Public Security International Cooperation Department, Liao Jinrong, about RMB1 trillion (US$145.5 billion) in funds flows out of China into gambling activities every year, “posing a threat to the country’s economy and national security,” the Mainland press reported.