Media reports state that online gambling in China soared during the recent World Cup. Interest was so intense that gambling income in Macao significantly declined, causing a major blow to the bottom line of major casinos that normally rely on a steady flow of high and low rollers from mainland China. The punters seem to have put their money into online gambling on the World Cup, with revenue at the People’s Republic of China (‘PRC’) government run lottery site increasing by over 80% during this period. Steve Dickinson and Arlo Kipfer of Harris Moure PLLC, China, explore the upsurge of online gambling in China during the World Cup given that gambling is illegal in China.
This then raises the big question: the Macao casinos exist because gambling is illegal in China. No substantial casino business exists in China, forcing punters to head to Macao. If gambling is illegal in China, how does online sports gambling work? If gambling is illegal in the PRC, how is it possible for the World Cup to have made such an impact? As always in China, the story is complex. It runs as follows.
The general ban on gambling in China is subject to one exception. The PRC government operates two legal lotteries: the China Welfare Lottery and the China Sports Lottery. The China Sports Lottery experienced its 20-year anniversary in April of this year. The sports lottery allows legal betting on all sporting events. By far the most popular is betting on football: both Chinese national football and the European leagues. As a result of this opportunity for legal gambling, China has become a nation of football fans. But these fans are bettors, not players.
At its inception, sports lottery tickets were sold at exclusive outlets found in all of China’s cities. The number of oudets has always served as a limitation in the number of potential customers. In order to expand access, the China Sports Lottery entered the online world in 2010. The new online rules allow licensed sports lottery vendors to partner with website providers to offer online lottery purchases. Such legal websites must be approved by government regulators and are subject to strict regulation. Due to the tight regulation, licensed sports lottery websites are still uncommon in China. As might be expected, the national lottery administration has monopolised access to its great profit.
During the World Cup craze in China, operators of the major retail sales websites in China saw an opportunity to cash in. These websites partnered with licensed local lottery vendors to offer their lottery products online through retail sales websites. The lottery sales were offered just like any other retail offering on the site. This form of lottery betting was technically in violation of the regulations. The website is licensed as a commercial website. The local lottery agent is licensed to sell lottery tickets. But, the regulations require specific approval to sell those lottery tickets online. No such approval was obtained, making sale on the major retail websites technically illegal.
However, there was money to be made and no one in China worried about the technical details. There is good reason for this. The major retail websites are well run, reducing to a minimum the chance of deceptive practices against the consumer. The government ultimately received a share of the proceeds through income earned by the local licensed vendor. The total income earned by the government was greatly increased due to the massive advertising power of the websites. In this setting, the government regulators had no motivation other than to say: send us the cheques.
It is not clear whether this very successful foray into the sale of sports lottery tickets on the part of the e-commerce giants will continue. The current feeling is that this was just a temporary event created by the unique interest of the Chinese people in the World Cup. However, the substantial income earned must be attractive to all involved and it is certainly possible that this semi legal sale of sports lottery tickets will continue.
But the story does not end here. From the gambler’s point of view, there is a major problem with betting in the China Sports Lottery: the payouts are low. The dedicated gambler is therefore provided with an incentive to seek a higher return. This higher return is offered by unauthorized online gambling websites. Take an example: a 100 RBM bet on Croatia to win its first game in the World Cup through the official sports lottery would have paid out about 8 RMB; the same bet made through an overseas online gambling site would have paid out about 60 RMB.
The Chinese bettor is therefore obviously attracted to betting on the foreign site. The only problem is that the site is illegal in China. It is illegal to access the site from China, it is illegal to send funds to the site from China and it is illegal to receive funds from the site in China. The PRC government has the technical ability to enforce these rules. Using the great firewall, access to foreign gambling sites can be blocked. Domestic websites that provide access to the foreign sites can be located and shut down. The major search engines like Baidu and Sina can be instructed to filters search terms that allow Chinese residents to find gambling sites. Banks and online payment services can be instructed to deny all payments to gambling sites and to refuse to accept payments from gambling sites.
Even though all these techniques of control are possible, during the World Cup Chinese citizens found that they had almost completely open access to wagering on the World Cup. Access to foreign online gambling sites entirely focused on Chinese citizens was entirely open. While specific numbers are not known, it is generally understood that the amount of betting on the World Cup by Chinese citizens on foreign sites actually dwarfed the amount legally wagered on the World Cup through the China Sports Lottery.
So how does a Chinese citizen make a bet through a foreign online gambling site? First, the Chinese gambler has to find a betting site written in Chinese and focused on Mainland Chinese bettors. Serious gamblers will learn the names of the most popular sites through the Chinese online forums dedicated to gambling. For newbies, a search on a Chinese search engine will result in hundreds of hits for online gambling sites. Normally, the potential better will be led to what is known as a portal site listing hundreds of online gambling sites. Normally, the potential bettor will be led to what is known as a portal site listing hundreds of online gambling sites. One click on the portal listing and the gambler will access the site of choice. Several sites have become overwhelmingly popular in China.
After the bettor finds a site, the next issue is determining how to place the bet. The RMB is not a convertible currency and gambling online is not legal. Not a problem. The site will provide clear instructions to the bettor on how to proceed. The system is simple and direct. The site will provide a list of online payment service providers (PSP) that have been approved to work with the site. The customer contacts his preferred service provider and sets up an account. The betting accounts normally require payment of a minimum deposit the customer will normally fund the account using a standard Chinese bank issued debit card. The deposit is made in RMB and the PSP handles the conversion into foreign currency, payment to the online gambling website and collection and payout of winnings.
The website is accessed in China with all communication in Chinese. For the major sites, there is a Chinese speaking voice operator available 24 hours a day. Payments are made and payouts are received in RMB, collection and bank processing are all handled online by an experienced operator, relieving the bettor of any need to discuss the process with bank personnel. A certain amount of fraud protection is provided by the PSP. Where the website is located in a country in which gambling is legal and supervised, there is even more protection from fraud.
The only issue is that the entire program is illegal under Chinese law. So far, the illegality does not seem to have had an impact on the business. Websites are adept at dealing with being blocked by operating with a large list of revolving URLs. PSP’s come and go using the same revolving URL technique. Chinese banks are desperate for deposits and processing fees and therefore cooperate with the PSP’s in ways that are difficult or impossible for the government regulators to monitor. Individual gamblers are prosecuted only when they have committed some other crime such as embezzlement of the funds used to fund their gambling addiction.
The World Cup has not introduced online gambling to China. Both legal domestic and illegal foreign online gambling were already well established. The effect of the tremendous publicity surrounding the World Cup instead introduced huge sectors of the Chinese public to online gambling. The support of online gambling on football provided by the China Sports Lottery convinced the Chinese public that online gambling is a safe form of amusement. The danger of this is that in the pursuit of higher returns the Chinese public will gravitate towards online gambling sites that are illegal in the country. This type of site is not regulated or supervised in any way and is often in the control of criminal organizations.
Reports are now coming out of China about deceptive practices arising from such sites that are typically based in SE Asia. Legal and social issues arising from gambling on such sites may cause the Chinese government to take more aggressive actions against illegal online gambling. The current anti-corruption drive in china focuses on control of overseas gambling, which also may lead to an additional push for regulation. For this reason, though the business is now thriving, there is no certainty about its future in China.
October 27, 2014
October 26, 2014
Seven arrested in football match fixing claims in Latvia
Seven people have been arrested in Latvia over alleged match fixing claims in football.
Latvian police raided Daugava Daugavpils training ground on Wednesday over allegations key domestic and international football games had been rigged, LETA reports.
Responding to the police raid on the training ground, Daugava Daugavpils club director Edgars Limans said: "I believe that the raid was more of a shock therapy for the players before the actual interrogation took place, which lasted for about 40 minutes for each.
"The raid took place about ten minutes after we started training, therefore, the detainees should return to Daugavpils already by Friday," Limans believes, adding that the team should be back in its full makeup already by Sunday.
The arrests come after UEFA alleged a Champions League game between the Daugavpils side and Finnish side FC Elfsborg was fixed. The Latvian team lost the game last year 7-1.
It's not the first time match fixing allegations have been exposed in Latvian football.
Former Daugava striker Stanley Ibe from Nigeria caused uproar last year after saying that all the club players knew that several games had been rigged. Ibe said that the club's coach and players were paid for doing what former president Olegs Gavrilovs told them.
Gavrilovs was disqualified from Latvian football for life in 2009 and is believed to be one of the arrested, media reports say.
Dinaburg later merged with Daugava. Despite the ban, Gavrilovs can still be seen in the stands during almost every game Daugava plays.
Former Dinaburg head coach Tamaz Pertia was also disqualified in 2009 over corruption allegations. but his disqualification was lifted whilst he currently coaches Riga Skonto football club.
Meanwhile, it's believed police searches will be carried out other Latvian football clubs, sportacentrs.com reports. UEFA said it was investigating the conduct of Latvian football club FC Jurmala earlier this year.
Daugava is set to play its next Latvian Higher League match on Sunday against Daugavpils. The club became the Higher League champion in 2012.
Latvian police raided Daugava Daugavpils training ground on Wednesday over allegations key domestic and international football games had been rigged, LETA reports.
Responding to the police raid on the training ground, Daugava Daugavpils club director Edgars Limans said: "I believe that the raid was more of a shock therapy for the players before the actual interrogation took place, which lasted for about 40 minutes for each.
"The raid took place about ten minutes after we started training, therefore, the detainees should return to Daugavpils already by Friday," Limans believes, adding that the team should be back in its full makeup already by Sunday.
The arrests come after UEFA alleged a Champions League game between the Daugavpils side and Finnish side FC Elfsborg was fixed. The Latvian team lost the game last year 7-1.
It's not the first time match fixing allegations have been exposed in Latvian football.
Former Daugava striker Stanley Ibe from Nigeria caused uproar last year after saying that all the club players knew that several games had been rigged. Ibe said that the club's coach and players were paid for doing what former president Olegs Gavrilovs told them.
Gavrilovs was disqualified from Latvian football for life in 2009 and is believed to be one of the arrested, media reports say.
Dinaburg later merged with Daugava. Despite the ban, Gavrilovs can still be seen in the stands during almost every game Daugava plays.
Former Dinaburg head coach Tamaz Pertia was also disqualified in 2009 over corruption allegations. but his disqualification was lifted whilst he currently coaches Riga Skonto football club.
Meanwhile, it's believed police searches will be carried out other Latvian football clubs, sportacentrs.com reports. UEFA said it was investigating the conduct of Latvian football club FC Jurmala earlier this year.
Daugava is set to play its next Latvian Higher League match on Sunday against Daugavpils. The club became the Higher League champion in 2012.
October 23, 2014
Sochi to host Russian Gaming Week; Russia busts 72,000 illegal gambling dens in five years
Russian resort town of Sochi, home to the Winter Olympic Games 2014, would be hosting the Russian Gaming Week in November.
Sochi to host Russian Gaming Week; Russia busts 72,000 illegal gambling dens in five yearsThe decision to tab Sochi as the host of this year’s conference was to showcase the resort town to industry leaders after Russian President Vladimir Putin signed a law in July officially designating Crimea and Sochi as new gambling zones.
The Sochi gambling zone is within the boundaries of the Olympic facilities with the hopes of turning the Russian Black Sea resort town into a popular tourist destination.
Next month’s RGW Sochi Expo will feature discussions regarding the town’s capacity to become a successful gambling zone, including debates on the possibility of foreign casino operators coming to Sochi and the level of competition these Russian gambling zones could have on each other.
Other designated gambling zones have attracted foreign investors, particularly Vladivostok, which has signed off on casino projects from Melco Crown Entertainment and NagaCorp. It remains to be seen whether Sochi will be able to get that kind of attention, although its safe to say that a lot will be learned when the resort town hosts the Russian Gaming Week next month.
Meanwhile, if there was ever any doubt about Russia’s rather overzealous approach in implementing its ban on illegal gambling houses, the number of illegal gambling houses it has busted in the past five years will squash those doubts away.
A report from Russian news agency TASS quoted the prosecutor general’s office saying that since the country enacted “Federal Law No 244” in July 1, 2009 banning casinos outside four gambling zones, authorities have done checks on over 108,000 facilities throughout the country. Of those checks, 72,000 illegal gambling houses and 822 underground casinos have been busted.
Furthermore, law enforcement authorities from Russia have also confiscated close to 1 million units of gambling equipment, on top of the 50 thousand chiefs of these gambling halls, all of whom have been fined a collective amount of $17.2 million.
Sochi to host Russian Gaming Week; Russia busts 72,000 illegal gambling dens in five yearsThe decision to tab Sochi as the host of this year’s conference was to showcase the resort town to industry leaders after Russian President Vladimir Putin signed a law in July officially designating Crimea and Sochi as new gambling zones.
The Sochi gambling zone is within the boundaries of the Olympic facilities with the hopes of turning the Russian Black Sea resort town into a popular tourist destination.
Next month’s RGW Sochi Expo will feature discussions regarding the town’s capacity to become a successful gambling zone, including debates on the possibility of foreign casino operators coming to Sochi and the level of competition these Russian gambling zones could have on each other.
Other designated gambling zones have attracted foreign investors, particularly Vladivostok, which has signed off on casino projects from Melco Crown Entertainment and NagaCorp. It remains to be seen whether Sochi will be able to get that kind of attention, although its safe to say that a lot will be learned when the resort town hosts the Russian Gaming Week next month.
Meanwhile, if there was ever any doubt about Russia’s rather overzealous approach in implementing its ban on illegal gambling houses, the number of illegal gambling houses it has busted in the past five years will squash those doubts away.
A report from Russian news agency TASS quoted the prosecutor general’s office saying that since the country enacted “Federal Law No 244” in July 1, 2009 banning casinos outside four gambling zones, authorities have done checks on over 108,000 facilities throughout the country. Of those checks, 72,000 illegal gambling houses and 822 underground casinos have been busted.
Furthermore, law enforcement authorities from Russia have also confiscated close to 1 million units of gambling equipment, on top of the 50 thousand chiefs of these gambling halls, all of whom have been fined a collective amount of $17.2 million.
Playtech has record Q3
Online gambling technology provider Playtech says its third quarter was a record breaker, putting the company on track to exceed current market expectations for full-year results. The company issued a Q3 trading update on Wednesday, showing a 28.6% year-on-year rise in revenue to €116.5m. The good times have continued into the first three weeks of Q4, with average daily revenue up 22% over the same period last year and up 2% sequentially.
Playtech’s mainstay casino vertical continued to earn the lion’s share of company revenue, rising 33% to €62.4m, while services revenue rose 19.3% to €34m. In fact, every vertical besides ‘other’ was in positive territory, but ‘other’ at least had the decency to remain flat at €1.6m. Sports betting posted the most dramatic gain, rising nearly 109% to €7.1m, thanks in part to the launch of an online sportbook for Italian media outlet Gazzetta dello Sport. Bingo rose 9.5% to €4.6m, land-based gambling rose 20.7% to €3.5m and even poker managed to improve 3.1% to €3.3m (although this was down 8.3% sequentially).
Playtech’s eastward shift continued in Q3, with Asia’s share of company revenue rising two points to 36% from Q2, while Europe and the rest of the world shed a point apiece to 56% and 8% respectively.
Playtech CEO Mor Weizer touted the number of deals the company inked in the quarter as evidence that the party is only getting started. Weizer noted that three licensees had shifted their UK-facing business to Playtech’s white label structure, “demonstrating the financial and operational benefits that can be achieved by using our turnkey offering.”
Weizer said Playtech would have big news sometime in H1 2015 regarding a major acquisition that would take the company “to the next level”. Weizer suggested the financial pressures about to be brought on UK-facing operators by regulatory changes would “put them in the right position to do a deal.” Playtech has been sitting on a massive cash pile for over a year after its former William Hill Online joint venture partner cut a check to acquire Playtech’s stake.
In even more good news, Playtech has triumphed in a French court case in which it had been accused of thieving the intellectual property of French online poker market leader Winamax. In August, Winamax had sued Playtech and several of its licensees over Playtech’s Twister sit n’ go game format, which Winamax believed infringed on its own Expresso three-handed ‘hyper-turbo’ lottery-style poker product. But earlier this month, the court rejected this argument, saying Expresso was “neither innovative nor original” and ordered Winamax to pay Playtech, Betclic Everest and Unibet €3k apiece.
Playtech’s mainstay casino vertical continued to earn the lion’s share of company revenue, rising 33% to €62.4m, while services revenue rose 19.3% to €34m. In fact, every vertical besides ‘other’ was in positive territory, but ‘other’ at least had the decency to remain flat at €1.6m. Sports betting posted the most dramatic gain, rising nearly 109% to €7.1m, thanks in part to the launch of an online sportbook for Italian media outlet Gazzetta dello Sport. Bingo rose 9.5% to €4.6m, land-based gambling rose 20.7% to €3.5m and even poker managed to improve 3.1% to €3.3m (although this was down 8.3% sequentially).
Playtech’s eastward shift continued in Q3, with Asia’s share of company revenue rising two points to 36% from Q2, while Europe and the rest of the world shed a point apiece to 56% and 8% respectively.
Playtech CEO Mor Weizer touted the number of deals the company inked in the quarter as evidence that the party is only getting started. Weizer noted that three licensees had shifted their UK-facing business to Playtech’s white label structure, “demonstrating the financial and operational benefits that can be achieved by using our turnkey offering.”
Weizer said Playtech would have big news sometime in H1 2015 regarding a major acquisition that would take the company “to the next level”. Weizer suggested the financial pressures about to be brought on UK-facing operators by regulatory changes would “put them in the right position to do a deal.” Playtech has been sitting on a massive cash pile for over a year after its former William Hill Online joint venture partner cut a check to acquire Playtech’s stake.
In even more good news, Playtech has triumphed in a French court case in which it had been accused of thieving the intellectual property of French online poker market leader Winamax. In August, Winamax had sued Playtech and several of its licensees over Playtech’s Twister sit n’ go game format, which Winamax believed infringed on its own Expresso three-handed ‘hyper-turbo’ lottery-style poker product. But earlier this month, the court rejected this argument, saying Expresso was “neither innovative nor original” and ordered Winamax to pay Playtech, Betclic Everest and Unibet €3k apiece.
October 22, 2014
Eurofootball signs deal with Bulgarian national team; Casino Technology inks with Bulgaria club powerhouse Ludogorets
Sofia-based sports betting operator, Eurofootball, signed a two-year sponsorship deal with Bulgarian national football team and the Bulgarian Football Union (BFU). The contract runs until 30th August 2016, taking the partnership beyond the UEFA Euro 2016 tournament for which Bulgaria attempts to qualify.
Eurofootball signs deal with Bulgarian national team; Casino Technology inks with Bulgaria club powerhouse Ludogorets“For us it is very important to sponsor BFU and the national football team through the long road ahead to the France 2016 championship,” Eurofootball CEO Nikolaos Arsenopoulos said in a statement. “We are proud to support the BFU and wish the national team the best of luck.”
The deal calls for the BFU and the national team to support Eurofootball’s charity drives, as part of the latter’s “Win and Help” corporate social responsibility program dedicated to encourage sports among Bulgaria’s youth. The partnership also comes at a good time for the national team in its drive to qualify for UEFA Euro 2016. “We hope that with good chance and Eurofootball’s support, we will succeed to qualify for the championship,” BFU president Borislav Mihaylov said.
The Bulgarian national team sits at fourth place with three points after three qualifying matches in Group H, behind of Croatia, Norway and Italy, and ahead of Malta and Azerbaijan.
The country’s preeminent club team PFC Ludogorets Razgrad finalized its own sponsorship deal with Bulgarian casino games developer Casino Technology. The deal allows the game developer to attach its brand to the three-time, defending Bulgarian football league champions and promote its newly launched eCasino.bg online casino platform. The partnership will give Casino Technology access to its club’s media sites as well as prime ad placements inside the Ludogorets Arena.
“As a company that managed to break into the world market thanks to its own efforts, hard work and policy for selection and training of staff, we are pleased to support FC Ludogorets in which we see the same qualities and momentum,” Casino Technology Founder and President Milo Borissov said in a statement.
Ludogorets sits second in its domestic league behind leaders CSKA Sofia. The team also competes in the Champions League where it’s been grouped with football powerhouses Real Madrid and Liverpool FC.
Eurofootball signs deal with Bulgarian national team; Casino Technology inks with Bulgaria club powerhouse Ludogorets“For us it is very important to sponsor BFU and the national football team through the long road ahead to the France 2016 championship,” Eurofootball CEO Nikolaos Arsenopoulos said in a statement. “We are proud to support the BFU and wish the national team the best of luck.”
The deal calls for the BFU and the national team to support Eurofootball’s charity drives, as part of the latter’s “Win and Help” corporate social responsibility program dedicated to encourage sports among Bulgaria’s youth. The partnership also comes at a good time for the national team in its drive to qualify for UEFA Euro 2016. “We hope that with good chance and Eurofootball’s support, we will succeed to qualify for the championship,” BFU president Borislav Mihaylov said.
The Bulgarian national team sits at fourth place with three points after three qualifying matches in Group H, behind of Croatia, Norway and Italy, and ahead of Malta and Azerbaijan.
The country’s preeminent club team PFC Ludogorets Razgrad finalized its own sponsorship deal with Bulgarian casino games developer Casino Technology. The deal allows the game developer to attach its brand to the three-time, defending Bulgarian football league champions and promote its newly launched eCasino.bg online casino platform. The partnership will give Casino Technology access to its club’s media sites as well as prime ad placements inside the Ludogorets Arena.
“As a company that managed to break into the world market thanks to its own efforts, hard work and policy for selection and training of staff, we are pleased to support FC Ludogorets in which we see the same qualities and momentum,” Casino Technology Founder and President Milo Borissov said in a statement.
Ludogorets sits second in its domestic league behind leaders CSKA Sofia. The team also competes in the Champions League where it’s been grouped with football powerhouses Real Madrid and Liverpool FC.
October 16, 2014
Finding a Video Poker Bug Made These Guys Rich - Then Vegas Made Them Pay
John Kane was on a hell of a winning streak. On July 3, 2009, he walked alone into the high-limit room at the Silverton Casino in Las Vegas and sat down at a video poker machine called the Game King. Six minutes later the purple light on the top of the machine flashed, signaling a $4,300 jackpot. Kane waited while the slot attendant verified the win and presented the IRS paperwork—a procedure required for any win of $1,200 or greater—then, 11 minutes later, ding ding ding!, a $2,800 win. A $4,150 jackpot rolled in a few minutes after that.
All the while, the casino's director of surveillance, Charles Williams, was peering down at Kane through a camera hidden in a ceiling dome. Tall, with a high brow and an aquiline nose, the 50-year-old Kane had the patrician bearing of a man better suited to playing a Mozart piano concerto than listening to the chirping of a slot machine. Even his play was refined: the way he rested his long fingers on the buttons and swept them in a graceful legato, smoothly selecting good cards, discarding bad ones, accepting jackpot after jackpot with the vaguely put-upon air of a creditor finally collecting an overdue debt.
Williams could see that Kane was wielding none of the array of cheating devices that casinos had confiscated from grifters over the years. He wasn't jamming a light wand in the machine's hopper or zapping the Game King with an electromagnetic pulse. He was simply pressing the buttons. But he was winning far too much, too fast, to be relying on luck alone.
At 12:34 pm, the Game King lit up with its seventh jackpot in an hour and a half, a $10,400 payout. Now Williams knew something was wrong: The cards dealt on the screen were the exact same four deuces and four of clubs that yielded Kane's previous jackpot. The odds against that were astronomical. Williams called over the executive in charge of the Silverton's slots, and they reviewed the surveillance tape together.
The evidence was mounting that Kane had found something unthinkable: the kind of thing gamblers dream of, casinos dread, and Nevada regulators have an entire auditing regime to prevent. He'd found a bug in the most popular video slot in Las Vegas.
As they watched the replay for clues, Kane chalked up an eighth jackpot worth $8,200, and Williams decided not to wait any longer. He contacted the Silverton's head of security, a formidable character with slicked-back silver hair and a black suit, and positioned him outside the slot area. His orders: Make sure John Kane doesn't leave the casino.
Kane had discovered the glitch in the Game King three months earlier on the other end of town, at the unpretentious Fremont Hotel and Casino in downtown's Glitter Gulch. He was overdue for a lucky break. Since the Game King had gotten its hooks in him years earlier he'd lost between tens of thousands and hundreds of thousands annually. At his previous haunt, the locals-friendly Boulder Station, he blew half a million dollars in 2006 alone—a pace that earned him enough Player's Club points to pay for his own Game King to play at his home on the outskirts of Vegas, along with technicians to service it. (The machine was just for fun—it didn't pay jackpots.) “He's played more than anyone else in the United States,” says his lawyer, Andrew Leavitt. “I'm not exaggerating or embellishing. It's an addiction.”
To understand video poker addiction, you have to start with the deceptively simple appeal of the game. You put some money in the machine, place a bet of one to five credits, and the computer deals you a poker hand. Select the cards you want to keep, slap the Draw button, and the machine replaces the discards. Your final hand determines the payout.
When the first video poker machine hit casinos in the 1970s, it was a phenomenal success—gamblers loved that they could make decisions that affected the outcome instead of just pulling a handle and watching the reels spin. The patent holder started a company called International Game Technology that debuted on the Nasdaq in 1981.
IGT's key insight was to tap into the vast flexibility offered by computerized gambling. In 1996, the company perfected its formula with the Game King Multi-Game, which allowed players to choose from several variations on video poker. Casinos snatched up the Game King, and IGT sold them regular firmware upgrades that added still more games to the menu. On September 25, 2002, the company released its fifth major revision—Game King 5.0. Its marketing material was triumphal: “Full of new enhancements, including state-of-the-art video graphics and enhanced stereo sound, the Game King 5.0 Multi-Game suite is sure to rule over your entire casino floor with unprecedented magnificence!” But the new Game King code had one feature that wasn't in the brochure—a series of subtle errors in program number G0001640 that evaded laboratory testing and source code review.
The bug survived like a cockroach for the next seven years. It passed into new revisions, one after another, ultimately infecting 99 different programs installed in thousands of IGT machines around the world. As far as anyone knows, it went completely undetected until late April 2009, when John Kane was playing at a row of four low-limit Game Kings outside the entrance to a Chinese fast food joint at the Fremont, smoke swirling around him and '90s pop music raining down from the casino sound system.
He'd been switching between game variations and racking up a modest payout. But when he hit the Cash Out button to take his money to another machine, the candle lit at the top of the Game King and the screen locked up with a jackpot worth more than $1,000. Kane hadn't even played a new hand, so he knew there was a mistake. He told a casino attendant about the error, but the worker thought he was joking and gave him the money anyway.
At that point, Kane could have forgotten the whole thing. Instead, he called a friend and embarked on the biggest gamble of his life.
Even before the phone rang in his suburban Pittsburgh home, Andre Nestor had a gut feeling that everything was about to change for him. Superstitious and prone to hunches, he'd felt it coming for days: April 30, 2009, would be exactly 15 years since Nestor ignored an urge to play a set of numbers that came up in the Pennsylvania lottery Big 4.
That was the story of his life—always playing the right numbers at the wrong time. Games of chance had been courting and betraying Nestor since he was old enough to gamble. In 2001 he'd moved to Las Vegas to be closer to the action, answering phones for a bank during the day and wagering his meager paycheck at night. That's when he met John Kane in an AOL chatroom for Vegas locals. Though Nestor was 13 years younger than Kane and perpetually flirting with poverty, they developed an intense addicts' friendship.
Nestor's records show he lost about $20,000 a year for six years before he gave up, said good-bye to Kane, and moved back to the sleepy Pittsburgh suburb of Swissvale, Pennsylvania, in 2007. For about two years he had a stable life, living off public assistance, gambling infrequently, and playing the occasional lottery ticket. Then Kane called to tell him about a bug he'd found in video poker. Nestor drove to the airport that night and camped there until the next available flight to Las Vegas.
Kane picked him up at the curb at McCarran airport. After a quick breakfast, they drove to the Fremont, took adjacent seats at two Game Kings, and went to work. Kane had some idea of how the glitch operated but hadn't been able to reliably reproduce it. Working together, the two men began trying different combinations of play, game types, and bet levels, sounding out the bug like bats in the dark.
It turned out the Game King's endless versatility was also its fatal flaw. In addition to different game variants, the machine lets you choose the base level of your wagers: At the low-limit Fremont machines, you could select six different denomination levels, from 1 cent to 50 cents a credit.
The key to the glitch was that under just the right circumstances, you could switch denomination levels retroactively. That meant you could play at 1 cent per credit for hours, losing pocket change, until you finally got a good hand—like four aces or a royal flush. Then you could change to 50 cents a credit and fool the machine into re-awarding your payout at the new, higher denomination.
Performing that trick consistently wasn't easy—it involved a complicated misdirection that left the Game King's internal variables in a state of confusion. But after seven hours rooted to their seats, Kane and Nestor boiled it down to a step-by-step recipe that would work every time.
Nestor and Kane each rang up a few jackpots, then broke for a celebratory dinner, at which they planned their next move. They would have to expand beyond the Fremont before the casino noticed how much they were winning. Fortunately, Game Kings are ubiquitous in Vegas, installed everywhere from the corner 7-Eleven to the toniest luxury casino. They mapped out their campaign and then headed back to Kane's home for the night.
Kane lived in a spacious house at the far northeast edge of town. His Game King was in the foyer. A spare bedroom down the hall was devoted entirely to a model train set, an elaborate, detailed miniature with tracks snaking and climbing through model towns, up hills, across bridges, and through tunnels, every detail perfect. The home's centerpiece was the living room with its three Steinway grand pianos. Kane is a virtuoso pianist; in the early 1980s he was a leading dance accompanist in the Chicago area, and even today he sells recordings under the vanity label Keynote Records. He left the professional music world only after failing to advance in the prestigious Van Cliburn International Piano Competition. Now he ran a management consulting practice that claimed one-third of the Fortune 100 as clients.
Kane's business was lucrative, so he was accustomed to handling money. But now that they were on the verge of a windfall, he was worried about Nestor; he could see his younger friend returning every cent to the casinos at the roulette tables or blowing it all on frivolities. “If you had a million dollars, what 10 things would you do?” Kane asked him. He wanted Nestor to make a list and really think through his priorities.
Nestor started a list, but it would prove unnecessary. After another day at the Fremont, they branched out. To their surprise, the button sequence didn't work. Over the following days, they explored the Hilton, the Cannery, then the Stratosphere, Terrible's, the Hard Rock, the Tropicana, the Luxor, and five other casinos, drawing the same dismal results everywhere. For some reason, the Game King glitch was only present at the Fremont.
At the end of a frustrating week, Nestor headed to the airport for his return flight with just $8,000 in winnings. As a final insult, he lost $700 in a video poker machine while waiting for his plane.
Kane decided to wring what he could from the four Fremont machines. He learned to speed up the process by using the Game King's Double Up feature, which gave players a chance to double their winnings or lose everything. Respectable payouts that might once have satisfied Kane were garbage now. After five weeks using the new strategy, Kane had pocketed more than $100,000 from the Fremont.
Unsurprisingly, the Fremont noticed. In modern casinos, every slot machine in the house is wired to a central server, where statistical deviations stick out like a fifth ace. The four machines under the Chinese food sign shot to the top of the Fremont's “loser list” of underperforming games: They'd gone from providing the casino a reliable $14,500 a month to costing it $75,000 in May alone.
On May 25, a slot manager approached Kane after one of his wins and announced that he was disabling the Double Up feature on all of the Game Kings—he was aware that Kane used the option copiously, and he figured it must have something to do with his run of luck.
All the while, the casino's director of surveillance, Charles Williams, was peering down at Kane through a camera hidden in a ceiling dome. Tall, with a high brow and an aquiline nose, the 50-year-old Kane had the patrician bearing of a man better suited to playing a Mozart piano concerto than listening to the chirping of a slot machine. Even his play was refined: the way he rested his long fingers on the buttons and swept them in a graceful legato, smoothly selecting good cards, discarding bad ones, accepting jackpot after jackpot with the vaguely put-upon air of a creditor finally collecting an overdue debt.
Williams could see that Kane was wielding none of the array of cheating devices that casinos had confiscated from grifters over the years. He wasn't jamming a light wand in the machine's hopper or zapping the Game King with an electromagnetic pulse. He was simply pressing the buttons. But he was winning far too much, too fast, to be relying on luck alone.
At 12:34 pm, the Game King lit up with its seventh jackpot in an hour and a half, a $10,400 payout. Now Williams knew something was wrong: The cards dealt on the screen were the exact same four deuces and four of clubs that yielded Kane's previous jackpot. The odds against that were astronomical. Williams called over the executive in charge of the Silverton's slots, and they reviewed the surveillance tape together.
The evidence was mounting that Kane had found something unthinkable: the kind of thing gamblers dream of, casinos dread, and Nevada regulators have an entire auditing regime to prevent. He'd found a bug in the most popular video slot in Las Vegas.
As they watched the replay for clues, Kane chalked up an eighth jackpot worth $8,200, and Williams decided not to wait any longer. He contacted the Silverton's head of security, a formidable character with slicked-back silver hair and a black suit, and positioned him outside the slot area. His orders: Make sure John Kane doesn't leave the casino.
Kane had discovered the glitch in the Game King three months earlier on the other end of town, at the unpretentious Fremont Hotel and Casino in downtown's Glitter Gulch. He was overdue for a lucky break. Since the Game King had gotten its hooks in him years earlier he'd lost between tens of thousands and hundreds of thousands annually. At his previous haunt, the locals-friendly Boulder Station, he blew half a million dollars in 2006 alone—a pace that earned him enough Player's Club points to pay for his own Game King to play at his home on the outskirts of Vegas, along with technicians to service it. (The machine was just for fun—it didn't pay jackpots.) “He's played more than anyone else in the United States,” says his lawyer, Andrew Leavitt. “I'm not exaggerating or embellishing. It's an addiction.”
To understand video poker addiction, you have to start with the deceptively simple appeal of the game. You put some money in the machine, place a bet of one to five credits, and the computer deals you a poker hand. Select the cards you want to keep, slap the Draw button, and the machine replaces the discards. Your final hand determines the payout.
When the first video poker machine hit casinos in the 1970s, it was a phenomenal success—gamblers loved that they could make decisions that affected the outcome instead of just pulling a handle and watching the reels spin. The patent holder started a company called International Game Technology that debuted on the Nasdaq in 1981.
IGT's key insight was to tap into the vast flexibility offered by computerized gambling. In 1996, the company perfected its formula with the Game King Multi-Game, which allowed players to choose from several variations on video poker. Casinos snatched up the Game King, and IGT sold them regular firmware upgrades that added still more games to the menu. On September 25, 2002, the company released its fifth major revision—Game King 5.0. Its marketing material was triumphal: “Full of new enhancements, including state-of-the-art video graphics and enhanced stereo sound, the Game King 5.0 Multi-Game suite is sure to rule over your entire casino floor with unprecedented magnificence!” But the new Game King code had one feature that wasn't in the brochure—a series of subtle errors in program number G0001640 that evaded laboratory testing and source code review.
The bug survived like a cockroach for the next seven years. It passed into new revisions, one after another, ultimately infecting 99 different programs installed in thousands of IGT machines around the world. As far as anyone knows, it went completely undetected until late April 2009, when John Kane was playing at a row of four low-limit Game Kings outside the entrance to a Chinese fast food joint at the Fremont, smoke swirling around him and '90s pop music raining down from the casino sound system.
He'd been switching between game variations and racking up a modest payout. But when he hit the Cash Out button to take his money to another machine, the candle lit at the top of the Game King and the screen locked up with a jackpot worth more than $1,000. Kane hadn't even played a new hand, so he knew there was a mistake. He told a casino attendant about the error, but the worker thought he was joking and gave him the money anyway.
At that point, Kane could have forgotten the whole thing. Instead, he called a friend and embarked on the biggest gamble of his life.
Even before the phone rang in his suburban Pittsburgh home, Andre Nestor had a gut feeling that everything was about to change for him. Superstitious and prone to hunches, he'd felt it coming for days: April 30, 2009, would be exactly 15 years since Nestor ignored an urge to play a set of numbers that came up in the Pennsylvania lottery Big 4.
That was the story of his life—always playing the right numbers at the wrong time. Games of chance had been courting and betraying Nestor since he was old enough to gamble. In 2001 he'd moved to Las Vegas to be closer to the action, answering phones for a bank during the day and wagering his meager paycheck at night. That's when he met John Kane in an AOL chatroom for Vegas locals. Though Nestor was 13 years younger than Kane and perpetually flirting with poverty, they developed an intense addicts' friendship.
Nestor's records show he lost about $20,000 a year for six years before he gave up, said good-bye to Kane, and moved back to the sleepy Pittsburgh suburb of Swissvale, Pennsylvania, in 2007. For about two years he had a stable life, living off public assistance, gambling infrequently, and playing the occasional lottery ticket. Then Kane called to tell him about a bug he'd found in video poker. Nestor drove to the airport that night and camped there until the next available flight to Las Vegas.
Kane picked him up at the curb at McCarran airport. After a quick breakfast, they drove to the Fremont, took adjacent seats at two Game Kings, and went to work. Kane had some idea of how the glitch operated but hadn't been able to reliably reproduce it. Working together, the two men began trying different combinations of play, game types, and bet levels, sounding out the bug like bats in the dark.
It turned out the Game King's endless versatility was also its fatal flaw. In addition to different game variants, the machine lets you choose the base level of your wagers: At the low-limit Fremont machines, you could select six different denomination levels, from 1 cent to 50 cents a credit.
The key to the glitch was that under just the right circumstances, you could switch denomination levels retroactively. That meant you could play at 1 cent per credit for hours, losing pocket change, until you finally got a good hand—like four aces or a royal flush. Then you could change to 50 cents a credit and fool the machine into re-awarding your payout at the new, higher denomination.
Performing that trick consistently wasn't easy—it involved a complicated misdirection that left the Game King's internal variables in a state of confusion. But after seven hours rooted to their seats, Kane and Nestor boiled it down to a step-by-step recipe that would work every time.
Nestor and Kane each rang up a few jackpots, then broke for a celebratory dinner, at which they planned their next move. They would have to expand beyond the Fremont before the casino noticed how much they were winning. Fortunately, Game Kings are ubiquitous in Vegas, installed everywhere from the corner 7-Eleven to the toniest luxury casino. They mapped out their campaign and then headed back to Kane's home for the night.
Kane lived in a spacious house at the far northeast edge of town. His Game King was in the foyer. A spare bedroom down the hall was devoted entirely to a model train set, an elaborate, detailed miniature with tracks snaking and climbing through model towns, up hills, across bridges, and through tunnels, every detail perfect. The home's centerpiece was the living room with its three Steinway grand pianos. Kane is a virtuoso pianist; in the early 1980s he was a leading dance accompanist in the Chicago area, and even today he sells recordings under the vanity label Keynote Records. He left the professional music world only after failing to advance in the prestigious Van Cliburn International Piano Competition. Now he ran a management consulting practice that claimed one-third of the Fortune 100 as clients.
Kane's business was lucrative, so he was accustomed to handling money. But now that they were on the verge of a windfall, he was worried about Nestor; he could see his younger friend returning every cent to the casinos at the roulette tables or blowing it all on frivolities. “If you had a million dollars, what 10 things would you do?” Kane asked him. He wanted Nestor to make a list and really think through his priorities.
Nestor started a list, but it would prove unnecessary. After another day at the Fremont, they branched out. To their surprise, the button sequence didn't work. Over the following days, they explored the Hilton, the Cannery, then the Stratosphere, Terrible's, the Hard Rock, the Tropicana, the Luxor, and five other casinos, drawing the same dismal results everywhere. For some reason, the Game King glitch was only present at the Fremont.
At the end of a frustrating week, Nestor headed to the airport for his return flight with just $8,000 in winnings. As a final insult, he lost $700 in a video poker machine while waiting for his plane.
Kane decided to wring what he could from the four Fremont machines. He learned to speed up the process by using the Game King's Double Up feature, which gave players a chance to double their winnings or lose everything. Respectable payouts that might once have satisfied Kane were garbage now. After five weeks using the new strategy, Kane had pocketed more than $100,000 from the Fremont.
Unsurprisingly, the Fremont noticed. In modern casinos, every slot machine in the house is wired to a central server, where statistical deviations stick out like a fifth ace. The four machines under the Chinese food sign shot to the top of the Fremont's “loser list” of underperforming games: They'd gone from providing the casino a reliable $14,500 a month to costing it $75,000 in May alone.
On May 25, a slot manager approached Kane after one of his wins and announced that he was disabling the Double Up feature on all of the Game Kings—he was aware that Kane used the option copiously, and he figured it must have something to do with his run of luck.
October 14, 2014
Czech Republic introduces new gambling bill
The Czech Republic is in the process of introducing a new gambling bill that would impose stricter regulations involving a variety of issues, including slot machine placements, betting limits, and tax revenues.
Czech Republic details new gambling billFinance Minister Andrej Babis unveiled details of the bill, which also includes a provision to create a database of gamblers to monitor their betting habits. The European country has been actively trying to curb cases of excessive gambling among its residents. Municipalities across the country have implemented their own regulations. On Thursday, Finance Minister Andrej Babis unveiled the details of a first comprehensive bill aimed to implement stricter rules and regulations for the industry.
A big part of these new regulations includes removing slot machines from regular pubs and bars and exclusively putting them in specialized bars and casinos. The Finance Ministry also plans to create a central monitoring system that would oversee all gambling operations in real time, while also creating a database of gamblers that will allow the ministry to intervene in “high-risk” gambling cases.
“We would also like to introduce principles of responsible gambling, establishing maximum hourly and monthly bet limits,” Babis said. “On top of that, we want to prevent certain groups of people from gambling. These include gambling addicts undergoing treatment or those who owe money either to their families or to the state.”
Gamblers and regular sports bettors will all be required to register in the aforementioned database, which will be linked to other registries in the country.
The proposed gambling bill would adhere to current EU rules on gambling, thus allowing the country to open its arms to online gambling operators who may want to nether the Czech market.
This part of the new bill is important because only five domestic bookmakers, including Fortuna Entertainment Group dominate the Czech gambling market. The current legislation bans any foreign online betting shops from catering to the market unless they also have physical betting shops in place.
However, the country is now realizing the missed revenue potential of the existing legislation. For one, the country doesn’t get tax revenues by not allowing foreign gaming operators to enter the market
“Users currently bet abroad, which several foreign companies make easier by introducing sites in Czech,” Deputy Finance Minister Ondrej Zavodsky told Reuters. “According to our estimates, the state misses out on more than 1 billion crowns a year in this segment.”
The bill is expected to be passed around to other government agencies before reaching the Lower House and could take effect in the early part of 2016.
Czech Republic details new gambling billFinance Minister Andrej Babis unveiled details of the bill, which also includes a provision to create a database of gamblers to monitor their betting habits. The European country has been actively trying to curb cases of excessive gambling among its residents. Municipalities across the country have implemented their own regulations. On Thursday, Finance Minister Andrej Babis unveiled the details of a first comprehensive bill aimed to implement stricter rules and regulations for the industry.
A big part of these new regulations includes removing slot machines from regular pubs and bars and exclusively putting them in specialized bars and casinos. The Finance Ministry also plans to create a central monitoring system that would oversee all gambling operations in real time, while also creating a database of gamblers that will allow the ministry to intervene in “high-risk” gambling cases.
“We would also like to introduce principles of responsible gambling, establishing maximum hourly and monthly bet limits,” Babis said. “On top of that, we want to prevent certain groups of people from gambling. These include gambling addicts undergoing treatment or those who owe money either to their families or to the state.”
Gamblers and regular sports bettors will all be required to register in the aforementioned database, which will be linked to other registries in the country.
The proposed gambling bill would adhere to current EU rules on gambling, thus allowing the country to open its arms to online gambling operators who may want to nether the Czech market.
This part of the new bill is important because only five domestic bookmakers, including Fortuna Entertainment Group dominate the Czech gambling market. The current legislation bans any foreign online betting shops from catering to the market unless they also have physical betting shops in place.
However, the country is now realizing the missed revenue potential of the existing legislation. For one, the country doesn’t get tax revenues by not allowing foreign gaming operators to enter the market
“Users currently bet abroad, which several foreign companies make easier by introducing sites in Czech,” Deputy Finance Minister Ondrej Zavodsky told Reuters. “According to our estimates, the state misses out on more than 1 billion crowns a year in this segment.”
The bill is expected to be passed around to other government agencies before reaching the Lower House and could take effect in the early part of 2016.
October 13, 2014
Casino rule 1: the house always wins
Crockfords in Curzon Street is one of my favourite casinos, redolent with clickety chips and glittering history. Its name comes from the old 19th-century gaming house on St James’s, set up by William Crockford: a Cockney fishmonger who was such a talented gambler that he made enough money to open his own club and bankrupt half the aristocracy. My kind of guy.
American gambling history glows with the seedy glamour of saloons and riverboats, cowboys slicing and dicing their way across the outlaw south with big guns and marked decks. The British equivalents were the old racecourses where dukes and dustmen bet and cursed together, and the marble gaming halls where Regency dandies went skint.
I find this all romantic; I can’t help it. Even though what I mostly do, these days, is play respectable and regulated poker tournaments in rented conference centres full of young German maths graduates, I try to let this quirky cultural history add some colour.
I’m particularly fond of Crockfords because, when I wrote my gambling memoir For Richer For Poorer, they let me hold the book launch there. Everyone was very nice. I liked them. And it’s a beautiful club. I hope I don’t have my membership revoked for what I’m about to write.
Last week’s story about Phil Ivey, who sued Crockfords for non-payment of a £7.7m punto banco win, reminded me that casinos are – and will always be – the enemy.
Ivey, probably the greatest poker player in the world, had been “edge sorting”. This involves noticing when a deck of cards has an asymmetrical pattern, then turning key cards upside-down so they can be identified from the back. In punto banco, the player has a big edge if the first card dealt is a 6, 7, 8 or 9 – so, if Ivey could turn those cards upside down, he’d know when to make big bets.
In Crockfords, you aren’t allowed to touch the cards. So Ivey’s lady companion, Cheung Yin Sun, asked the unwitting croupier, in Mandarin, to turn the cards “for superstitious reasons”.
Phil Ivey won £7.7m but, realising what had happened, Crockfords paid out only his original stake. So he sued them for his winnings and lost.
The judge ruled that Ivey was cheating. I see a sting – maybe a con – but I’d say the house was outwitted rather than cheated.
The late gambling legend Amarillo Slim once bet the 1939 Wimbledon champion Bobby Riggs that he could beat him at ping-pong. When the match day dawned, the old-time gambler surprised the tennis champ by unveiling the “bats” he’d brought: two cast-iron cooking skillets. Slim had been practising with the skillets for months. Riggs could barely hold them. The tennis whizz thought he’d had a big edge in the coup, but he was wrong. He paid out and learned from his mistake.
Titanic Thompson once bet a guy that he could work out how many watermelons were piled on a passing truck, by sight alone. The guy had no idea that Thompson had met the truck driver the previous day, counted the watermelons and paid him to drive past at an agreed time. The guy paid out and learned from his mistake.
Phil Ivey himself, a few years ago, lost several thousand dollars playing golf against a couple of British poker players. One of the Brits made the mistake of boasting widely that Ivey was “a golf fish”. The proud American went away, took lessons, played obsessively, then came back and (claiming he’d “hardly played”) suggested upping the stakes. He won a million dollars.
Some argued that it was cheating not to declare a changed handicap. Others replied that this was not an official match; Ivey had been taken for a mug, so he mugged his opponents in return.
Why should casinos be exempt from the traps that face all gamblers? They hustle in their own ways, after all. No windows or clocks, so we lose a sense of time. Free drinks; friendly dealers; no open declaration of their statistical advantage. If they think you’re going to lose a fortune (as they did in Ivey’s case), they will pander to your “superstitions”, whether it’s providing a Mandarin-speaking dealer or flipping cards around. It’s all about making you feel important, to ensure you keep betting your money at unfavourable odds. They make you feel “lucky” when you don’t have a chance.
Ivey interfered with the run of play. That is one definition of cheating; the judge accepted it and I can see why. But my heart says he was just cleverer than the house.
He didn’t smuggle in a set of loaded dice or x-ray specs; he didn’t mark the cards with his fingernails or bribe the staff. He just spotted something about the deck they didn’t spot. He exploited their readiness to give him special treatment because they anticipated fat losses. I believe the casino should have ground its teeth, tipped its hat, paid £7.7m for the lesson and stopped using asymmetrical cards.
I play poker, a game where there is no edge but the luck of the deal and the skill of the player. Casino games such as roulette, blackjack, baccarat, slot machines and so on, are stacked in favour of the house. But don’t hustle the hustler: a judge has said that simply isn’t allowed. If you want to gamble on licensed premises, you just have to bend over and take it.
We all dream of “a system” to break the bank at Monte Carlo. What neater way to illustrate the muggery of that dream, what handier Belloc-like lesson, than a court’s official ruling: if you actually come up with such a system, they don’t have to pay you.
American gambling history glows with the seedy glamour of saloons and riverboats, cowboys slicing and dicing their way across the outlaw south with big guns and marked decks. The British equivalents were the old racecourses where dukes and dustmen bet and cursed together, and the marble gaming halls where Regency dandies went skint.
I find this all romantic; I can’t help it. Even though what I mostly do, these days, is play respectable and regulated poker tournaments in rented conference centres full of young German maths graduates, I try to let this quirky cultural history add some colour.
I’m particularly fond of Crockfords because, when I wrote my gambling memoir For Richer For Poorer, they let me hold the book launch there. Everyone was very nice. I liked them. And it’s a beautiful club. I hope I don’t have my membership revoked for what I’m about to write.
Ivey, probably the greatest poker player in the world, had been “edge sorting”. This involves noticing when a deck of cards has an asymmetrical pattern, then turning key cards upside-down so they can be identified from the back. In punto banco, the player has a big edge if the first card dealt is a 6, 7, 8 or 9 – so, if Ivey could turn those cards upside down, he’d know when to make big bets.
In Crockfords, you aren’t allowed to touch the cards. So Ivey’s lady companion, Cheung Yin Sun, asked the unwitting croupier, in Mandarin, to turn the cards “for superstitious reasons”.
Phil Ivey won £7.7m but, realising what had happened, Crockfords paid out only his original stake. So he sued them for his winnings and lost.
The judge ruled that Ivey was cheating. I see a sting – maybe a con – but I’d say the house was outwitted rather than cheated.
The late gambling legend Amarillo Slim once bet the 1939 Wimbledon champion Bobby Riggs that he could beat him at ping-pong. When the match day dawned, the old-time gambler surprised the tennis champ by unveiling the “bats” he’d brought: two cast-iron cooking skillets. Slim had been practising with the skillets for months. Riggs could barely hold them. The tennis whizz thought he’d had a big edge in the coup, but he was wrong. He paid out and learned from his mistake.
Titanic Thompson once bet a guy that he could work out how many watermelons were piled on a passing truck, by sight alone. The guy had no idea that Thompson had met the truck driver the previous day, counted the watermelons and paid him to drive past at an agreed time. The guy paid out and learned from his mistake.
Phil Ivey himself, a few years ago, lost several thousand dollars playing golf against a couple of British poker players. One of the Brits made the mistake of boasting widely that Ivey was “a golf fish”. The proud American went away, took lessons, played obsessively, then came back and (claiming he’d “hardly played”) suggested upping the stakes. He won a million dollars.
Some argued that it was cheating not to declare a changed handicap. Others replied that this was not an official match; Ivey had been taken for a mug, so he mugged his opponents in return.
Why should casinos be exempt from the traps that face all gamblers? They hustle in their own ways, after all. No windows or clocks, so we lose a sense of time. Free drinks; friendly dealers; no open declaration of their statistical advantage. If they think you’re going to lose a fortune (as they did in Ivey’s case), they will pander to your “superstitions”, whether it’s providing a Mandarin-speaking dealer or flipping cards around. It’s all about making you feel important, to ensure you keep betting your money at unfavourable odds. They make you feel “lucky” when you don’t have a chance.
Ivey interfered with the run of play. That is one definition of cheating; the judge accepted it and I can see why. But my heart says he was just cleverer than the house.
He didn’t smuggle in a set of loaded dice or x-ray specs; he didn’t mark the cards with his fingernails or bribe the staff. He just spotted something about the deck they didn’t spot. He exploited their readiness to give him special treatment because they anticipated fat losses. I believe the casino should have ground its teeth, tipped its hat, paid £7.7m for the lesson and stopped using asymmetrical cards.
I play poker, a game where there is no edge but the luck of the deal and the skill of the player. Casino games such as roulette, blackjack, baccarat, slot machines and so on, are stacked in favour of the house. But don’t hustle the hustler: a judge has said that simply isn’t allowed. If you want to gamble on licensed premises, you just have to bend over and take it.
We all dream of “a system” to break the bank at Monte Carlo. What neater way to illustrate the muggery of that dream, what handier Belloc-like lesson, than a court’s official ruling: if you actually come up with such a system, they don’t have to pay you.
UK Government to stop unemployed from gambling
The UK governments work and pension Minister Iain Duncan Smith has announced at the recent Conservative Party Conference that benefits for the unemployed and poor will receive per-paid cards instead of cash to limit in what he called problems with addictions such as gambling and drugs.
In a trial period for a select number of claimants the Minister said that pre-paid cards would stop people using the money to gamble and other addictive devices and make them spend the money on getting them back to work and providing for the family.
Mr Duncan Smith said that for a ‘significant’ number of people on benefits, the struggle to manage their household finances makes it harder for them to buy the essentials and to look for work.
At the conference he said: ‘I have long believed that where parents have fallen into a damaging spiral – drug, alcohol or gambling addiction, even problem debt, or more – we need to find ways to safeguard them – and more importantly, their families, their children, ensuring their basic needs are met.
‘That means benefits paid should go to support the wellbeing of their families, not to feed their destructive habits.
‘I can announce that I am testing prepaid cards, onto which we will make benefit payments, so that the money they receive is spent on the needs of the family – finally helping break the cycle of poverty for families on the margins, change we can be proud of.’
Under the new plan a trial of claimants in the north of the country will be issued with the pre-paid cards.
The government claims that families will be able to ‘take more control over their finances’ if they are restricted in what they can buy or use the funds for.
In this way people will be unable to buy alcohol, drugs and gamble but making the cards compatible only with a limited number of retailers.
Should the trial scheme work then it is planned to be rolled out across the whole country by 2018.
In a trial period for a select number of claimants the Minister said that pre-paid cards would stop people using the money to gamble and other addictive devices and make them spend the money on getting them back to work and providing for the family.
Mr Duncan Smith said that for a ‘significant’ number of people on benefits, the struggle to manage their household finances makes it harder for them to buy the essentials and to look for work.
At the conference he said: ‘I have long believed that where parents have fallen into a damaging spiral – drug, alcohol or gambling addiction, even problem debt, or more – we need to find ways to safeguard them – and more importantly, their families, their children, ensuring their basic needs are met.
‘That means benefits paid should go to support the wellbeing of their families, not to feed their destructive habits.
‘I can announce that I am testing prepaid cards, onto which we will make benefit payments, so that the money they receive is spent on the needs of the family – finally helping break the cycle of poverty for families on the margins, change we can be proud of.’
Under the new plan a trial of claimants in the north of the country will be issued with the pre-paid cards.
The government claims that families will be able to ‘take more control over their finances’ if they are restricted in what they can buy or use the funds for.
In this way people will be unable to buy alcohol, drugs and gamble but making the cards compatible only with a limited number of retailers.
Should the trial scheme work then it is planned to be rolled out across the whole country by 2018.
Japan WILL allow locals to gamble
It seems that the Japanese parliament have changed their minds on the possibility of casino resorts in the country being only open to overseas tourists. In a report from Reuters the news agency is now quoting that the Integrated Resorts Promotion Bill will now allow Japanese nationals to gamble.
With the new bill expected to become law in early 2015 there were fears that the government and Prime Minister Shinzo Abe was considering to ban locals from gambling within the casinos to appease opposition parties to get the bill through parliament.
However with Japan only attracting some 10 million tourists per year in a country that has 128 million residents many foreign casino operators would not have been interested investing had that law been brought in.
Indeed with Macau the world’s largest gambling hub seeing nearly 30 million visitors per year the prospect then of operators investing the $10 billion or more building the casino resorts in Japan was more unlikely.
If that were to be the case, it would be a “tremendous missed opportunity,” said Jim Murren, chief executive of MGM Resorts International earlier this year.
It now seems that the law allowing for casino resorts to be built before the 2020 Tokyo Olympics will allow local gamblers along with foreign visitors.
With the new bill expected to become law in early 2015 there were fears that the government and Prime Minister Shinzo Abe was considering to ban locals from gambling within the casinos to appease opposition parties to get the bill through parliament.
However with Japan only attracting some 10 million tourists per year in a country that has 128 million residents many foreign casino operators would not have been interested investing had that law been brought in.
Indeed with Macau the world’s largest gambling hub seeing nearly 30 million visitors per year the prospect then of operators investing the $10 billion or more building the casino resorts in Japan was more unlikely.
If that were to be the case, it would be a “tremendous missed opportunity,” said Jim Murren, chief executive of MGM Resorts International earlier this year.
It now seems that the law allowing for casino resorts to be built before the 2020 Tokyo Olympics will allow local gamblers along with foreign visitors.
Over 7,000 Chinese officials punished for gambling offenses
China’s attempts to crackdown on illegal gambling activities has resulted in thousands of government officials getting punished for offenses related to illegal gambling since the belt-tightening began in the middle of last year.
The Shanghai Daily quoted a central government reporting that 7,162 officials were punished for their involvement in illegal gambling activities from more than 30 cities and provinces in China. Of these locations, the Zhejiang and Guangdong provinces reported the most cases with the former accounting for 1,575 cases and the latter having 1,127 cases. No details were released on the severity of the punishments but reports suggested that officials were given anywhere from warnings to administrative punishments.
The report puts weight on separate incidents wherein Chinese government officials made headlines in the past for their gambling foibles, including officials who were alleged to have taken bribes “by being allowed to win” at mahjong by gambling owners. In China, it’s a common practice, especially in the Guizhou province, as a way of winning “favors” and preferential treatment for potential business dealings in the future.
Back in May, a deputy director from Liuzhou’s social security management office was also arrested over allegations that he pocketed 3 million yuan in public funds just to pay off his losing bets on soccer. A similar case was also reported in Guangxi’s Liangjiang Town wherein Finance Office Director Lu Shengle allegedly siphoned off 3.23 million in government money to pay his own gambling debts.
Then there’s the case in Fotang Town in Zhejiang’s Yiwu City where a village official is currently under investigation over allegations that he has more than 4 million yuan in debts in Macau, following a suicide attempt in late September.
All these punishments of government officials has come at a time when the country has aggressively pushed its anti-corruption campaign. Since gambling is illegal anywhere in China except Macau, government officials who have engaged in illegal gambling in the past are now being put on blast, front and center, to answer for their alleged misgivings.
The Shanghai Daily quoted a central government reporting that 7,162 officials were punished for their involvement in illegal gambling activities from more than 30 cities and provinces in China. Of these locations, the Zhejiang and Guangdong provinces reported the most cases with the former accounting for 1,575 cases and the latter having 1,127 cases. No details were released on the severity of the punishments but reports suggested that officials were given anywhere from warnings to administrative punishments.
The report puts weight on separate incidents wherein Chinese government officials made headlines in the past for their gambling foibles, including officials who were alleged to have taken bribes “by being allowed to win” at mahjong by gambling owners. In China, it’s a common practice, especially in the Guizhou province, as a way of winning “favors” and preferential treatment for potential business dealings in the future.
Back in May, a deputy director from Liuzhou’s social security management office was also arrested over allegations that he pocketed 3 million yuan in public funds just to pay off his losing bets on soccer. A similar case was also reported in Guangxi’s Liangjiang Town wherein Finance Office Director Lu Shengle allegedly siphoned off 3.23 million in government money to pay his own gambling debts.
Then there’s the case in Fotang Town in Zhejiang’s Yiwu City where a village official is currently under investigation over allegations that he has more than 4 million yuan in debts in Macau, following a suicide attempt in late September.
All these punishments of government officials has come at a time when the country has aggressively pushed its anti-corruption campaign. Since gambling is illegal anywhere in China except Macau, government officials who have engaged in illegal gambling in the past are now being put on blast, front and center, to answer for their alleged misgivings.
Ladbrokes to introduce new atmosphere creation techniques to London stores
Ladbrokes Retail management is planning to test artificial turf and “scent atmosphere” to select high street stores as the bookmaker aims to differentiate its retail division from competitors. Ladbrokes will look to recreate the feeling of the old fashioned football terraces in-store.
Ladbrokes is working on its in-store ambiance project with commercial design agency Fitch London. The changes will look to implement new design features, aimed at improving social atmosphere and customer engagement within its stores.
Ladbrokes retail management, announced that the new layouts would be tested in select London stores, after a trial period management would than assess whether to implement these changes throughout its UK retail operations.
Design agency Fitch London has worked on numerous commercial retail projects including M&M’s World, Adidas Stores and Swarovski London stores. The agency will look to apply its commercial expertise in order to engage a positive response from Ladbrokes retail customers.
Chris Robson, the Group Property and Procurement Director of Ladbrokes commented on the project: “The new shop layout and customer strategy aims to differentiate Ladbrokes from the normal traditional format of the betting shop.”
In June 2015, Ladbrokes retail management announced a revamp of in-store facilities throughout its UK operations. Ladbrokes stores would use interactive screens showing the latest sports results, and would have access to free WiFi and phone charging stations. Furthermore tea and coffee machines would also be installed as the bookmaker looked to improve in-store atmosphere and customer engagement.
Ladbrokes is working on its in-store ambiance project with commercial design agency Fitch London. The changes will look to implement new design features, aimed at improving social atmosphere and customer engagement within its stores.
Ladbrokes retail management, announced that the new layouts would be tested in select London stores, after a trial period management would than assess whether to implement these changes throughout its UK retail operations.
Design agency Fitch London has worked on numerous commercial retail projects including M&M’s World, Adidas Stores and Swarovski London stores. The agency will look to apply its commercial expertise in order to engage a positive response from Ladbrokes retail customers.
Chris Robson, the Group Property and Procurement Director of Ladbrokes commented on the project: “The new shop layout and customer strategy aims to differentiate Ladbrokes from the normal traditional format of the betting shop.”
In June 2015, Ladbrokes retail management announced a revamp of in-store facilities throughout its UK operations. Ladbrokes stores would use interactive screens showing the latest sports results, and would have access to free WiFi and phone charging stations. Furthermore tea and coffee machines would also be installed as the bookmaker looked to improve in-store atmosphere and customer engagement.
Unibet adds UK Twitter age verification monitor
Unibet are the latest sports betting operator to strengthen its player protection initiatives by launching an age verification monitor to its English language Twitter feed.
The European sports betting operator announced that its English Twitter followers would be required to enter their date of birth in order to follow the operators Twitter feed, latest news and player promotions.
Unibet management have followed the same player protection initiatives undertaken by UK operators William Hill and Gala Coral, who in September announced that age verification monitors would be implemented throughout their social media channels.
At present Unibet has over 19,000 Twitter followers on its English language twitter account. The operator has launched the new Twitter initiative to coincide with upcoming changes to UK online gambling laws, as Unibet Plc aims to promote responsible gaming and player safety measures throughout its betting operations.
Unibet management confirmed the operator will monitor engagement on social media channels to ensure that the operator does not engage and communicate with underage users.
The European sports betting operator announced that its English Twitter followers would be required to enter their date of birth in order to follow the operators Twitter feed, latest news and player promotions.
Unibet management have followed the same player protection initiatives undertaken by UK operators William Hill and Gala Coral, who in September announced that age verification monitors would be implemented throughout their social media channels.
At present Unibet has over 19,000 Twitter followers on its English language twitter account. The operator has launched the new Twitter initiative to coincide with upcoming changes to UK online gambling laws, as Unibet Plc aims to promote responsible gaming and player safety measures throughout its betting operations.
Unibet management confirmed the operator will monitor engagement on social media channels to ensure that the operator does not engage and communicate with underage users.
October 09, 2014
Japan casinos could be foreign gamblers only
The Japanese lower house of parliament which is currently debating the casino bill that would allow casino resorts in the country for the first time ever, is now considering to amend the bill to only allow foreigners to enter and not locals.
According to media reports from Japan the chairman of a bipartisan grouping of lawmakers set up to handle the Integrate Resorts Promotion bill suggested it might be watered down to make such resorts for foreigners-only.
It is believed that by doing so would gain the support of minority political parties that are currently opposing the gambling bill. Letting just overseas players in initially would mean there is no risk of gambling related issues such as problem gambling.
However this possibility even in the short to medium term of casino resorts opening would severely impact on international casino operators spending the billions they said they would given that the whole nation on which they have casino resorts are not allowed to enter.
In Singapore where they currently have this model of overseas gamblers only allowed the market is worth $2.7 billion in revenues per year, analysts believe that figure could be four times higher is locals were allowed to gamble.
Should Japan decide to go down the foreign gambler only route all the casino operators some offering $10 billion to build a casino resort would certainly water down those estimates on construction given the lower revenues generated by just overseas gamblers.
According to media reports from Japan the chairman of a bipartisan grouping of lawmakers set up to handle the Integrate Resorts Promotion bill suggested it might be watered down to make such resorts for foreigners-only.
It is believed that by doing so would gain the support of minority political parties that are currently opposing the gambling bill. Letting just overseas players in initially would mean there is no risk of gambling related issues such as problem gambling.
However this possibility even in the short to medium term of casino resorts opening would severely impact on international casino operators spending the billions they said they would given that the whole nation on which they have casino resorts are not allowed to enter.
In Singapore where they currently have this model of overseas gamblers only allowed the market is worth $2.7 billion in revenues per year, analysts believe that figure could be four times higher is locals were allowed to gamble.
Should Japan decide to go down the foreign gambler only route all the casino operators some offering $10 billion to build a casino resort would certainly water down those estimates on construction given the lower revenues generated by just overseas gamblers.
October 08, 2014
Singapore remote gambling bill will ban casino and poker, allow social games
Singapore’s remote gambling bill passed its second reading in Parliament on Tuesday, despite spirited opposition from a group of lawmakers who say the bill’s restrictions don’t go far enough.
The bill, introduced in September, would restrict online gambling to those operators licensed by the state. License eligibility would be limited to Singapore-based operators who contribute a portion of their proceeds to local charitable and/or social causes. The bill also calls for punitive measures against operators of sites not holding a Singapore license, as well as anyone acting as an agent or other promotional capacity for such sites, and even for these sites’ customers.
Second Minister for Home Affairs S. Iswaran (pictured) told Parliament the bill would keep a tight lid on the types of betting licensed operators would be able to offer. Casino-style games and poker were singled out as examples of betting that won’t be tolerated. But Iswaran downplayed fears that the bill’s broad language would restrict Singaporeans’ ability to play online social games, saying such games would not fall within the bill’s scope so long as players “cannot convert in-game credits or tokens for money or real merchandise outside the game.”
Parliamentary critics suggested the government was sending a mixed message by allowing exemptions to the remote gambling ban. Companies like the Singapore Pools sports betting monopoly and its pari-mutuel race betting equivalent Turf Club are expected to apply for new remote gambling licenses. Singapore Pools currently allows remote betting only via telephone while the Turf Club permits wagering via smartphones.
Iswaran referenced both companies as evidence that Singapore knew what it was doing by granting limited exemptions to gambling prohibitions. Iswaran said the bill was introduced “not because we wish to promote it or condone” remote gambling but to maintain “an ecosystem that minimizes the law and order concerns and social consequences.”
Chan Chun Sing, Minister for Social and Family Development, followed up on this point, saying the exemptions for select operators would allow the authorities to monitor player behavior to mitigate potential harms of remote gambling. Chan said it wasn’t so much a question of whether to ban or not ban but determining “the best way for us to manage this very difficult problem.”
Meanwhile, Deputy Prime Minister and Minister for Home Affairs Teo Chee Hean has revealed some statistics on how local residents were utilizing the brick-and-mortar casino levy system. Singapore’s two casinos charge local gamblers a S$100 entry levy that is valid for 24 hours. The model has been widely cited by other Asia-Pacific jurisdictions seeking to liberalize their gambling laws as the best way to mitigate the potential social harms of casino gambling.
In response to a question from a fellow parliamentarian, Teo said 8% of all daily entry levies were purchased by Singaporeans looking to extend their casino stay by an additional 24 hours. Teo cautioned that this didn’t automatically mean all 8% had been gambling at the casino for 24 hours non-stop, as the levies permit gamblers to enter and exit the casino at their leisure during that 24-hour window. Teo said the government would continue to monitor levy usage but has no current plans to revise the laws to prohibit such extensions.
The bill, introduced in September, would restrict online gambling to those operators licensed by the state. License eligibility would be limited to Singapore-based operators who contribute a portion of their proceeds to local charitable and/or social causes. The bill also calls for punitive measures against operators of sites not holding a Singapore license, as well as anyone acting as an agent or other promotional capacity for such sites, and even for these sites’ customers.
Second Minister for Home Affairs S. Iswaran (pictured) told Parliament the bill would keep a tight lid on the types of betting licensed operators would be able to offer. Casino-style games and poker were singled out as examples of betting that won’t be tolerated. But Iswaran downplayed fears that the bill’s broad language would restrict Singaporeans’ ability to play online social games, saying such games would not fall within the bill’s scope so long as players “cannot convert in-game credits or tokens for money or real merchandise outside the game.”
Parliamentary critics suggested the government was sending a mixed message by allowing exemptions to the remote gambling ban. Companies like the Singapore Pools sports betting monopoly and its pari-mutuel race betting equivalent Turf Club are expected to apply for new remote gambling licenses. Singapore Pools currently allows remote betting only via telephone while the Turf Club permits wagering via smartphones.
Iswaran referenced both companies as evidence that Singapore knew what it was doing by granting limited exemptions to gambling prohibitions. Iswaran said the bill was introduced “not because we wish to promote it or condone” remote gambling but to maintain “an ecosystem that minimizes the law and order concerns and social consequences.”
Chan Chun Sing, Minister for Social and Family Development, followed up on this point, saying the exemptions for select operators would allow the authorities to monitor player behavior to mitigate potential harms of remote gambling. Chan said it wasn’t so much a question of whether to ban or not ban but determining “the best way for us to manage this very difficult problem.”
Meanwhile, Deputy Prime Minister and Minister for Home Affairs Teo Chee Hean has revealed some statistics on how local residents were utilizing the brick-and-mortar casino levy system. Singapore’s two casinos charge local gamblers a S$100 entry levy that is valid for 24 hours. The model has been widely cited by other Asia-Pacific jurisdictions seeking to liberalize their gambling laws as the best way to mitigate the potential social harms of casino gambling.
In response to a question from a fellow parliamentarian, Teo said 8% of all daily entry levies were purchased by Singaporeans looking to extend their casino stay by an additional 24 hours. Teo cautioned that this didn’t automatically mean all 8% had been gambling at the casino for 24 hours non-stop, as the levies permit gamblers to enter and exit the casino at their leisure during that 24-hour window. Teo said the government would continue to monitor levy usage but has no current plans to revise the laws to prohibit such extensions.
October 03, 2014
Bet365 accused of profiteering in Chinese online market
Bet365, the Stoke-based bookmaker whose adverts are fronted by the actor Ray Winstone, has grown into one of the world’s largest online gambling businesses, helped by Chinese punters, who risk prison terms by betting via the group’s website.
The company – which is also known in Britain for funding the Premier League football team Stoke City and for making large donations to the Labour party – has seen a boom in its online betting operations. They are almost three times the size of the internet division of William Hill and more than seven times larger than the online business run by Ladbrokes, as turnover has grown by 78% over the past two years.
However, documents seen by the Guardian, interviews conducted with former and current bet365 employees, Freedom of Information requests made to the UK’s Gambling Commission and an analysis of foreign-language media reports all appear to confirm industry suspicions that the company – which has no physical presence or assets in China – operates one of the most successful online gambling services that can be accessed from inside the country.
China is one of the world’s largest online gambling markets despite the government having outlawed betting in all but a few controlled scenarios. The gambling group says its legal advice is that it has broken no law by taking bets from the country. The Guardian’s evidence suggests that:
• Chinese citizens have been detained for interacting with online betting firms, including four bet365 customers in Jiangxi province arrested after gambling on the group’s website, while two men in Zhejiang were jailed for promoting bet365 on their blogs, according to local media reports.
• Bet365 frequently changes its website addresses in China, thereby side-stepping attempts by local regulators to close sites down.
• The bookmaker has created a large call centre in Stoke staffed by Chinese-speaking workers.
• The company has constructed a complex payments system that allows it to take bets placed using China’s currency, the renminbi.
The Guardian has established that only about half of the £1.3bn the company won from gamblers in 2013 came from countries where bet365 possessed a licence to operate.
While that statistic does not imply the remainder was won from markets with legal restrictions on online gambling, industry analysts say a sizeable portion of the winnings must come from Asia, and principally China.
Bet365’s publicly listed rivals – William Hill, Ladbrokes, Betfair and Paddy Power – all say they do not take online bets from the country.
One former bet365 employee, who confirmed that the company was one of the larger online gambling operators accessible from China, said: “There’s nothing the Chinese government can do about it, other than block the sites, which they do. A lot Chinese[-facing] bookmakers change their domain names on a regular basis.”
Meanwhile, a current bet365 employee confirmed it was “100% true” that bet365 altered website addresses to allow Chinese punters to keep betting when authorities shut down sites. The bet365 sites in question use obscure domain names such as www.28365365.com in their often brief lifespan. He added: “I would say there are 50 [bet365 call centre] advisers just to follow the Chinese customers. China is the biggest department apart from the English [speaking] one”.
The company declined to respond in detail to a series of questions posed to it by the Guardian. In a statement, it said: “Bet365 takes its legal and regulatory obligations very seriously and is licensed to undertake its activities by relevant regulatory authorities across a variety of jurisdictions and is compliant with all applicable legislation.
“There is no legislation that expressly prohibits the supply of remote gambling services into China by operators who are based outside China. Bet365 has no people, assets or infrastructure in China and does not engage any agents, aggregators or intermediaries, for any purpose, in China.
“In the view of bet365, and its lawyers, Chinese law does not extend to the provision of services into China by gambling operators and service providers who themselves have no nexus with the territory. Any allegation of illegality on the part of bet365 is therefore untrue.”
The company added that it does not receive “renminbi from payment processors or otherwise”, and said it was unaware of “anyone in China being prosecuted for using its services”. It also said that in the Jiangxi case – where four bet365 customers were arrested in 2011 – it was “likely” that it had been the victim of a fraud, while in response to reports of two men being jailed in Zhejiang, it said it is the “responsibility of affiliates [who are paid by bet365 for introducing customers] to assess the legal implications”.
In 2005, China published judicial interpretations relating to the existing article 303 of its criminal law, which already stated: “That whoever, for the purpose of reaping profits, assembles a crowd to engage in gambling, opens a gambling house or makes an occupation of gambling is to be sentenced to not more than three years of fixed-term imprisonment, criminal detention or control, in addition to a fine”.
The interpretation added that “whoever, for the purpose of reaping profits, sets up gambling websites on the internet or acts as an online gambling agent will be regarded as ‘opening gambling houses’ and will be punished according to article 303 of the criminal law”.
The interpretation of the law has led many within the gambling industry to take the view that this applies to websites located outside China as well as within, and to avoid China as a market.
Michael Tan, senior counsel based in Shanghai at the international law firm Taylor Wessing, said: “From the perspective of Chinese law, [gambling] is illegal and a criminal offence. However, it is hardly enforceable since the betting company might be beyond the jurisdiction of China. So far China does not have treaties with most western countries, and to extradite is difficult in practice”.
Regulus Partners, a gambling industry consultancy firm, said there was very little visibility as to the true size of the Chinese betting market. However, it estimates that the Chinese market generates annual winnings for bookmakers of about £13.9bn – of which about £3bn are placed directly with gambling websites and the rest via third parties who collect bets on the ground and then pass the bets on to bookmakers. On those figures, a 3% share of the Chinese market, for instance, would provide a gambling company with annual winnings of around £400m.
The Guardian’s analysis of bet365’s revenue streams comes as the UK gambling industry began a new regulatory regime on 1 October, whereby operators pay a licence fee to the Gambling Commission in order to operate in the UK.
Under the new UK licensing regime, operators deriving more than 3% of revenues from distinct international markets must disclose details of those businesses to the regulator, and provide a legal opinion justifying operations in those foreign markets.
The bookmaker said: “Bet365 Group entities have applied for continuation rights as required by the [new UK] licensing regime and, when doing so, shared with the Gambling Commission the legal bases underpinning the business derived from all the group’s material markets”.
Betting companies will also need a licence if they want to advertise on Premier League shirts and in football stadiums, an activity that has surged in recent seasons as English football games are broadcast around the world.
Separately, the Stoke-based bookmaker announced on Monday that it would be relocating its international betting businesses from Britain to Gibraltar, operating under licences granted by the government of Gibraltar and making the company the last of the big UK betting companies to move offshore. The firm’s gaming business has operated from Gibraltar since 2007.
Apart from its online gambling business, bet365 Group also owns Stoke City, and has covered losses at the club to the tune of £49m over the past four years. Its logo is seen all over the world each weekend as it is the sponsor of the team’s jerseys.
As well as supporting the local football team, the company and its subsidiaries also gave £330,000 to the Labour Party between 2007 and 2010, according to Electoral Commission records.
Peter Coates, the Stoke City chairman, co-owner of bet365 and father of the business’s founder, Denise, has personally donated £160,000 between 2004 and 2012.
The company – which is also known in Britain for funding the Premier League football team Stoke City and for making large donations to the Labour party – has seen a boom in its online betting operations. They are almost three times the size of the internet division of William Hill and more than seven times larger than the online business run by Ladbrokes, as turnover has grown by 78% over the past two years.
However, documents seen by the Guardian, interviews conducted with former and current bet365 employees, Freedom of Information requests made to the UK’s Gambling Commission and an analysis of foreign-language media reports all appear to confirm industry suspicions that the company – which has no physical presence or assets in China – operates one of the most successful online gambling services that can be accessed from inside the country.
China is one of the world’s largest online gambling markets despite the government having outlawed betting in all but a few controlled scenarios. The gambling group says its legal advice is that it has broken no law by taking bets from the country. The Guardian’s evidence suggests that:
• Chinese citizens have been detained for interacting with online betting firms, including four bet365 customers in Jiangxi province arrested after gambling on the group’s website, while two men in Zhejiang were jailed for promoting bet365 on their blogs, according to local media reports.
• Bet365 frequently changes its website addresses in China, thereby side-stepping attempts by local regulators to close sites down.
• The bookmaker has created a large call centre in Stoke staffed by Chinese-speaking workers.
• The company has constructed a complex payments system that allows it to take bets placed using China’s currency, the renminbi.
The Guardian has established that only about half of the £1.3bn the company won from gamblers in 2013 came from countries where bet365 possessed a licence to operate.
While that statistic does not imply the remainder was won from markets with legal restrictions on online gambling, industry analysts say a sizeable portion of the winnings must come from Asia, and principally China.
Bet365’s publicly listed rivals – William Hill, Ladbrokes, Betfair and Paddy Power – all say they do not take online bets from the country.
One former bet365 employee, who confirmed that the company was one of the larger online gambling operators accessible from China, said: “There’s nothing the Chinese government can do about it, other than block the sites, which they do. A lot Chinese[-facing] bookmakers change their domain names on a regular basis.”
Meanwhile, a current bet365 employee confirmed it was “100% true” that bet365 altered website addresses to allow Chinese punters to keep betting when authorities shut down sites. The bet365 sites in question use obscure domain names such as www.28365365.com in their often brief lifespan. He added: “I would say there are 50 [bet365 call centre] advisers just to follow the Chinese customers. China is the biggest department apart from the English [speaking] one”.
The company declined to respond in detail to a series of questions posed to it by the Guardian. In a statement, it said: “Bet365 takes its legal and regulatory obligations very seriously and is licensed to undertake its activities by relevant regulatory authorities across a variety of jurisdictions and is compliant with all applicable legislation.
“There is no legislation that expressly prohibits the supply of remote gambling services into China by operators who are based outside China. Bet365 has no people, assets or infrastructure in China and does not engage any agents, aggregators or intermediaries, for any purpose, in China.
“In the view of bet365, and its lawyers, Chinese law does not extend to the provision of services into China by gambling operators and service providers who themselves have no nexus with the territory. Any allegation of illegality on the part of bet365 is therefore untrue.”
The company added that it does not receive “renminbi from payment processors or otherwise”, and said it was unaware of “anyone in China being prosecuted for using its services”. It also said that in the Jiangxi case – where four bet365 customers were arrested in 2011 – it was “likely” that it had been the victim of a fraud, while in response to reports of two men being jailed in Zhejiang, it said it is the “responsibility of affiliates [who are paid by bet365 for introducing customers] to assess the legal implications”.
In 2005, China published judicial interpretations relating to the existing article 303 of its criminal law, which already stated: “That whoever, for the purpose of reaping profits, assembles a crowd to engage in gambling, opens a gambling house or makes an occupation of gambling is to be sentenced to not more than three years of fixed-term imprisonment, criminal detention or control, in addition to a fine”.
The interpretation added that “whoever, for the purpose of reaping profits, sets up gambling websites on the internet or acts as an online gambling agent will be regarded as ‘opening gambling houses’ and will be punished according to article 303 of the criminal law”.
The interpretation of the law has led many within the gambling industry to take the view that this applies to websites located outside China as well as within, and to avoid China as a market.
Michael Tan, senior counsel based in Shanghai at the international law firm Taylor Wessing, said: “From the perspective of Chinese law, [gambling] is illegal and a criminal offence. However, it is hardly enforceable since the betting company might be beyond the jurisdiction of China. So far China does not have treaties with most western countries, and to extradite is difficult in practice”.
Regulus Partners, a gambling industry consultancy firm, said there was very little visibility as to the true size of the Chinese betting market. However, it estimates that the Chinese market generates annual winnings for bookmakers of about £13.9bn – of which about £3bn are placed directly with gambling websites and the rest via third parties who collect bets on the ground and then pass the bets on to bookmakers. On those figures, a 3% share of the Chinese market, for instance, would provide a gambling company with annual winnings of around £400m.
The Guardian’s analysis of bet365’s revenue streams comes as the UK gambling industry began a new regulatory regime on 1 October, whereby operators pay a licence fee to the Gambling Commission in order to operate in the UK.
Under the new UK licensing regime, operators deriving more than 3% of revenues from distinct international markets must disclose details of those businesses to the regulator, and provide a legal opinion justifying operations in those foreign markets.
The bookmaker said: “Bet365 Group entities have applied for continuation rights as required by the [new UK] licensing regime and, when doing so, shared with the Gambling Commission the legal bases underpinning the business derived from all the group’s material markets”.
Betting companies will also need a licence if they want to advertise on Premier League shirts and in football stadiums, an activity that has surged in recent seasons as English football games are broadcast around the world.
Separately, the Stoke-based bookmaker announced on Monday that it would be relocating its international betting businesses from Britain to Gibraltar, operating under licences granted by the government of Gibraltar and making the company the last of the big UK betting companies to move offshore. The firm’s gaming business has operated from Gibraltar since 2007.
Apart from its online gambling business, bet365 Group also owns Stoke City, and has covered losses at the club to the tune of £49m over the past four years. Its logo is seen all over the world each weekend as it is the sponsor of the team’s jerseys.
As well as supporting the local football team, the company and its subsidiaries also gave £330,000 to the Labour Party between 2007 and 2010, according to Electoral Commission records.
Peter Coates, the Stoke City chairman, co-owner of bet365 and father of the business’s founder, Denise, has personally donated £160,000 between 2004 and 2012.
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