Hong Kong Bans Offshore Betting From Today

by Mary Swire, Tax-News.com, Hong Kong

31 May 2002

Last week Hong Kong's Legco voted to ban offshore betting, but many local bookmakers have criticised the new law, some of them saying they may be forced to close.

Legco voted 47 to 6 in favour of the Gambling (Amendment) Bill 2000 after the Democrats, Liberals and the Democratic Alliance for the Betterment of Hong Kong backed the Government's legislation to crack down on unauthorised bookmakers operating overseas. The new law comes into force today.

Using the Internet or phones to bet with local or overseas bookmakers other than the Hong Kong Jockey Club will be a crime, with penalties up to $30,000 and/or nine months in jail.

The Secretary for Home Affairs, Lam Woon-kwong, said the bill would deter people from exploiting grey areas in the existing law - which was written before cross-border betting was made easy by new technology - and protect the Government's tax revenues from betting. 'We have not interfered with people going to Macau and Las Vegas to gamble, but we must enforce our policy if the activities happen within Hong Kong.'

The legislation is a blatant piece of protectionism designed to defend the Jockey Club's betting turnover. Because of the rise of offshore, Internet-enabled betting, the Jockey Club has seen its onshore (taxed) betting turnover drop by about 12% from a 1997 high of HK$92 billion. In 1999-2000, it paid HK$11 billion in taxes and HK$1.8 billion to charity. So it ran crying to the government, which has responded with legislation which will ban all forms of offshore betting outright.

The Jockey Club estimates that HK$83bn is 'lost' to offshore betting, but bookmaker Victor Chandler Worldwide says the actual amount of illegal sports betting is probably twice as much.

Victor Chandler Chief Executive Michael Carlton said he thought the legislation represented "a huge missed opportunity for Hong Kong." He estimated there would be an unprecedented level of gambling on the World Cup, with turnover of some hundreds of millions of US dollars, much of which would bypass the SAR.

Mr Carlton calls the current proposal the worst of all possible solutions, saying that it will create a vast underground industry: "Some 300,000 people intend to bet on this summer's World Cup, and the only options they will have when the law is amended will be to bet with illegal bookmakers, or not to bet at all."

"They are really shooting themselves in the foot", said a spokesperson for William Hill. "This law cannot be enforced and it would have been better to have harnessed the betting through the Jockey Club rather than to make it illegal."

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