The Guardian said online bookmakers use tricks to elude Chinese gambling laws, but betting operators claim they’re not doing anything illegal.
An article published in the Guardian has caused quite a stir, after the newspaper described how online and mobile betting giant Bet365 finds ways to get around Chinese laws, which prohibit locals from gambling. While players are punished for breaking these regulations, the bookmaker keeps changing its web address to avoid being shut down.
In response to the article, the company released a statement claiming that it’s not breaking any laws by operating in China, although the Government there has made it very clear that it won’t tolerate any gambling in the country.
Casinos are only legal in Macau, while betting on horse races is restricted to Hong Kong. Both of these areas are special administrative regions of the People’s Republic of China, which means they have their own governments and get to make their own regulations.
Profiting from legal loopholes
The Guardian recently reported that, despite not having any physical presence in China, Bet365 makes a big part of its online betting revenues from Chinese players.
While authorities have taken measures to block as many online casinos and sportsbooks as possible, Bet365 has always managed to come back by changing its address, the Guardian said. The newspaper collected evidence that suggests a number of customers were even detained for breaking Chinese gambling laws by accessing the foreign-based website.
To make things even easier for Asian customers, the online gambling operator has set up a team of Chinese speakers at its call centre based in the UK. It even worked out a complex system to allow Bet365 to accept payments in Chinese renminbi currency.
According to the newspaper, only half of the GBP1.3 billion won by gamblers last year came from jurisdictions in which Bet365 is actually licensed to operate. This does not necessarily mean that the other half was won on illegal markets, but analysts believe a large proportion of the money came from China.
A former Bet365 employee confirmed that rumors about the website changing its address to avoid being blocked were “100% true”. Another former staff member argued that there was nothing Chinese authorities could to completely block these websites.
Not legal, but not illegal either
Bet365 reacted pretty quickly to these accusations, releasing a statement to defend its operations in China and claiming that it takes its legal and regulatory obligations “very seriously”. The company also pointed out that its activities are licensed by “relevant regulatory authorities across a variety of jurisdictions”.
China does not hand out licenses to online gambling companies, because it doesn’t want their services. But the legislation doesn’t clearly ban them either. Lawyers argue that the company is not doing anything illegal, since there are no Chinese gambling laws referring exclusively to online casinos and betting, or forbidding these types of services.
“There is no legislation that expressly prohibits the supply of remote gambling services into China by operators who are based outside China. Bet365 has no people, assets or infrastructure in China and does not engage any agents, aggregators or intermediaries, for any purpose, in China,” the company explained in the statement.
“In the view of bet365, and its lawyers, Chinese law does not extend to the provision of services into China by gambling operators and service providers who themselves have no nexus with the territory. Any allegation of illegality on the part of bet365 is therefore untrue,” it added.
Room for interpretation
Bet365 said it does not accept payments in renminbi, adding that it was not aware of “anyone in China being prosecuted for using its services”. But there are a few legal arguments to support the idea that playing casino games online is, in fact, illegal in the country.
Article 303 of the state’s criminal law states: “Whoever, for the purpose of reaping profits, assembles a crowd to engage in gambling, opens a gambling house or makes an occupation of gambling is to be sentenced to not more than three years of fixed-term imprisonment, criminal detention or control, in addition to a fine”.
A judicial interpretation of this article, published in 2005, added: “Whoever, for the purpose of reaping profits, sets up gambling websites on the internet or acts as an online gambling agent will be regarded as ‘opening gambling houses’ and will be punished according to article 303 of the criminal law”.
Bet365 withdraws from Romania
After Romania introduced new online gambling regulations forbidding foreign-based operators from providing services to local players, Bet365 notified its Romanian customers that it would temporarily withdraw from the country. New registrations from gamblers based in Romania will not be accepted, and the country was removed from the registration list.
Since the new laws require companies to be based in the country, Bet365 needs to decide whether the local market is profitable enough to justify that kind of investment. “We are currently reviewing our position in Romania and decided to stop accepting new clients living in Romania at the moment. (We) hope to have more information in the future,” the bookmaker said.
Bet365 has recently announced that it was moving its operations from the UK to Gibraltar. However, the company will continue to cater to British players and retain a presence in the country. The only difference is that Gibraltar will become the bookmaker’s main licensing hub.
Operating from its main office in Gibraltar, the online and mobile betting firm will continue to offer its services worldwide, including in China, where there’s clearly a lot of profit to be made.