BUSINESS

Shanghai busts more WeChat ‘red envelope’ gamblers

TAGs: China, hongbao, wechat

china-wechat-hongbao-illegal-gamblingChinese authorities continue to crack down on anyone organizing illegal gambling activities via social media networks.

On Monday, Chinese media outlets reported that prosecutors in Shanghai’s central Jing’an District had charged two individuals with operating an illegal gambling den, although the ‘den’ in question existed only in the digital realm.

A man and his girlfriend, identified only as (respectively) Meng and Hu, were arrested in February for organizing illegal gambling using the ‘hongbao’ feature of the highly popular mobile messaging service WeChat.

Hongbao, aka red envelope, gets its name from the longstanding Chinese practice of friends and relatives exchanging money-filled envelopes on special occasions. In 2014, WeChat instituted its digital Hongbao service, allowing users to exchange virtual credits. The service proved immensely popular, leading to billions of envelopes being exchanged around particular dates on the calendar, such as the Lunar New Year‘s eve.

WeChat’s Hongbao service allows users the option to send envelopes to a specified group while randomizing the total financial amount sent, meaning some members of the group receive more while others get less. Users quickly figured out ways to use this randomized distribution to organize informal – and illegal – lottery pools.

WeChat began cracking down on such lottery pools last year after determining that up to three-quarters of the suspect user groups were engaging in unauthorized use of the Hongbao service. Government media outlets chastised Hongbao gambling as fostering “a new form of internet alienation” that facilitated “hidden capital flows.”

In Meng and Hu’s case, the pair reportedly garnered an illegal profit of RMB 50k (US $7,270) before their arrest. As ringleader of the lottery pool, Meng had ensured that he was not subject to the same rules of the game, in which the group member who receives the least amount of money is required to start the next round by issuing a Hongbao envelope containing an amount equal to or greater than the amount he/she received.

WeChat’s ubiquity makes it a popular means for facilitating mainlanders’ forbidden gambling activity. Just last week, Macau police busted an illegal proxy betting ring that communicated real-time action from a Macau casino VIP table to a dedicated WeChat group of around 40 mainland gamblers.

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