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The issue of online betting has been hogging the headlines for some time and further research shows that Hong Kong punters are flocking to the Web in droves. From 22 per cent in October, the overall portion of local Internet users going to gambling sites increased to 36 per cent in November and 41 per cent in December.

The figures released last week by Internet measurement firm NetValue showed that it is teenagers and young adults who are visiting gambling Web sites the most.

Forty-six per cent of those NetValue identified as Cyber gamblers were between the ages of 15 and 24.

Another interesting finding was that the majority of gambling site visitors were students, numbering 43 per cent of the total population.

Furthermore, income appears to be of little concern to these users. Twenty-five per cent of gambling site visitors had no income and 23 per cent earned less than HK$6,500 per month.

The statistics would appear to reinforce the recently aired views of the Hong Kong Jockey Club, who have blamed online betting for a drop in betting revenues. The Lunar New Year races brought in 8 per cent less than last year and Jockey Club chief Lawrence Wong pointed the finger at online betting.

'Hong Kong cannot afford to be laid-back about the threat to revenue from illegal and Internet betting,' said Mr Wong at the time.

Mr Wong even went so far as to single out Antigua-based Easybets.com as a gambling revenue threat. The Web site offers untaxed betting on Hong Kong Jockey Club races. None of their revenue, unlike the Jockey Club's, will find its way into the SAR's coffers.

The Government has reacted to the furore by proposing the Gambling (Amendment) Bill, which will outlaw offshore bookmakers taking bets in Hong Kong. While Legco has yet to debate the proposed amendments, few believe the Bill will be able to stop Internet betting.

The Jockey Club has instead argued that a profits tax is necessary, rather than the current method of taxing turnover. They believe this would bring some uniformity to the competition between themselves and the online bookmakers and would allow them to recover lost revenue.

'The only long-term solution is to move to a tax on profits,' said Mr Wong.

However, the Jockey Club has failed to effectively counter the arguments relating to the type, rather than merely the revenue implications, of online betting. The basic fact is that online betting can provide punters with an exotic array of selections. In comparison, the Jockey Club's offerings of horse racing and the Mark Six look distinctly humdrum.

The Government has responded by considering the issue of allowing English Premiership soccer betting in the territory, but the effort appears stillborn. It is estimated that some popular English soccer games can rake in HK$2 billion in betting. In total, illegal gambling is thought to turn over HK$84 billion per year.

The oft-quoted argument that online betting is a risky proposition may also be a non-starter.

The Jockey Club executive director for corporate development, Kim Mak Kin-wah has reiterated that Internet sites are generally unregulated and punters run the risk of being duped.

'This is the reason why the Government feels it needs to do something to update the law,' said Mr Mak.

Internet betting is unregulated so, undoubtedly, there are Web sites only too happy to dupe innocent punters.

Organisations like William Hill, Ladbrokes and even Easybets, however, come with bookmaking pedigrees and cannot be considered a risk for betters.

The obvious way out of this mess, and the one that appeals to Hong Kong punters, is to allow the Jockey Club to offer odds on the full range of international sporting activities. There are, however, two difficulties with this proposal.

The first is that the Jockey Club is not a profit-making enterprise like electronic bookmakers, but is instead something of a public utility. All the money it makes returns to the public in one form or another and putting it up against the Internet operators may require a change in this status.

The second, more frustrating, problem lies in the apparent intransigience of lawmakers. Efforts to investigate the issue have yielded little return and question marks over the political will to find a solution have been raised.

The stakes, of course, are high. HK$11.4 billion, or 5.3 per cent of the Government's total revenue in 2000, derived from the Jockey Club. If this starts to decrease then something has to give, with increased taxes being one possible scenario.

Graphic: GAM11gwz



Government beware! - rise of the Cyber-punt