Party Could be Over for Asian Gaming Meccas

Beijing increasingly fed up with crime, funds outflows

The good times may be about to come to a stop for the countries profiting from the millions of Chinese flying overseas to gamble, according to two industry newsletters, Asia Gaming Bulletin and GGR Asia, both of which are quoting a Chinese Ministry of Culture and Tourism bulletin announcing a “blacklist” system for some foreign gambling tourist destinations. The bulletin, according to the two publications, also announced possible travel restrictions on Chinese nationals traveling to Asian gaming industry countries beyond Macau.

It’s likely that the restrictions could fall on the Philippines, Vietnam, Cambodia, Russia, and Korea, which was already hit hard when the Chinese initiated a travel ban over Seoul’s decision to allow US THAAD missiles on Korean soil.

The government in Beijing has grown increasingly irritated over the massive amounts of illegal funds flowing into gambling outside the country through online gaming and video streaming and has launched a series of crackdowns, most recently in June, when the Ministry of Public Security announced the arrest of more than 11,500 suspects, said it had destroyed 368 gambling platforms and 148 technical programs and seized more than US$32 billion.

According to the public security ministry, officials began the crackdown that culminated in the June arrests at the end of February, deploying agents across the country to carry out in-depth efforts to combat cross-border gambling and related blackmail, fraud, money laundering, abduction, trafficking, smuggling, finance, and other illegal and criminal activities that have grown around the illegal gaming industry.

The crackdown closed 187 payment platforms and underground banks, seized more than 220,000 bank cards, froze more than 28,100 accounts, and identified more than RMB229 billion (US$32.3 billion) in funds. Within the country, officials broke up telecommunications network criminal bank accounts and smashed more than 1,200 dens, seized more than 27,000 sets of accounts involved.

The ministry’s statement included Vietnam, Myanmar, and other unnamed areas in Southeast Asia where illegal gaming allegedly was taking place.  

Gambling has been illegal in China since the 1949 revolution that brought the Communist Party to power. Macau, just off China’s southern flank across the Pearl River from Hong Kong, has long been the major destination for Chinese citizens with money burning a hole in their pockets, especially since 1997 when the late Stanley Ho lost his monopoly and gaming companies from Los Vegas flooded in. With so many crooked bureaucrats pouring money into the former Portuguese enclave, Beijing began posting intelligence operatives to see who was spending what, resulting in significant arrests.

More lately, gigantic gaming palaces have sprouted elsewhere, beyond the reach of the Chinese police, particularly in Myanmar, just over the border from China, and in Vietnam. Others have appeared in Saipan in the Northern Mariana Islands, as well as in Cambodia, where 140 casinos received licenses, most of them in the once-sleepy town of Sihanoukville until the Chinese government forced Prime Minister Hun Sen to crack down. Some 120,000 Chinese working in the gaming industry are said to have left town for China almost overnight, wrecking the local economy. One Cambodian source said the industry has begun to grow again surreptitiously, however.

The other major port of call has been the Philippines, where the Pasay area of Manila has been the scene of feverish construction, with four huge casinos looming over Manila Bay. Chinese emigres, both legal and illegal, working on the casinos and in the online gaming industry, drove real estate prices in the area up sharply before the Covid-19 pandemic played havoc with prices. President Rodrigo Duterte estimated at one point that as many as 150,000 Chinese workers were in the country, legally or illegally.

In August 2019, the Chinese Embassy complained to the government in Manila over the online operations, which permit online streaming from video studios of casino-style table games, issuing a stern warning that the burgeoning online gaming industry POGOS, as they are called, were draining hundreds of millions of renminbi through underground banks and cross-border money laundries and “posing a threat to China’s financial security and supervision.”

The embassy warned that the government planned to step up action to stamp out illegal gambling and told its citizens at home that if they were gambling overseas, they could be committing criminal acts.

Nonetheless, until the coronavirus put a crimp in them, the POGOs, as the offshore operations are known, have exploded in size. Small-time bettors using their phones can live-stream wagers of as little as RMB10 US69¢ through Putonghua-speaking computers. More affluent gamblers can use attractive fashionably-dressed proxies wearing headsets to play baccarat and other games. Thus the Chinese at home are finding it easy to spend vast amounts of money and time online, a growing percentage of that passing through Manila. With computers and smartphones, they can hide their gambling from authorities.

Unfortunately, the situation has also generated considerable crime, much of it committed by Chinese loan sharks committed against gamblers who get in over their heads in the proliferating casinos. The Chinese embassy charged that dozens of kidnappings and torture cases have taken place against Chinese citizens who gamble or work illegally in gambling entities in the Philippines.

There is no indication in the public security ministry’s statement that the graft campaign targeted the Philippines. In typical cases, the statement said, “overseas casinos attracted customers to gamble in our territory,” organizing agents to solicit from overseas dens and within the territory. Suspects used software development as a guise to provide technical support for overseas casinos and online gambling groups in Southeast Asia, transferring and withdrawing funds in the country and hiring people to send cash to overseas casinos. Some organized outbound gambling.

In January, the public security agents discovered that overseas casinos were recruiting domestic personnel to participate in gambling on a massive scale. In Gansu, for instance,  public security agents launched a network arrest operation that netted 32 suspects, hunted down another 22 suspects online, froze 1,200 bank cards as well as 269 various accounts and seized cars, computers, mobile phones, and other equipment.

The one Asian gaming market that analysts believe could become the beneficiary of the blacklist policy is Macau, which would potentially be facing less competition from other Asian jurisdictions, and itself will not become a target of this new policy.


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