| Racing at Shatin: Hong Kong loves a flutter | ||||||
The internet age is challenging one of the great modern myths of Hong Kong – that betting is not permitted in the territory. Indeed, something of a crisis is occurring because of the explosive growth of betting on the internet by Hong Kong residents. The government coffers are suffering, one of the oldest and most powerful groups in the city complains that it is losing up to $7 billion a year in revenues and cries of foul can be heard as far away as the local legislative council.
Strictly speaking, Hong Kong law says that betting is illegal. But betting does not include the $11 billion a year that locals spend chasing the horse races twice weekly in the season at Happy Valley and Shatin. And of course there is the daily casino called the stock market – much more of a betting parlour with a wide range of punters than its equivalents in the west. Meanwhile the constant clacking night after night of majong tiles in countless back rooms as thousands, if not hundreds of thousands, of dollars change hands is usually not counted.
Not for nothing was it said that colonial British Hong Kong was ruled by four people – the chairman of the Royal Hong Kong Jockey Club, the chief manager of the Hongkong&Shanghai Banking Corporation, the taipan of Jardine Matheson and the governor – in that order of importance. The club, now stripped of its regal prefix, is still a meeting place for the great and good of Hong Kong, but is feeling the pressure of the internet. Its peak year was 1997, when sovereignty over Hong Kong was transferred from the UK to China. Since then, revenues have fallen by 17%.
The government is feeling the pinch because the 14% betting tax is an important contributor to the budget, accounting for 11% of total tax take in the past fiscal year.
Charities, which get the bulk of the Jockey Club’s profits – or about $148 million a year – are also likely to suffer. The club says that besides being the biggest charity in Hong Kong, in dollar terms it ranks with the Rockefeller Foundation.
In spite of the law, Hong Kong’s predominantly Chinese population loves a flutter, on the races, on the stock market and on majong. For those who were not satisfied with these outlets, there was always a jetfoil ride to Macao, just an hour away across the Pearl River, or the giant cruise liners that take their passengers on two- to three-day trips to China or Vietnam, safely outside Hong Kong waters, for the dice to roll freely. But such diversions took time and money.
The internet is a different proposition, accessible and ready for immediate use in computer-savvy Hong Kong. With the rise and rise of online gambling sites, now numbering 1,000 or more worldwide and offering tax-free gambling from their havens in the Caribbean, Hong Kong is tuning in. One research firm, NetValue, estimates that 41% of Hong Kong internet users visited at least one online gambling site in December. The Jockey Club is so alarmed that it has mounted a public campaign against its internet rival.
The problem of internet betting has come to the top of the government agenda. Indeed, the pervasiveness of betting even found a way into the final budget speech of financial secretary Donald Tsang Yam-kuen, who is shortly to become Hong Kong’s chief secretary for administration. He broke away from his text to joke that: “My colleague said that it would be a plain budget anyway, so he’d rather bet on how many times I have to stop and cough.”
The government is following a twin-track approach. A bill is before the legislative council to prohibit offshore gambling on the internet, but it has been criticised for the wide scope of its drafting. One legislator pointed out that, if passed, the bill would make it illegal for a visitor from the UK to borrow a mobile phone to put a bet on Manchester United.
At the same time there is recognition that with the football World Cup coming to Japan and Korea next year, it may be better to tap the tide of popularity of betting on sport rather than to stand in its way. Financial secretary Tsang declared that: “To address the problem [of gambling] we need a two-pronged approach. First, we must step up enforcement action against illegal gambling to maintain law and order in Hong Kong. Second, we must face up to reality.” The growth in football betting was “unlikely to be curbed,” he declared. “Rather than aiming to achieve the impossible, we should examine the case for providing a legal avenue for soccer betting.”
Later, in the face of an outcry from Christian and other groups who fear an expansion of betting, especially if it offers easy access for the young, Tsang denied that he had advocated legalising football betting, merely saying that the issue should be studied. “I have not used the term ‘advocate’. I hope that [legislative council] members will not force me to eat a dead cat,” he said, using a Chinese expression for being unfairly blamed for something.
Lee Cheuk-yan, the legislative council member for the Confederation of Trade Unions, warned against double standards and said that if all gambling was immoral, then betting on horses and on futures markets should also be made illegal.
The government has a double interest in whether to open up football betting. Besides protecting public morality, an expansion of betting to the football field would also allow it the prospect of increasing its revenues and narrowing the budget deficit that has opened up. And the Jockey Club is also standing by, hoping to be the beneficiary of any proposals permitting such betting.
The online bookmakers are also watching for their opportunities, claiming that if the Jockey Club gets the franchise for football betting, this will harm Hong Kong’s laissez-faire reputation.
Tim Lambe of Easybets.com, which is registered in Antigua but offers a Chinese-language website listing Hong Kong races, claims that the government is bowing to the demands of the Jockey Club and that offshore bookmakers compete on different products and on attractive prices and benefit the punter as consumer.
The question is whether the government can get its proposals ready and put into law before the great kick-off begins.
