Chinese Police Bust $4.6m Gambling Ring That Used Sports Betting Loophole

  • The syndicate was buying losing betting accounts and exploiting perks given to large spenders
  • Incentives sportsbooks give to big spenders include cashback on losses and high betting limits
  • The syndicate was paying people between $157 and $784 daily for use of their betting accounts
  • A group within the syndicate would travel to sporting events and exploit instant-betting functions
  • Police arrested 69 suspects and have frozen about $3m
Man in handcuffs
Chinese police have taken down an illegal gambling syndicate that earned $4.6m by exploiting loopholes in online betting accounts. [Image: Shutterstock.com]

Identifying an opportunity

Police in China have dismantled a syndicate that was exploiting a sports betting loophole to earn about $4.6m. According to the Wenzhou Evening News, the syndicate operated out of the city of Wenzhou for about seven months. This group purchased hundreds of money-losing sports betting accounts in order to exploit the perks that are given to unsuccessful, big-spending bettors.

incentives include cashback on losses, bigger bet sizes, and unlimited withdrawals

Police identified the figurehead of the gang as “Shi,” an owner of an internet café in the city. Shi had reportedly lost a lot of money across various online sportsbooks, but discovered that by losing such significant sums, sportsbook operators would offer incentives so he would continue betting. These incentives include cashback on losses, bigger bet sizes, and unlimited withdrawals. Shi believed that by accessing a large number of these types of accounts, there would be an edge.

The ins and outs of the illegal operation

In July 2020, Shi allegedly asked an associate called “Zhou” and other people to post web ads looking for these types of losing betting accounts. Those who fit the bill would earn between 1,000 yuan ($157) and 5,000 yuan ($784) each day for providing access to their accounts. About 200 people across the country signed up for the scheme. Some of the accounts needed facial recognition, which led to Shi allowing some of the account holders to live in his father’s villa.

allowing them to exploit the short latency of data and broadcast feeds

Shi then expanded operations by partnering up with a Hainan Province-based gambler called “Wang.” This person utilized his own resources in order to build a team that had over a dozen gamblers, as well as sports betting analysts. Team members would go to sporting events across Southeast Asia and Europe in order to take advantage of instant-betting functions, allowing them to exploit the short latency of data and broadcast feeds.

The team of gamblers would be able to place wagers on sporting events faster than those people who were watching the games through a live feed. Therefore, if a goal was scored in a soccer game, the team of gamblers would often be able to place a bet on the final score of the game before certain sportsbooks were able to change the odds to reflect the change in the score.

The outcome of the investigation

Police identified Shi’s team as the ones that looked after the account holders and accounts, while Wang’s team supervised the actual betting side of things. Zhou reportedly took care of the finances, buying almost 3,000 bank cards to be used as part of the operation.

The only forms of gambling that are legal in mainland China are state-run lotteries.

To date, Wenzhou police have arrested 69 suspects and have seized 136 related mobile phones and 36 computers. The authorities have also frozen about $3m.