By Sola Wolcott

November 23, 2008

Online Gambling Make it Big in Asia - Pacific Nowadays, with the dawning of the Internet Age most of the buzz around the internet surrounds more on the social networking websites as Facebook, Multiply and MySpace; still some of the most profitable opportunities online remain with firms involved in distinctly old-fashioned means, such as the Gaming, Betting and Wagering Business. The online gaming industry has reached an ever-widening audience by taking full-advantage of every new technological development the web has to offer from safe credit card payment technologies to streaming of live footage of dealers. Up until 2006, main markets have been centered in the US and Europe; though that was before the US Congress gave the hard hand on online gambling, banning credit card companies from accommodating payments from such sites. Following the high-profile arrests in the United States saw the rapid pull-out of gaming firms in the country. With Macao overtaking Las Vegas as the top gambling destination, survivors have then turned their sights to the massive Asian market. No doubt that the Asian online gambling market is now growing faster than the US and other established markets. Many experts including Sebastian Sinclair, a gaming analyst with Christiansen Capital Advisors and a leading tracker of the internet gambling sector, expect Asian nations to eventually constitute majority of the market for online gambling as betting through the use of new technologies as wireless phones and PDAs proliferate. The Asia Pacific has long been viewed as the promised land of gambling. The promise of a huge market comes with it its wide variety of peoples, diverse cultures and preferences. For certain the Asia-Pacific with its rich diverseness presents to be a daunting business place for the uninitiated. In the researchers educated opinion, key factors to consider to effectively penetrate and strategically play in the Asias online gambling

boom would first, to have an in-depth knowledge of the race and its corresponding cultures inclination and preferences on gambling and its forms; next is to consider internet reach, and third but not the least of it, is to look into and closely observe the political behavior, attitude and standing of the local government. On Race and Culture If you must play, decide upon three things from the start: The rules of the game, the stakes and the quitting time. --- Chinese Proverb. Good advice then, still great advice now. This ancient Chinese wisdom having existed centuries back evidences the strong and deep-rooted presence of gambling in Asian, especially Chinese culture. With the Chinese comprising a significant percentage of demographics all throughout Asia, naturally as it has been so and as sociology dictates, influences and cultures are shared. The market is huge, and I think everybody knows that Asian players are the most sought after because they spend the most money and are the most fervent gamblers says Angela Ho, president of the DrHo888.com website and daughter of Macaus legendary casino king, 83 year old Dr. Stanley Ho. The Costa Rica based site has reportedly seen monthly wagering increases of up to 40 percent by the almost exclusively Asian or Asian speaking clientele. The site serves players throughout the Far East but is particularly popular in China, and largely Chinese occupied Macau, Malaysia and Singapore. Currently it isnt just about China and largely Chinese occupied territories. The potential rewards from other Asian markets are staggering. The traditional Japanese gambling game Pachinko for instance is a $250 billion industry larger than all the casinos in the world added together. The Asia Pacific market is unquestionably huge; and far from being homogeneous each and every culture corresponds to certain lifestyles and preferences, all being quite traditional in their own right. Therefore to effectively cater to all, scratches off the usual one-size-fits-all theme; rather in-depth knowledge for culture-customized approaches is

necessary. For instance, Asians especially the Chinese are very insular people and tend to stick to amongst themselves. Being so, they prefer playing with people in their own ethnic background rather than with an outsider if given a choice. In addition, Asian players generally do not trust machine games such as the slots and video poker as it is generally believed that Lady Luck do not live in a machine. She lives in a deck of cards. Given this, one approach internet gaming operators have undertaken would be the streaming of live video of employees dealing actual playing cards, rolling real dice, and the like. Awareness of the simple truths with regard to culture differences and preferences is indispensable and can spell instant success if applied right. Alfastreet Sales and Marketing Manager Matjaz Petek says the key is to offer the right game to the right target group. True enough, electronic games and especially roulette games are very popular in countries like Cambodia and also Vietnam, but come to Macau, and things change as Chinese players prefer other types of electronic games like dice and baccarat. On Internet reach and Propensity for Online Gaming In a recent Bear Stearns report, the Asian population has the highest propensity and frequency of wagering in the world. Furthermore, in 2006, Merrill Lynch reports that Asian internet users account for 8.6 percent of the worlds online consumer spending. That figure is expected to climb to more than 30% in 2008. The River City Group, a major information resource and business-to-business facilitator specializing exclusively on the online gambling industry, estimates that the Asian IGaming will see similar growth over the same period. Putting it in numbers, a most recent study released by comScore, Inc. a leader in measuring the digital world, showed that 51 percent of the Asia-Pacific internet population is found to have visited gaming sites in August 2008, spending an average of 87mins on the sites and averaging 11.5 visits per user during the month. China is posed to have the highest penetration rate in the region. Nearly 55 percent of Chinas online population visited gaming sites during

the month, representing more than 90 million users. Singapore followed with a 50 percent penetration, followed by Australia with 45 percent. On the quality side, mainly in terms of time spent, South Koreas users topped the list with its visitors averaging more than 3 hours per person during the month, and visiting game sites an average of 13 times. Taiwan showed the second highest level of engagement with 151 minutes per visitor, followed by Hong Kong with 143 minutes per visitor, then Singapore with 140 minutes per visitor.

% Reach

Total Unique Visitors (000)

Average Minutes per Visitor

Average Visits per Visitor

Asia Pacific ** China Singapore Australia Taiwan New Zealand South Korea Malaysia Japan Hong Kong India

51.1 54.9 49.6 44.7 42.4 41.1 40.5 40.2 39.8 36.9 27.4

19,081 90,292 1,172 5.032 4,465 926 10,715 3,463 22,830 1,388 8,295

86.8 69.8 140.0 125.2 151.0 134.5 189.6 130.8 76.1 142.9 45.4

11.5 13.0 13.0 11.13 15.5 9.9 13.0 11.9 10.0 13.1 4.3

Available: http://ir.comScore.com

Numbers are considerably promising, given that figures stated above exclude searches from public computers such as internet cafes, as well as access from mobile phones and or PDAs.

On Governmental Behavior, Attitude and Standing The Asia Pacific Market is unquestionably huge and present; though one of the major hurdles of doing business in Asia would be a governmental change of heart which in the process inevitably shifts and

dictates trade approach and activities around. It is therefore inevitable to be in the know of current events, and closely in touch with the political atmosphere. Asians have popped in and out of the online gambling industry due to the never-ending changes made to their legal systems and gambling legislations. Despite the massive appetite for gambling of all forms, as well as a permissive technical infrastructure, the legality of online gambling has been declared explicitly criminal in many Asian jurisdictions and remains entirely questionable and undetermined in others. The main reason behind this is a complete lack of comprehensive gambling laws and/or reference to the land-based gambling industry. In Singapore for instance, online betting remains a regulatory grey area, as laws banning gambling were passed before the Internet existed and so given that online gambling is announced prohibited, it is not enforcedly forbidden. In some areas, the government has been keen to take on a more westernized approach to the matter; good example is the Philippines, already offering licenses for online casinos in Manila and a special economic zone in Cagayan. With the introduction of the first online casino in 2000, the online gambling in Asia has greatly developed. Current status though, shows most of Asian countries fervent attempts on to banning the trade, with only Macau and the Philippines as the only ones standing in the region to have an open atmosphere for the generally Asian well-received industry. Researcher expresses that banning online gambling is comparable to killing email. At this day and age, one simply cannot. And while governments futilely curb a booming well-accepted industry, analysis experts and industry professionals believe that the restrictive environment that is fostered and has been maintained until now has only strengthened the Asians desire to turn to online gambling in an attempt to prove their governments and legislations ineffective in trying to prohibit it. Similarly, online casino operators believe that eventually when it is realized that it

cannot be effectively banned, jurisdictions are to resort to its legalization and regulation. Below is a table on the current status of legality of online gambling in countries in the Asia-Pacific Region.

Present Status Australia Partly Legalized

Remarks
According to the Australian Interactive Gambling Act 2001, it is illegal to provide online gaming services to Australian citizens but it is not an offence to actually play poker or casino games online. Sports betting is legal with many governmentlicensed providers in operation.

China

Banned

Online gambling is banned in China, as is casino gambling, though Horse racing has been approved by the government to make a come-back in 2009 with solid considerations of allowing legal betting operations. Only the Hong Kong Jockey Club is authorized to offer betting on lotteries, horse racing and football online. Offshore providers are not permitted to offer online gambling services to HK citizens. There are no laws that address online gambling in India. There are casinos in Goa hotels, while gambling is prohibited elsewhere, but the status of its Internet form of gambling is not determined. Today only horse and motor racing are legal to gamble on in Japan, while the Lottery, Pachinko, and Mahjong are classified as amusements, thus are legal. Casinos and online gambling are illegal in Japan. The Macau Jockey Club and the Sociedade de Loterias e Apostas Mutuas de Maceau are authorized to offer online sports betting. There is currently no regulatory framework for foreign providers wishing to operate remote services from Macau. Though football sports betting is popular in Malaysia, online gambling is illegal.

Hong Kong

Partly Legalized

India

Undetermined

Japan

Banned

Macau

Undetermined

Malaysia

Banned

New Zealand

Partly Legalized

TAB and the New Zealand Lotteries Commission are authorized to offer lottery products and sports betting over the internet. Other online gambling providers, however, are prohibited from entering the market although it is not illegal for New Zealanders to gamble with offshore providers. Few companies allowed to issue licenses to online casinos based in the Philippines South Korea law states it illegal to gamble online. Same with Mainland China, online gambling is prohibited. Thailand forbids any sort of gambling on the internet. At present, all forms of gambling save the state lottery are illegal in Vietnam, but the country is considering regulating an online gambling industry.

Philippines

Legalized

South Korea Taiwan Thailand Vietnam

Banned Banned Banned Undetermined

Available: http://www.onlinecasinoreports.com

Researcher notes The massive market for online gaming is undoubtedly present. Researcher assesses that I-Gaming site operators have only but scratched the surface, and everything is up for grabs. Despite prohibitions left and right, gambling per se being deeply inherent in the Asian culture is bound to stay and thrive --- legalized or not. And unlike its earlier predecessor (land-based casinos), Online gambling with its borderless and highly flexible and opportunistic nature is not as tangibly accessible to regulation lest complete eradication. It is well equipped to go round rigidities and thrive where web technologies reach and ideally where legislation permits. But just the same, like its predecessor, Online gaming is here to stay, one way or another --- apparently lawfully welcome, or not. Given the dominantly unfriendly legal environment for online gaming throughout most of Asia, the few undecided countries that still

offer a flicker of openness pose as promising sites to be developed into major markets. Aside from Macau and the Philippines, few potential emerging markets in the researchers view are India, Vietnam, Japan and South Korea. While at present that there are no existing laws prohibiting online gaming in India, sports betting on the other hand has long been banned in the country and many of its citizens have ignored the ban for almost as long. More than US$2 bn was wagered on this years Indian Premiere League cricket tournament, prompting some government officials to not only take notice but to suggest that sports betting be legalized and taxed, and to raise revenues for much needed public works projects. This development has reached big British bookmakers such as Ladbrokes and is looking into expanding its bookmaking services into India. Such a large untapped market like India cannot be ignored said John O Reilly, director of the UK-based operator told Reuters. Vietnam is experiencing similar development, taking steps toward the legalization of sports betting in the country. Just the same, Ladbrokes is also looking into the potential of the Vietnamese market given said progress on the works. Another emerging market to set sights on is Japan. Whilst the country is under strict supervision for the operation of both online and offline casinos and even bound by an agreement with the United States to close off their online casino market to foreign countries, the ruling Liberal Democratic Party (LDO) is expected to propose new legislations to legalize casinos within the coming months. As of January 2008, according to sources closely following the partys legislative plans, the LDP reached a compromise by consulting with a special casinos panel designed to establish an independent watchdog over the industry. This regulatory body will exert fierce investigative authority to prevent crimes and overview the management of the casinos industry. Such procedures would include the screening of business license applications for casinos, on-site inspections of casino operators, monitoring and certification of casino staff and equipment, etc.

The LDP plans to submit the bill in order to receive support from other political parties, due to the obvious demand for casinos in Japan, and their clear success in 120 other countries around the world. Under the proposed plan, the casinos would be established within municipal governments that have openly shown interest in casinos, and will be managed by private investors and firms. This most promising development is still on the works but despite gambling (both online and offline) still illegal in the country, Japans market for legal gambling on horse and motor racing is most prospective. In addition, lottery, Pachinko and Mah Jong --- multi-billion industries in their own rights are considered under amusements in Japanese gambling law and therefore very much legal. Last and certainly not the least, despite clear illegality, Online Casino still very much thrives in South Korea. Regardless of the illegality of online casino gambling, the nation has seen a steady growth of the trade in the amount of online gamblers. South Korea is a perfect example of the ideal atmosphere of right culture with the right numbers to boot, boasting of over 10 million internet subscribers. Provided strict illegal status of online gambling, the South Korean market got around this and managed to flourish through the use of a points system, where players gambling online use points via bought avatar, which then sell them in return to new players for real money to continue the account. The online casinos themselves do not offer cash jackpots or prizes other than mere points, in effect technically not breaking any laws. The South Korean market is much keen on pursuing those that breach their online casino gambling laws though it has proven to become increasingly difficult as millions of citizens are contributing. With that said, as a side note, Researcher deem it perhaps be a better solution for the government to reconsider its position on the said matter and opt for legalization and tighter regulatory methods to hopefully better address the

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primary issue of rampant problem gamblers amongst South Korean citizens. In closing, given that the Asia-Pacific market constitutes the majority of the online gambling market, and even more so for the development of new gambling technologies as mobile gambling, gaming analysts from Christiansen Capital Advisors have shown that Asian markets made up 40 percent of the total online gambling market in 2006, and it has been steadily growing since. With so many developments and many expectations to boot, the pace of online gambling growth in the Asia-Pacific to this Researchers opinion is not to slow down any time soon, and is a venue worth keeping an eye on for new things to come.

References:

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Cohen, M.(2008, November 13). Singapore, Sands stand by their bets. Asia Times. Retrieved November 21, 2008, from http://www.atimes.com/atimes/Southeast_Asia/JK13Ae01.html Gambling, Inc.(2008) Online Casinos Tap into the Expanding Asian Market. Gambling.Inc. Retrieved November 21, 2008, from http://www.gamblinginc.com/news/_asianmarket.html IGWB.(2008). Asia-Pacific Around the World. International Gaming and Wagering Business. Retrieved November 21, 2008, from http://www.igwb.com

Jo (2006, July 30). Asian Market Makes for the Casinos. Washington Post. Retrieved November 20, 2008, from http://www.washingtonpost.com/wpdyn/content/article/2006/07/29/AR2006072900276.html Macartney, J.(2008, January 12). Chinese back a certain winner with legal racing and betting. Times Online. Retrieved November 21, 2008, from http://www.timesonline.co.uk/tol/news/world/article3172145.ece Online Casino Archives. (2008, April 17). Internet Casino Technology Discussed at Forum in China. Online Casino Archives. Retrieved November 20, 2008, from http://www.onlinecasinoarchives.com/2008/WORLD/4/17/298953/
Online Casino Archives. (2008, July 10). Plans afoot to Curb Online Gambling in South Korea. Online Casino Reports. Retrieved November 20, 2008, from http://www.onlinecasinoarchives.com/2008/WORLD/7/10/299401/ Online Casino News. (2008, March). China could License Internet Gambling. Online Casino News. Retrieved November 21, 2008, from http://www.onlinecasinonews.com/ocnv2_1/article/article.asp?id=16472

Online Casino Reports.(2008). Online Casino School. Online Casino Reports. Retrieved November 20, 2008, from
http://www.onlinecasinoreports.com/school/legality

Xinhua (2008, January 16). Chinas Online Gaming Population. China Daily. Retrieved November 20, 2008, from http://www.chinadaily.com.cn/china/2008-01/16/content_6399532.htm Xinhua (2006, February 25), Japan to Legalize Casino to promote Tourism. Betasia. Retrieved November 20, 2008, from http://news.xinhuanet.com/english/2006-02/25/content_4227128.htm

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