24 Billion Dollar Online Casino Industry Penetrates China's Great Firewall

The Chinese government is struggling to stop its citizens from gambling online.

 (photo credit: INGIMAGE)
(photo credit: INGIMAGE)
The Chinese government is struggling to stop its citizens from gambling online. The nation’s people are hungry to play at online casinos and given the absolutely vast market, the ruling Communist Party has its work cut out fighting the hundreds of offshore casino venues willing to accept Chinese players.

China is to big an opportunity for others to simply ignore

The Chinese government has completely banned gambling, both online and otherwise, on the mainland. This has been the case for many years. Only in Macau can people gamble at all and even then, it must be within a licenced brick-and-mortar casino.

The Communist Party views gambling very negatively. A report in Bloomberg says that it fuels telecommunications fraud and is responsible for an exodus of citizens, drawn by lucrative jobs in the industry in neighbouring nations. Of course, there is also the issue of funds leaving the Chinese economy to companies who pay no taxes to Beijing along with the usual perceived social implications. With betting limits as low as 10 yuan, gambling platforms appeal to lower income gamblers who might think that betting is a way to increase their standard of living. Even with the great firewall, Time and time again it has been proven that there is always a way to access blocked online casinos.

Operators in Cambodia, the Philippines, and other Asian nations are increasingly offering the opportunity to play casino classics like blackjack and baccarat, or bet on sports, to Chinese punters. Manilla, the capital city of the Philippines, is enjoying something of a boom at the moment, thanks largely to the money flowing in through gambling operations. The Nikkei Asian Review claims that many of the operations are setup as Philippine offshore gaming operations (or POGOs) and target Chinese players.

The publication estimates that the industry employs more than half a million in a city that was in the midst of an economic decline prior to the government welcoming offshore firms. Huge numbers of those employed at the companies themselves are Chinese, which leads to tensions between the local population and those workers from China taking advantage of more lenient legislation.

Given the economic prosperity that the industry is bringing to China’s neighbours, it is hardly surprising to see the governments there reluctant to enforce any policies to stop local gambling operators targeting Chinese players. 

The head of the Philippine gaming agency, Andrea Domingo, recently told an audience at a local gambling industry event that online casinos “are here to stay.” She added:

“We are legal, we ensure fair play.”

In fact, there are two multimillion dollar “casino hubs” being built in Manila. Evidently, the industry is expecting greater expansion over the coming years, much to China’s chagrin, no doubt.  

All that said, China is having relative successes at limiting its citizen’s access to online gambling platforms. Although it appears that banks such as Bank of China Ltd. are quite happy to work with offshore gambling companies, large payment processing firms popular in the nation are tightening their restrictions in line with Beijing’s wishes to stamp out online gambling at all costs. Alipay and Tencent’s WeChat application are amongst those bending most readily to the Communist Party’s will.

The Chinese government has also been pressuring neighbouring countries in an effort to reduce access to online gambling services. Cambodia, for example, has agreed to not issue new gambling licences and to also not renew existing ones.

However, most of Beijing’s efforts have been focused on the Philippines given that the nation is so obviously benefiting at its expense. Rather than agree to the full ban that China wants, the government there has instead said that it will stop accepting new licence applications until the end of 2019. After that, it is unclear if new ones will be granted. However, we do know that Philippine President Rodrigo Duterte outright rejects the ball for a ban on the POGOs. Instead of potentially snuffing out the economic boom occurring in the nation, the government will attempt to regulate the industry. This is according to the Philippine ambassador to China, Chito Sta. Romana, who spoke to Bloomberg TV in August. It is not clear how China will react to such an effort at compromise.

The entire Asian online gambling industry is expected to top $24 billion this year. Given its total population of around 1.4 billion, and the difficulty the government is having with policing the issue thanks to the relative anonymity afforded by the internet, it’s fair to say that illegal Chinese online gambling will be accounting for a good portion of that. The population is clearly so hungry for access to gambling services that it’s willing to defy one of the more authoritarian governments on the planet. Meanwhile, while neighbours like the Philippines are highly reluctant to police its own industry in a way that might damage it, it seems unlikely that Beijing’s efforts to eradicate what it deems the menace of online gambling will be successful.