Gambling business in China is considered illegal. Residents of the country, regardless of the region, can play only one gambling game, the operator of which is the state itself – the lottery. All other entertainments involving betting are placed in two gambling zones – Hong Kong and Macau.
There are only four types of gambling available in Hong Kong – mahjong, lottery, horse racing and soccer betting. Macau has a wide range of card games, roulette, craps, slot machines and much more. Basically, Macau is a Chinese casino city, comparable to Las Vegas in the United States. The gambling capital of China is a popular tourist center where junket tours are organized.
In 2016, the gross gaming revenue in Macau was HKD 217 billion (Hong Kong dollars). In the future, a systematic growth of annual income by 9% is forecasted until 2020. At the same time, if today the casino customers are mostly VIPs, by 2020 the balance will shift towards the massiveness of gambling entertainment.
Features of gambling business regulation in China
Gambling business outside of gambling zones in China is prohibited. The organization of clandestine casinos and betting points is punishable by law in accordance with clause 303 of the Criminal Code of the People’s Republic of China. Gambling is only available in Hong Kong and Macau. Each city has its own bills that regulate the provision of gambling services.
So, in Hong Kong it is allowed:
- horse racing and sports betting (football);
Acceptance of bets and organization of lotteries in Hong Kong is carried out by a monopoly company with a government grant – the Hong Kong Jockey Club.
Available in Macau:
- casino table games (card games, craps, roulette, etc.);
- slot machines (video slots, video poker, digital versions of table games);
- sports betting;
- lotteries and other public games.
Entertainment is provided in more than 30 gambling establishments located in Macau. The land-based casinos are controlled by the Macau Chief of Administration, the Gaming Inspection and the Coordination Bureau.
Gambling regulators and gambling laws
The ability to place bets and purchase lottery tickets in Hong Kong is provided by the only company that has received government approval. The Hong Kong Jockey Club (HKJC) organizes its activities in accordance with a number of laws that apply exclusively to the city:
- Betting Duty Ordinance chapter 108;
- Betting Duty Ordinance chapter 148.
The terms on which mahjong is delivered as a game of chance are discussed separately. Mahjong clubs were licensed between 1842 and 1977 while Hong Kong remained a British colony. After the city came under the control of China, the issuance of licenses for organizing mahjong clubs was canceled. However, the already opened establishments continued their activities. Today, there are 60 mahjong clubs left in Hong Kong.
The organization of other gambling, including poker, is prohibited in Hong Kong. The owners of illegal establishments are punished with fines and imprisonment. When caught for the first time, the manager of an underground gambling club is obliged to pay a fine of 10,000 USD. Also, the organizer of the banned games receives three months in prison. With each recapture, the amount of the fine increases (up to 30,000 USD) and the term of imprisonment is extended (up to nine months).
Gambling in Macau
In Macau, the gambling business is regulated by the Macau Chief of Administration and subsidiary bodies – the Gaming Inspection and the Coordination Bureau. The powers of the head of administration include the determination of gambling policy and the licensing of casino operators in Macau.
Subsidiary bodies coordinate and control the gambling market, and also issue special licenses:
- gambling promoters;
- creators of electronic equipment for casinos;
- manufacturer of equipment for gambling (cards, dice, chips, etc.).
The actions of local authorities are subject to the Macau Gaming Law. The law sets out the legal framework for the organization of commercial gambling. In addition, there are a number of clarifying acts:
- Instant Lottery Law – regulates the supply of instant lotteries;
- Illegal Gaming Law – contains a list of games and equipment that are considered illegal;
- International Gaming Tender Regulation – a law that allows foreign entrepreneurs to organize a gambling business in Macau;
- Gaming Promoters’ Regulation – an act regulating the field of promotion and advertising of gambling, as well as the organization of junket tours;
- Gaming Credit Law – regulates lending to casino operators and gambling industry promoters;
- Junket Commissions Regulation – describes the boundaries in which promoter companies organizing junket tours receive commissions;
- Electronic Gaming Machines Regulation – controls the issuance of licenses to manufacturers of equipment used in casinos.
The legal framework allows the development of the gambling business in Macau and the attraction of foreign entrepreneurs to the development of the gambling zone. The opportunity to obtain a license in the gambling capital of China allows the world’s land-based casino operators to locate their establishments in Macau. This, in turn, increases the attractiveness of the gambling zone for tourists and local residents.
Conditions for obtaining a license in China
Obtaining a license in Hong Kong and officially supplying gambling is almost impossible. A monopoly company operates on the territory of the city’s gambling zone, and licenses for organizing mahjong clubs have not been issued since 1977. However, HKJC can delegate some of its powers to other companies. So, only official partners of the Hong Kong Jockey Club can accept sports bets.
The right to provide gambling services in Macau officially belongs to the local authorities. The head of the administration of the gambling zone grants concessions (official permits) to three gambling operators in accordance with international tenders issued in 2001.
The criteria by which potential market participants were assessed were as follows:
- experience in managing gambling establishments;
- prepared investment project;
- development of casino sites and infrastructure that promotes tourism development;
- provision of jobs and readiness to independently train personnel;
- availability of funds to pay for the concession lease;
- contributions to welfare and tourism development programs in Macau;
- additional investment in the development of culture, science, sports, education and the economy of Macau.
To increase the number of operators, the government allowed concession companies to issue their own subconcessions. Thus, six gambling operators are represented on the Macau gambling market. Permits expire in 2020. Until then, new companies cannot provide gambling services in the gambling zone of China.
Online gambling in the country
Online gambling is prohibited in China. Access to online gambling is provided only in the gambling zone – Macau. Virtual entertainment, where it is possible to place bets, is regulated by the Macau Gambling Act. Here, online gambling is called an interactive game.
Interactive games are defined according to the following criteria:
- Any external device is used for the game – a mobile phone, personal computer, laptop, tablet, etc.
- Entertainment is presented in the form of a board game or video slots
- Players deposit money or currency equivalent to money for the game session
- During the game, the user can win money or a special currency, which is subsequently exchanged for real money.
Only private companies that have received permission from the Macao government can provide online gambling services. However, there was no tender for online sites, according to which it was possible to sign concession agreements. In addition, operators of land-based casinos were also denied the right to provide online gambling services in Macau. Therefore, online casinos do not exist in their usual form in China.
Moreover, the legislative regulation of visits to foreign Internet sites has also been tightened. Until recently, only a firewall protected the inhabitants of China from Internet gambling. Now the government is going to block access to online gambling via VPN.
But on the territory of Macau, online betting on horse races, dog races and sports competitions is allowed. The right to provide internet betting belongs to the following companies: Macau Horse Racing Company Limited, Macau (Yat Yuen) Canidrome Co. Ltd and Sociedade de Lotarias e Apostas Mútuas de Macau (SLOT).
Popular slot machines in China
Popular in Macau are slots from world-renowned manufacturers that supply slot machines to land-based casinos. Among these machines:
- Triple Diamonds;
- 88 Fortunes;
- Wheel of Fortune;
- Hot Shot.
The list of favorite games of the Chinese population includes both classic slot machines and modern five-reel slots with all kinds of bonuses. Most casinos have machines from Greentube, IGT, SG Gaming and WMS.
Video poker machines and digital versions of table games are in demand. The most popular are poker slots, digital baccarat and virtual blackjack.
Slot machines are popular entertainment in Macau casinos. As of 2016, there were 13 826 all kinds of slots in all the establishments of the gambling zone. The annual revenue generated by the casino just from the slot machines in 2016 amounted to 1.43 billion USD.
Gambling software developers
In China, the gambling industry is associated exclusively with tourism and attracting foreign investors. Therefore, the country does not have its own production of slot machines and equipment for casinos. All the necessary equipment in the gambling zones is imported. The Macau administration issues licenses to global developers of technical solutions for land-based gambling establishments. Operators fill casino halls with products from world famous manufacturers.
Prospects for the development of gambling business in China
The development of the gambling business in China is rather limited. Gambling is banned throughout the country, and only in the Macau Gambling Zone can you place bets on sports, table games and slot machines. The gambling zone is developing in close connection with the tourism business. Macau casinos are part of hotel complexes with developed infrastructure.
Today, most of the visitors to the gambling zone are VIPs. However, in the near future, it is planned to shift the balance in favor of mass availability. This change will provide Macau with more visitors. As a result, this will affect the growth of income received by China from the gambling business. According to the forecasts of gambling analysts, by 2020, casino profits will increase by 9% annually.
The gambling business in China aims to entertain and attract tourists to the country. The local population is carefully guarded from gambling. In Hong Kong, locals can place bets on horse racing and football, play the lottery or play the traditional Chinese game of mahjong. In Macau, the range of games is much wider. It complies with European and American standards.
The development of online gambling is under a big question. So far, the Chinese government has not developed bills to allow the supply of gambling entertainment on the global network. The country does not just lack national operators. It also prohibits visiting foreign online casinos, including using anonymizers. The only place where you can play online is Macau.