Would Enhanced Regulation Increase Online Gambling Popularity in Asia?

Earlier this month, Chau Wai Kuong, the Director of the Judiciary Police in Macau, released crime statistics gathered during the period between 2012 and 2014 which might indicate that the present difficulty of pursuing online gaming fraud cases potentially may be impacting the popularity of online gaming in some places in Asia. Many online casinos will accept registrations from players located in a wide array of countries. However, although the Internet possesses a global reach, regulators (including police departments and gaming regulators) often find themselves severely limited in their ability to enforce national rules over online gaming establishments because of unclear or conflicting national jurisdictional boundaries.

During a regular weekly briefing session, the Director of the Macau Judiciary Police reported that gaming-related crimes in Macau had risen during the past three years. Between 2013 and 2014, fraud cases increased by 54.4% and loan sharking cases skyrocketed from 16 cases at the beginning of the period to 208 reported cases last year. He attributed the rising numbers to two factors: a sluggish gaming economy in local casinos and enhanced police enforcement. Distressingly, some 452 reports last year to the Macau police related to internet fraud in the gaming industry, an increase of 33.7%. Although the police were able to take action in the majority of local offenses, the online cases often involved complex jurisdictional issues, the Police Director indicated.

The ability to regulate the activities of online casinos effectively remains an issue in other parts of the world also. Although many casinos seek the jurisdiction of specific countries with well established casino regulatory bodies, there are some nations that allow sites to register but do not possess rigorous screening criteria or very effective enforcement agencies. Patrons of online casinos bear most of the responsibility for insuring that they visit reputable sites. Consumers often find themselves in a precarious position, since they are not always able to determine whether a website is operating legitimately, or not.

The situation in Macau may offer illuminating insight into the challenges faced by online casinos in obtaining effective industry regulation that will offer reassurance to patrons that they will obtain fair treatment. Physical gaming establishments are able to expand across international borders effectively in part because clear jurisdictional lines exist to indicate the regulatory authority for the casino. By contrast, online casinos can expand with multiple sites, yet often it remains up to the site owner to seek effective regulation.

Some evidence exists that on site casinos are expanding internationally and attracting many patrons from Asian countries. It remains to be seen whether or not online casinos will develop effective regulatory mechanisms to promote long term expansion, too.

In recent years, for instance, Macau has developed a burgeoning gaming industry. Several companies have established physical casinos within its jurisdiction. Along with Hong Kong, Macau is now one of the two most popular tourist destinations for members of the Millennial generation in the Peoples’ Republic of China. Many Millennials in China enjoy disposable income that permits them to travel abroad more often than members of earlier generations. In fact, international tourism reportedly is a high priority for many upwardly mobile young professionals in China.

The brick and mortar gaming industry in Macau has benefited from this trend; despite a slight decline in reported profits during the past three years, the expansion of casinos in Macau appears to be ongoing.

For example, Jimei International Entertainment Group, a company which operates the Jimei Casino in Macau, as well as a number of high roller tables at other Macau casinos and casinos in the Philippines, recently announced two agreements intended to promote packaged casino travel ventures between Macau and Australia. It announced that it will join in offering the new packaged casino trips with a company owned by Australian casino magnate James Packer, the CEO of Crown Resorts, in Perth, Australia. It separately announced a venture in cooperation with New International Club Ltd., a firm owned by Carlos Jose Lok that will seek to bring more visitors to Macau’s casinos.

Jimei International Entertainment Group maintains international holdings. In addition to its casino businesses, the company reportedly operates a wealth management firm in Hong Kong.

Leave a Reply