Thursday, June 07, 2007
China has flutter on gambling
Published: June 2 2007, FT
It has none of the glitter of a Las Vegas casino, but LiRishun is happy with the dingy gaming hall wherehe spends hours each day in the front line of China's gambling counter-revolution.
"This is good entertainment," said Mr Li, as he searched for trends in the winning numbers flashing up every five minutes on the Happy Pool hall's overhead television screens. "It offers a kind of hope. If you don't buy, you can't win."
Mr Li, an unemployed maker of traditional enamel pots, is playing keno, abingo-like game reputedly invented 2,000 years ago. Like all forms of gambling, it was banned after the 1949 Communist revolution.
Keno's return is part of a cautious re-embrace of gambling by a government keen to provide alternatives to the flourishing underground bookmakers and to find new sources of revenue.
While gambling is still officially illegal, Beijing has in recent years allowed sports and welfare lottery systems to introduce gaming products, including instant bingo games, betting on football and slot machine-style video games with cash prizes.
All the main types of gambling except casino table games are available in a legitimate form in China, says Wang Xuehong of Beijing University's centre for lottery studies.
Even taboos against games such as poker and mahjong are eroding. The Communist Youth League recently invested in an online poker company, though officials insist players will not be able to cash in virtual chips.
Entrepreneurs see huge potential for expanding the two-decade-old lottery systems, which raked in Rmb82bn (£5.4bn) in 2006 but are dwarfed by underground gambling sales estimated at more than Rmb700bn. Foreign companies are seeking to break into the market by supplying equipment or by earning commissions from lottery systems they supply.
Ladbrokes was an adviser for GreatGate Sports & Entertainment, which runs Happy Pool halls. The UK betting chain joined the Hong Kong-listed AGTech Holdings recently to provide new electronic games for the sports lottery.
Chinese gaming remains a risky business, however. Regulatory transparency is limited and local and central authorities tussle for influence over lotteries.
One Happy Pool manager says the company's 100 outlets are seen as an experiment by officials. The gaming halls' future depends on how government policy develops. Beijing, he says, sees well-managed commercial gaming as a way to preserve national interest and social stability. "I'm optimistic about the prospects."
For the moment, however, underground bookies seem to have the upper hand.
Ms Wang, of the lottery studies centre, says legitimate gaming is hedged by often "ridiculous" limitations, including arbitrary rules on how lottery numbers should be drawn.
Illegal betting operations offer better products and innovative services such as home delivery of winnings. "One thing [we need to do] is to make our games more attractive and enjoyable," she said.
Happy Pool's keno game gives back only 50 to 55 per cent of sales to players in the form of winnings, compared with 80 per cent or so in western markets. At least 35 per cent is supposed to go into sport or welfare funds.
Deep misgivings remain, however, about the spread of legal gambling. Even Ms Wang, a supporter of liberalised gaming, says the Chinese can be particularly vulnerable to gambling's allure. Enthusiasm for betting has rebounded "like a stretched string" after the long ban.
Tales abound of hooked punters losing large sums. But Mr Li has little time for those who condemn gambling as a socially corrosive vice. He wants to see more games and bigger winnings. "You don't have to play if you don't want to," he said.
Return of one of the 'Six Evils'
After China's 1949 Communist revolution, gambling was dubbed one of the "Six Evils", on a par with prostitution, pornography, drug addiction, superstition and the kidnapping of women and children.
Underground gambling returned in the 1980s as social controls eased.
The government also authorised sport and welfare lotteries and in the 1990s started drafting a lottery law to put the new industry on a secure regulatory footing.
Competing bureaucratic interests have hampered legislative efforts and the legal status of much of the sector remains unclear ¶ 4:13 AM
It has none of the glitter of a Las Vegas casino, but LiRishun is happy with the dingy gaming hall wherehe spends hours each day in the front line of China's gambling counter-revolution.
"This is good entertainment," said Mr Li, as he searched for trends in the winning numbers flashing up every five minutes on the Happy Pool hall's overhead television screens. "It offers a kind of hope. If you don't buy, you can't win."
Mr Li, an unemployed maker of traditional enamel pots, is playing keno, abingo-like game reputedly invented 2,000 years ago. Like all forms of gambling, it was banned after the 1949 Communist revolution.
Keno's return is part of a cautious re-embrace of gambling by a government keen to provide alternatives to the flourishing underground bookmakers and to find new sources of revenue.
While gambling is still officially illegal, Beijing has in recent years allowed sports and welfare lottery systems to introduce gaming products, including instant bingo games, betting on football and slot machine-style video games with cash prizes.
All the main types of gambling except casino table games are available in a legitimate form in China, says Wang Xuehong of Beijing University's centre for lottery studies.
Even taboos against games such as poker and mahjong are eroding. The Communist Youth League recently invested in an online poker company, though officials insist players will not be able to cash in virtual chips.
Entrepreneurs see huge potential for expanding the two-decade-old lottery systems, which raked in Rmb82bn (£5.4bn) in 2006 but are dwarfed by underground gambling sales estimated at more than Rmb700bn. Foreign companies are seeking to break into the market by supplying equipment or by earning commissions from lottery systems they supply.
Ladbrokes was an adviser for GreatGate Sports & Entertainment, which runs Happy Pool halls. The UK betting chain joined the Hong Kong-listed AGTech Holdings recently to provide new electronic games for the sports lottery.
Chinese gaming remains a risky business, however. Regulatory transparency is limited and local and central authorities tussle for influence over lotteries.
One Happy Pool manager says the company's 100 outlets are seen as an experiment by officials. The gaming halls' future depends on how government policy develops. Beijing, he says, sees well-managed commercial gaming as a way to preserve national interest and social stability. "I'm optimistic about the prospects."
For the moment, however, underground bookies seem to have the upper hand.
Ms Wang, of the lottery studies centre, says legitimate gaming is hedged by often "ridiculous" limitations, including arbitrary rules on how lottery numbers should be drawn.
Illegal betting operations offer better products and innovative services such as home delivery of winnings. "One thing [we need to do] is to make our games more attractive and enjoyable," she said.
Happy Pool's keno game gives back only 50 to 55 per cent of sales to players in the form of winnings, compared with 80 per cent or so in western markets. At least 35 per cent is supposed to go into sport or welfare funds.
Deep misgivings remain, however, about the spread of legal gambling. Even Ms Wang, a supporter of liberalised gaming, says the Chinese can be particularly vulnerable to gambling's allure. Enthusiasm for betting has rebounded "like a stretched string" after the long ban.
Tales abound of hooked punters losing large sums. But Mr Li has little time for those who condemn gambling as a socially corrosive vice. He wants to see more games and bigger winnings. "You don't have to play if you don't want to," he said.
Return of one of the 'Six Evils'
After China's 1949 Communist revolution, gambling was dubbed one of the "Six Evils", on a par with prostitution, pornography, drug addiction, superstition and the kidnapping of women and children.
Underground gambling returned in the 1980s as social controls eased.
The government also authorised sport and welfare lotteries and in the 1990s started drafting a lottery law to put the new industry on a secure regulatory footing.
Competing bureaucratic interests have hampered legislative efforts and the legal status of much of the sector remains unclear ¶ 4:13 AM
