Blow For Sports Betting As China Says No

China is renowned as one of the largest gambling markets in the world, both domestically and from gambling income generated by Chinese tourists abroad. However, recent steps by the government might put that in jeopardy.

The domestic market is heavily regulated, only allowing lotteries to operate legally, although there is a buoyant illegal gambling market in the country.

The government recently announced that it will not be allowing gambling on sports or horse-racing in the province of Hainan, contrary to what some expected.

Sports betting saw a surge in interest in the country over the summer because of the World Cup, which led to a high number of arrests to dismantle sizeable organized crime rings.

The only place in China where gambling is legal is Macau, but the terrible weather conditions in the territory in recent months have led to a drastic downturn in tourism. However, figures remain promising for mass market gambling in the region.

Betting and horse racing banned in Hainan

In February, Bloomberg reported that China was considering allowing sports betting or lotteries in Hainan in order to further open the doors to casinos to open, adding a second territory in which gambling would be legalized in China.

However, these claims have been dismissed by the secretary of Hainin province, Liu Cigui, who said recently: “Some online comments about opening casinos, allowing gambling and horse-racing, or copy from capitalism and adopt overall private ownership, are divorced from China’s reality and (they are) resolutely not allowed.”

On Tuesday, China granted Hainan the status of a free trade zone, promising to lift restrictions on international investment in sectors including agriculture and medical services. Unfortunately for international gaming operators, it looks like they will remain restricted to Macau for the foreseeable future.

Macau recovering from bad weather

Macau’s Gaming Inspection and Coordination Bureau published official figures for the three months to the end of September on Tuesday. They showed a year-on-year increase of 10.2%, rising to $9.2bn. Baccarat revenue rose by 3.6% year on year for Q3 in the VIP market and by 21.5% in the mass market for the same period.

The figures reflect the general trend for gambling in Macau, where VIP spending is slowing, but mass market spending is increasing steadily. These figures are all the more promising given the terrible weather conditions faced by the territory during the period, meaning that the results could have been even higher if tourism had not been hit by a natural disaster.

The slump in VIP revenue could be partly attributed to the weather, but figures were already alluding to a slowdown in big spenders’ revenue in Q2.

This is a trend reflected globally and international gambling providers are looking to find the next big thing to replace baccarat revenue, which is slowing down.

China big spenders in the World Cup

It is thought that the summer’s football tournament boosted gambling efforts in China, as an estimated $7.5bn was spent by the country on sports betting during the FIFA World Cup via the legal Sports Lottery, with billions more being spent via illegal gambling. Figures for the latter section of the market are unlikely ever to be specified.

An idea of the scale of illegal betting during the World Cup can be seen in the dismantling of a $48bn betting ring during the tournament itself. The figures give an idea of the vast scale of the gambling market in the country. There was also a surge in cryptocurrency wagers placed during the tournament, with punters using platforms including WeChat to place their bets online.

The booming market will be incredibly attractive to international gaming companies looking to benefit from a slice of it despite the growing amount of money spent on gambling in the country.

But unless there is a radical u-turn made in the country’s gambling policies, it looks unlikely that they will be able to get a foothold on the market anytime soon.

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