[Chinese gov. should work harder to filter out those foreign gambling sites]--"Gambling-crazy China seen as next great site for Internet gold rush"
By GEOFFREY YORK AND COLIN FREEZE
Monday, July 4, 2005 Page A1
BEIJING and MONTREAL -- Even in the midst of a national anti-gambling crackdown, it only took a few minutes for The Globe and Mail's Beijing bureau to place an illegal wager.
We placed a small bet on the date of the next Canadian election. But we could have just as easily wagered on soccer, horse racing, basketball, the Dow Jones index, the competition to be the next Olympic host city, or hundreds of other events -- simply by surfing onto the on-line gambling sites that are supposedly banned in China.
Gambling has been illegal in China since the Communist revolution, yet it remains a powerful lure for millions of people here. An estimated $50-billion (U.S.) is spent annually at underground casinos and gambling rings in China.
But in China and around the world, betting is exploding onto the Internet -- a medium where the chips fall where they may, heedless of local limitations and laws. The on-line gambling industry has grown exponentially in recent years but many players in the business still say the sky's the limit.
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They have good reason to be excited: Last week, investors in the United Kingdom valued a Gibraltar-based poker company at an astonishing $9.1-billion as it went public. PartyGaming's stock, now worth more than British Airways, is further fuelling the wild-eyed expectations of Canadian and other Western entrepreneurs.
Because the industry is maturing in Europe and North America, many experts fixate on China as the site of the next big gold rush.
In fact, Montreal played host to two major conferences on Internet gambling last month. Undaunted by an official ban, scores of conference goers were tantalized by the prospect of getting the Chinese high-rollers hooked on the Internet.
"You go to any casino in the world and your major players are Chinese and Asian players," said Donald Cho, an Internet-gambling consultant who was up from San Francisco to attend a seminar on Chinese opportunities.
Gambling continues to thrive in China, even though the government is still officially in the throes of a "relentless strike" against it.
In a national campaign that has been under way for months, authorities have shut down hundreds of gambling websites and arrested scores of people. One Communist Party official in Zhejiang province was arrested for gambling $560,000 (U.S.) on foreign websites.
Yet, according to media reports here, more than 780 foreign gambling websites are providing Chinese-language web pages. And The Globe's bureau in Beijing found it easy to evade the rules and make wagers.
We chose a British-based gambling website, Betfair.com, easily accessible on our laptop computer through a Beijing Internet server. The site offers a Chinese-language version for most of its wagering options although it denies it is encouraging anything illegal.
Placing bets on the Internet is a seductive temptation for the Chinese. "I don't even have time to think that I'm gambling," one high-rolling gambler told a Chinese newsmagazine last year. "What I do is just switch on the computer and log onto the Internet."
Shen Mingming, director of the China Centre for Lottery Studies at a Beijing university, said the authorities are trying to block the foreign gambling sites, but the amount of on-line gambling is rising. "It's regarded as illegal, but it's hard to control," he said.
"China hasn't created a system of laws and regulations for Internet gambling. There are hot debates about whether the government should keep attacking it or instead issue a policy to legalize and regulate it."
Many countries in the world face the same dilemmas. In coming years, Canada's own government-controlled gambling monopoly will be increasingly threatened by the Internet, but no one has attempted to regulate the practice.
This year, the United Kingdom passed laws to at least set some ground rules. Conversely, in the United States, the debate has stagnated on the question of whether on-line gambling should be outlawed.
Yet the Internet moves at the light speed of fibre-optic connections, and everywhere gambling fortunes are being made and lost, in nanoseconds.
Montreal's Desjardins Securities held a conference at the city's casino in June to endorse some Canadian companies involved in Internet gambling.
But most investors who attended wanted to know about the prospects for the industry's growth in China -- a subject matter that was also exciting more than 1,000 people gathered in downtown Montreal, at the three-day Global Interactive Gaming Summit and Expo.
"Understand that China is a long-term investment, not overnight success," consultant Jason Chan told that conference. The founder of G-Master Technology Co. in Macau -- a "special administrative region" that serves as China's Las Vegas -- is one of the world's foremost experts on the subject, having helped Western companies design a number of Chinese-language sites.
Mr. Chan tries to curb some of the exuberance by saying that a number of problems need to be ironed out -- not least the fact that many Chinese still distrust credit cards and computer-gambling sites.
Still, Ronald Maginley, an offshore gaming expert who helps set up gambling sites on the Caribbean island of Antigua -- one of a half-dozen or so major offshore havens that play host to the computer servers where Internet-gambling traffic is routed to -- said he expects that the business will only grow.
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