Chinese province cracks down on gambling investment

The provincial government of Hainan in China has suspended private investments in online gambling ventures in order to cool down expectations that sports betting, lotteries and other forms of betting may have future potential following rumour that the government may soon legalise horse race betting.

The publication Caixin reports that over the past year over 70 companies have registered in the province as internet gambling enterprises interested in the future potential of online gambling, each proving capital resources of (or in excess of) 10 million yuan (US$1.5 million).

Caixin notes that most of these companies have been established by individual private investors, although many appear to share the same principal shareholders and executives, and some even have the same residential address.

“Provincial authorities this month suspended the registration of companies looking to get into businesses related to gambling on horse racing, according to an official with the Administration for Industry & Commerce in the Baoting Li and Miao autonomous county in Hainan,” Caixin reports.

Authorities also revoked approvals for sports gambling from companies that had previously registered as gambling businesses, saying that they were now awaiting further instructions on future regulation. One official said that consideration was being given to a system in which only non-profit companies would be allowed to operate gambling businesses

Industry experts told Caixin that investors piled on to register companies in the gambling business because they believed the province would soon legalise betting on horse racing.

The publication notes that gambling is generally illegal at present on the Chinese mainland, with two exceptions – lotteries run by the General Administration of Sport and the Ministry of Civil Affairs.

Rumours that gambling on horse racing could be legalised in Hainan started as early as 2009 when the State Council reportedly ruled that Hainan could investigate the possibilities of legalising “some types of sports betting and lotteries”.

The province has been methodically carrying out this research, and triggered further interest last August when it entered into a framework agreement with the sports administration regarding the promotion of sports and associated industries on the island province.

The agreement pledged to “support the exploration of developing sports betting and instant lotteries for large international competitions.”

Hainan is China’s smallest province, and also the largest island under the jurisdiction of the People’s Republic of China. It is situated at the southernmost part of China, just across the Gulf of Tonkin from Vietnam.

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