Gambling on illegal gambling

Gambling in China is illegal. It is illegal to set up gambling dens, gambling houses, casinos and any gambling infrastructure, whether of the brick and mortar kind, or those that operate nearly undetected in cyberspace. More important, it is illegal for the Chinese to gamble. The anti-gambling laws in China apply to both operators, gamblers and proxies for off-site VIP gamblers.

Article 303 of the Criminal Law of the People’s Republic of China specifically declares that, “Whoever, for the purpose of profit, gathers people to engage in gambling, runs a gambling house or makes gambling his profession shall be sentenced to fixed-term imprisonment of not more than three years, criminal detention or public surveillance and shall also be fined.”

China’s dragnet, like most other aspects of its latent expansionism, characteristically encompasses gambling’s collaterals.

In May 2005, China’s Supreme Court and the People’s Procuratorate of China together issued what was then known as the “Interpretation for Trial of Criminal Cases concerning Gambling” (the “2005 Interpretation”) where among other rather voluminous interpretations one was the definition of a criminal breach where “a person who knowingly provides direct supporting services such as capital, Internet network, telecommunications facilities and payment settlement to gambling participants or organizers.”

Macau is the exception in mainland China. Gambling in Macau is strictly regulated by the Gaming Inspection and Coordination Bureau which has quasi-legislative and judicial authority including enforcement and police powers.

In 2016 proxy betting was considered a crime even in Macau.

That accounts for the sudden increase in the VIP gambling market in the Philippines where proxy betting, despite its vulnerability to money laundering, now accounts for as much as 40 percent of the known domestic market and as much as 85 percent of a single legitimate VIP room in any of our casinos.

The fact that there are occasional raids in the residential high-end neighborhoods and villages in Makati simply testify to an illegal, off-book and criminal market that may well dwarf what little we see of this active social and economic volcano.

Unlike direct betting, proxy betting involves a Chinese-speaking agent physically present inside the VIP room. The proxy communicates with his principal by phone. Under Article 303 and the widely encompassing “2005 Interpretation,” proxies, like their principals, are criminally liable under Chinese law. So are the junket operators, the creditors of the gamblers, the telecommunications providers and the settlement runners.

Proxy betting, a variant legal in the Philippines, is prevalent despite being declared criminal in Australia, Singapore and other Asian countries. Because of the confidentiality requisites demanded of proxies these virtual avatars are likely to be foreign nationals adding to the Philippine offshore gambling operations (POGO) population.

The addiction to gambling, akin to drug abuse and illegal drug trafficking in which a sitting Philippine senator now faces prosecution, is a cancer and a scourge that costs lives, families and fortunes. Last month the grieving family of a 29-year-old woman murdered in Hunan over a dispute over gambling debts sought the death penalty given the victim was stabbed nearly 200 times.

In Macau the social burdens include “high drop-out rate(s) among school students, increase in problem gambling and crime, increased demand for counseling services and public health treatment, (and) deteriorating quality of life.” This is validated by a treatise entitled “Social impacts of casino gaming in Macao: A qualitative analysis” which concluded that the costs of gambling in Macau outweighed its benefits.

Array the growth of POGO with critical developments in China. The rise of POGO is a direct result and can be considered as an attempt to replicate Macau’s gambling development before the regulatory noose tightened.

Unfortunately our investments in POGO are not only investments in illegal gambling. They are virtual wagers that crime pays.

“Proxy betting, a variant legal in the Philippines, is prevalent despite being declared criminal in Australia, Singapore and other Asian countries.

“Rise

of POGO is a direct result and can be considered as an attempt to replicate Macau’s gambling development.