Major Chinese online gambling bust; 8City analysts skeptical; Macau smoking law

TAGs: 8City, China, Macau, Shanghai, Smoking, South Korea

china-online-gambling-bust-8city-smoking-macauWhile police forces across Asia were not shy about reporting their successes in the fight against bookies taking wagers on the Euro 2012 football championship, it seems the biggest bust of all went unreported… until now. Qu Weifang, head of the Shanghai Cyber Police, gave a press conference on Thursday in which he announced the bust of the biggest online gambling operation Chinese authorities have ever taken down. The Chinese state-run newspaper Global Times quoted Qu saying the authorities began surveillance of the operation back in April, leading to the arrest in July of over 50 individuals, the confiscation of RMB 3m (US $480k) in cash and the freezing of RMB 10m ($1.6m) of punters’ funds in the operation’s bank accounts.

The ring that ran the online betting site is believed to have served as a conduit for domestic punters to over 20 different gambling sites, most of which Qu said were based in Southeast Asia and operated by ethnic Chinese. The operation is believed to have handled over RMB 70b ($11.2b) in wagers on sporting events and casino table games between January and the time it was shut down. The police caught a break when an individual named Shou was observed making frequent log-ins to an overseas website, which Qu said the ring used to manage its accounts. The ring reportedly purchased the site’s software abroad.

South Korea’s audacious plan to outdo Macau via the proposed 8City destination resort casino development near Incheon is being greeted with skepticism by local analysts, one of which noted that the project’s $290b investment target was only slightly smaller than the country’s entire 2013 budget. Woori Investment & Securities’ Joseph Chung told GamblingCompliance he believed the project’s viability was “pretty low” given its scale – casinos, hotels, theme parks, racetracks and other non-gaming options spread over 80 square kilometers – amid a “weakening overall market situation.” (Although Macau’s recent better than expected October tally undercuts that ‘weakening’ argument somewhat.)

Shinhan Investment’s Junewon Sung expressed doubts as to whether there would be sufficient demand to support the non-gaming amenities. As with other countries in the region, the fact that locals would be banned from entering 8City’s casinos could also prove a deal-breaker for foreign investors. Other analysts called attention to the fact that over half the space on which the project is to be constructed is currently underwater and will require a massive land reclamation effort along with extensive infrastructure development.

Perhaps South Korea could up its ante by making the 8City casinos exempt from the country’s public smoking laws (a concession that Las Vegas Sands is trying to convince the Spanish government to grant its proposed EuroVegas project). Casino operators in Macau are frantically preparing for the imposition of a casino tobacco ban that takes effect January 1. Under the new law’s recently published guidelines, casinos can create designated smoking areas, but these cannot occupy more than half the total gaming floor area.

Existing casinos – which includes those under construction and those having received construction approval – have four options to divide their gaming floor: four-meter-wide transition areas, two-meter-high walls, special ventilation systems or air curtain systems. All future casino permits will come with requirements for physically separated areas with independent ventilation systems. Casino staff will have to be rotated between the two areas to reduce their exposure to second-hand smoke. China Daily stats say China has an estimated 350m smokers and 60% of all Chinese males over 15 smoke, compared to a mere 4% of women.


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