Chinese Government Attempting to Halt Rise in Online Gambling
Online gambling, both in fields like esports and in general, has seen a dramatic rise in recent years on a global scale. However, that rise has not been without a multitude of problems. Indeed, the rise of esports gambling has resulted in a severe lack of industry regulation. Another growing problem for online gambling is in China, where gamblers are avoiding anti-gambling laws by betting remotely in other countries.
The Rise of Online Gambling in China and the Current Problems
Officially, the Chinese government bans gambling in the country, and this ban extends to online gambling. However, in practice, this law is proving very difficult to enforce when it comes to online gambling sites. As a result, despite the ban, the Chinese gambling market is already a multi-billion dollar market and one that is continuing to grow. Gambling itself isn’t necessarily the problem here, however. The problem is that as Chinese gamblers flock to online sites registered in other countries, the profits of those sites don’t flow back into the Chinese economy.
Many of these sites are currently hosted in countries like Cambodia and the Philippines, which permit international online gambling. In fact, many of the sites operating in this market are intentionally difficult to contact. As a result, policing them is infamously tough. (A near universal problem, in fact, when it comes to shadier online businesses.) According to IGamiX gaming consultant Ben Lee, quoted in Bloomberg Businessweek; “Many online gambling companies operate under the radar. There are so many of them. It’s like China’s trying to whack a mole.”
China is currently attempting to lobby governments in these countries to outlaw or more strictly control these operators. Supporting their case are apparent ties to fraud within the online gambling market, as operators prey on low-income gamblers lured to the sites by low wager amounts. The problem isn’t solely outside of China either; several Chinese banks allow gamblers to receive their winnings from these sites via accounts they own. Other gambling operators make use of online payment platforms, including one owned by Tencent. In this arena, however, some companies (including Tencent) are now working with the government to tighten restrictions and combat illegal gambling.
Can the Growth of Illegal Gambling be Curbed?
Although illegal gambling continues to be a problem, the Chinese government has made some progress. After lobbying the Cambodian government over the issue, Cambodia has pledged not to issue new online gambling licenses. It also won’t renew any licenses that expire. Meanwhile, the Philippines has stopped accepting license applications, at least in the short-term. However, the Philippines are avoiding a full ban on international online gambling, which China wants. Of course, the online gambling market does directly benefit their own economy; as such, they prefer to regulate rather than ban outright.
“It’s become a cross-border business,” explains law firm Lin & Partners’ David Lee; “and it’s very difficult for China to prosecute”. After all, the market is lucrative for the economies of countries where it is hosted. As a result, those countries don’t want to harm their own economic growth. Of course, while many online gambling operators currently operate in Cambodia and the Philippines, a severe tightening of regulations or ban on operation in those countries would likely only push such operators elsewhere. As such, an outright ban may only be a temporary fix, and an unpopular one at that in the countries where these sites are operating.
This is a particular problem for China. However, it’s also a problem for other countries which restrict online gambling sites from operating within their borders. The accessibility of the internet means that gamblers don’t need to look far for sites. If they’re hosted in another country, then the economic benefits of the business go directly into that country’s economy. China has problems with this area in particular because it is one of the largest countries in the world that bans gambling outright, making it a much larger-scale problem. Nevertheless, there are more and more countries taking steps to curb illegal online gambling.
An Illustrative Lesson for Other Countries and Industries
Ultimately, the answer may be the same possible answer for the rise in illegal esports gambling; regulation. Much as the ban on alcohol during the prohibition era of the US only succeeded in turning alcohol sales into a criminally-run black market, a complete ban on online gambling leaves consumers with no alternative to shadier online enterprises operating abroad. Turning to other areas, and gaming in particular; industry watchdogs have been calling for the esports industry to self-regulate in order to curb issues with illegal gambling. While that solution is unlikely to work in China’s case, as the Chinese government is unlikely to countenance ending their ban, their struggle with illegal gambling may illustrate an important point elsewhere.
Indeed, ensuring that the online gambling industry is properly regulated is something which some countries, such as the UK, have sought to do in recent years. The UK’s Gambling Commission, for example, regulates the country’s gambling industry and provides a platform for consumers to complain about companies and their practices. Consumers in some countries also have the benefit of review sites which actively compare online gambling operators. In some cases, these are available on country-specific platforms. This can help consumers to identify the most trustworthy and best online casinos in Canada, for example, or other countries. The esports industry is in dire need of such a commission; particularly now that online sports gambling is legal in the US. Whether China will be able to find an alternative solution to its own problem remains to be seen.