China’s Internet and insurance giants are finding ever more innovative ways to skirt the country’s strict betting laws and reap a payout from the billions fans are wagering on the FIFA World Cup.
Gambling is banned in China, except if it is run by the government or the proceeds donated to charity, but Alibaba Group Holding Ltd (阿里巴巴) and Tencent Holdings Ltd’s (騰訊) have this year linked up with state-owned provincial lotteries to enable punters to bet on the World Cup online.
Both have smartphone gambling apps that have proven hugely popular during the tournament in Brazil and on which more than 10 billion yuan (US$1.6 billion) in bets are expected to be legally wagered — dwarfing the 2.3 billion yuan bet during the 2010 finals in South Africa, but far less than will be spent illegally.
“I find it so much easier to bet on an app, rather than having to go to a lottery center,” said Li Qiang, a Shanghai resident who said he won 200 yuan when Uruguay beat Italy in the group stage.
“I love the World Cup, but being Chinese, we have little way to get involved other than to bet,” he said, referring to the national team ranked 103rd by FIFA.
Neither Tencent nor Alibaba have gambling licenses, but earn revenue by acting as online platforms for provincial lotteries that offer odds on nearly everything.
Alibaba — which heavily promotes World Cup betting on its main e-commerce shopping platform, Taobao.com (淘寶網) — takes a 7 percent cut of the money gambled through its Web sites, the Beijing Youth Daily said.
On Thursday, an advertisement on Taobao priced Brazil as favorites to win the tournament at 2.3/1, less generous than the 2.75/1 available from most UK bookmakers.
Alibaba declined to comment on the gambling and Tencent did not answer a request for comment.
More than 500 million people in China access the Internet via their smartphones, according to the state-run China Internet Network Information Center.
“The law is quite strict in China, but gaming opportunities are very accessible to anyone who has a smartphone,” said Huang Guihai (黃貴海), associate professor at the Gaming Teaching and Research Centre at the Macao Polytechnic Institute.
However, insurance firms trying to do World Cup business have met official disapproval.
An Cheng Insurance (安誠財產保險公司) offered a “heartbreak” policy in which fans get Taobao credit if their team is eliminated to “alleviate the mental shock,” effectively enabling customers to profit from teams exiting the contest.
Regulators last week stepped in to issue an urgent notice that “insurance products with gaming character should be suspended,” Xinhua news agency reported.
“Some insurance companies have pulled related World Cup regret insurances from the shelves,” it added.
Yet most Chinese sports betting takes place via outlawed Web sites, where odds are more attractive and credit offered.
Research by sports newspaper Titan Weekly estimates that an astonishing 500 billion yuan was spent on legal and illegal online gambling during the 2006 tournament in Germany, about 2 percent of China’s GDP.
“The issue of illegal gambling is particularly serious during the World Cup,” said Wang Xuehong (王學紅), head of Peking University’s Lottery Research Institute.
Given the scale of the demand, official restrictions on betting created opportunities for illegal operators, she said.