Will Beijing take a punt on legalised gambling?

PUBLISHED : Monday, 25 May, 2009, 12:00am
UPDATED : Monday, 25 May, 2009, 12:00am

This October doesn't just mark the 60th anniversary of the People's Republic of China; it will also be six decades since gambling was outlawed on the mainland. At the time, the reasons for the ban were both ideological and practical. Not only would there be no more bourgeois days out at the race tracks in Shanghai and Wuhan for enemies of the people, but criminalising betting would help ensure that people stayed out of debt.

That was the theory anyway. Sixty years on and gambling is thriving as never before. A staggering 1 trillion yuan (HK$1.14 trillion) is wagered on the mainland every year, according to Beijing University's China Centre for Lottery Studies. Much of that money goes on online betting on soccer matches in far off Europe. Rising incomes and the spread of the internet, as well as the urge to have a flutter that is deeply ingrained in the Chinese character, have combined to create a betting boom.

But people don't just make wagers on sporting events. Around 300 billion yuan is spent annually on underground or foreign lotteries. In contrast, the mainland's two official lotteries raised 106 billion yuan for welfare and sports programmes last year. Now, in an effort to stop the illegal lotteries, Beijing will introduce legislation to regulate the lottery industry. From July, sellers of underground lottery tickets will face as yet unspecified criminal charges.

It is highly unlikely, though, that the threat of a prison sentence will stop the unofficial lotteries, just as the fact that the police busted almost 600,000 people for gambling in 2008 has failed to deter punters from laying bets. Virtually every street in the mainland's cities is home to a mahjong school, while there's an argument that the reason the Shanghai stock exchange has proved so popular is because it's regarded as a form of gambling.

The challenge for the authorities is how to entice all those gamblers into spending their money on official lottery tickets. If they did, then experts predict that the mainland would have a lottery worth US$150 billion a year. That would be almost three times bigger than the combined worth of US lotteries and would dwarf the largest European ones. In a country where education, health care and social welfare programmes are desperately underfunded, the revenue raised would certainly help redress that.

Beijing knows this better than most: until the financial crisis, 70 per cent of all government revenue in Macau came from taxes on the casinos' US$7 billion earnings. That's why there is increasing speculation that a third state-run lottery will be launched, to help fund cultural and educational projects.

In public, at least, the government still sticks to the 1949 line that gambling is a menace and threat to society. But, a minority of problem gamblers can't outweigh the benefits of legalising betting. Just like the prohibition of alcohol and drugs, outlawing gambling hasn't worked and never will. In the 60th year of the new China, there is no point in introducing laws to stop underground lotteries as long as people can afford to buy tickets.

David Eimer is a Beijing-based journalist