Chinese police crack US$78 billion multinational gambling syndicate that boasted almost a million users in China alone

Mainland police have busted a multinational online gambling syndicate they say generated more than 500 billion yuan (HK$608 billion) in bets and which served nearly a million registered members in the country, local media have reported.

Planning for the massive crackdown - code-named Operation 109 - started last year.

Despite a large number of arrests in July, the police action came to light only when it was announced by the Ministry of Public security yesterday.

The syndicate had a complex structure with overseas divisions overseeing more than 500 websites targeting mainland gamblers, The Beijing Newsreported, citing the ministry.

The main server was in Taiwan, while Cantonese and Putonghua-speaking customer service staff were located in Hong Kong, Thailand and the Philippines.

Hong Kong police said they would not comment on individual cases.

"From our data analysis, every sign is pointing to a professional team working in the background," said Peng Zhihong, from the Yueyang Public Security Bureau's internet crime investigation unit in Hunan .

The police said the suspects used fake identity cards and "illegitimate" mobile phone cards to create identities, and regularly disposed of computer and communication equipment, which made investigation difficult.

More than 120,000 registered gamblers out of the million or more who had credit were actively betting on the sites at any one time. The police estimate the websites racked up more than 500 billion yuan in bets.

The sum dwarfs the dealings at the biggest casino operators. Sands China's four casinos in Macau recorded US$8.35 billion in net revenue last year, while SJM Holdings took HK$79.2 billion.

According to the report, winnings were paid into gamblers' bank accounts. Likewise, gamblers were required to pay losses to the sites' bank accounts. Those who failed to do so faced swift retribution.

The mastermind was identified as a 39-year-old man surnamed Xu from Chaoshan in eastern Guangdong, while a Shenzhen-based internet technology company provided coding and website design to the server in Taiwan.

Xu rented most of the gambling sites to smaller syndicates, which operated as companies, for between 30,000 to 50,000 yuan a month.

It is believed the rental income alone was worth 13 million a month to Xu, on top of the takings he received from the online casino that he operated by himself.

Each of the tenant syndicates had shareholders, who in turn had their own agents to develop a customer base – similar to a multilevel marketing scam – Shanghai-based news papet Thepaper.cn reported.

Customers accessing any of the gambling websites were required to log-in, bypass a search interface, then enter more safety codes that lead to a navigation interface and selection menu before placing their first bet.

The interface to all websites could be changed instantly in a security breach was detected.

Police made their first arrests in July, 84 in total, in several cities in Guangdong province, including Shantou, Jieyang, Shenzhen, Dongguan and the capital, Guangzhou.

Another 12 gambling locations such as private homes were also raided and accounts at 14 different banks were seized.

Xu, the syndicate’s mastermind, fled to Jieyang, where he was arrested in September.

Additional reporting by Elizabeth Cheung