Illegal betting and organised crime in Asia' Presentation

Martin Purbrick

Director of Security & Integrity, Hong Kong Jockey Club

Illegal betting and organised crime in Asia

The growth of illegal betting in Asia has led to global expansion of the operators, the consequent spread of criminal involvement in racing and other sports betting markets, as well as being a driver for other criminal problems such as sports corruption and money laundering.

• Legal and illegal betting in Asia

• Criminal involvement in Asia betting

– Asian Illegal Bookmakers

– Asian Betting Exchanges

– Casino junkets and illegal betting

Illegal betting is causing sports corruption

Legal and illegal betting in Asia

‘Entire rogue league corrupted by match-fixing‘

(Telegraph, 18th January 2016)

“Almost half of First Division matches in current Canadian Soccer League season have signs of suspicious betting

activity, resulting in estimated £4.5 million in potential

fraudulent betting profits”

‘Cricket-Ex-South Africa international Bodi charged in match-fixing scandal’

(Reuters, 14th January 2016)

“Cricket South Africa said in December investigating an

"intermediary" for betting syndicates and had laid charges”

‘Australian Open: Tennis rocked by allegations of widespread match fixing among top players’

(Sydney Morning Herald, 18th January 2016)

“The match fixing was orchestrated by gambling syndicates in Russia and Italy,

targeted prominent players in their hotel rooms at major tournaments

and offered them $US50,000 for each fix”

The largest illegal betting companies are from Asia


Asian Bookmakers

Asian Betting Exchanges

Asian Casino Junket betting operators

Globally, legal and illegal betting markets are huge

Ronald Noble, Interpol Secretary General, 2011 “When widespread, illegal and irregular betting will create a shadow economy possibly enormous in size and depth. In Asia alone, illegal betting is estimated to provide revenues for almost US$500 billion.” (EUR 446 billion)

Sorbonne-ICSS, 2014

“The estimated volume of the global market (legal and illegal) of sporting bets is somewhere between €200 and €500 billion, more than 80% being illegal bets.”


The global illegal betting market is likely to be as big as USD500 billion in transactions with Asia the driver


(Source: HKJC analysis)

Market Illegal Turnover

Hong Kong racing + other sports

USD64 billion (Football $40b, Racing $12.78b, others $12b)

Asia racing + other sports

USD350 billion

Global racing + other sports

USD500 billion ++

Illegal betting operators have a strong online user interface that is attractive to customers


Illegal betting website setup is easy and cheap. First Cagayan in the Philippines leads the growth


Total cost of setting up a licensed betting website in the Philippines

Sports betting website

Full-suite betting website (e-casino +

sports betting)

License application fee USD26,000 40,000

License annual renewal fee USD15,000 40,000

Annual ‘Gaming Tax’ USD60,000 60,000

Illegal betting operators have an agent system that facilitates customer growth


Customers

Cred

it granted

Super

master agent

Master agent

Agent

Agent system of IBCbet (Maxbet)

Co

mm

issi

on

incr

ease

s

Illegal operators use new convenient online payment methods, which circumvent banks

• Established in 2001, currently the largest digital wallet in the global online gambling and gaming market

• Supports 40 different currencies and 100 payment options

• Currently the only digital wallet to have money transmission licenses in every U.S. state, as well as DGE approval in New Jersey to operate in the state's online gambling market.

• Founded in 1999, Neteller is used by millions of consumers in more than 200 countries and is especially popular in the foreign exchange and online gambling sectors.

• In 2005, it provided payment services to more than 80% of gaming merchants worldwide.

• It is accepted by nearly all online gambling operators, except for those in the US.

Other online payment service providers


• Legal and illegal betting in Asia

• Criminal involvement in Asia betting

1. Asian Illegal Bookmakers

2. Asian Betting Exchanges

3. Casino junkets

• Combatting illegal betting strategy

12

Asian betting operators are closely tied to transnational organised crime

Trans-national

Organised Crime

Asian Book-

makers

Asian Betting

Exchanges

Macau Casino Junkets

Sports Match Fixing

Criminal involvement in Asia betting

1) Asian bookmakers have close links to transnational organised crime


SBOBET and MAXBET have links through company structures and principals

IBCBET (Maxbet) is a major betting operator, owned by Paul Phua, arrested by the FBI in 2014 in Las Vegas

*Choice of 13 languages

*Customer support

numbers in Philippines


IBC and SBO ownership is linked, opaque, and may involve multiple Asian bookmakers

‘Online gambling guru and '14K triad member' Paul Phua snared in Las Vegas arrest’

‘Accused gambling kingpin Paul Phua assisting Malaysia on matters of national security'

‘Malaysian citizen who used to be Macau's top junket operator is not a triad member, Kuala Lumpur's Minister of Home Affairs tells FBI’

(SCMP: 30/12/2014)

16

‘Accused of operating an illegal soccer gambling ring in Las Vegas hotel suites that United States prosecutors allege netted billions of Hong Kong

dollars during the World Cup’

(SCMP: 27/7/2014)


FBI evidence shows links between IBCBET, multiple offshore betting websites, and casino junkets


• Son arrested by FBI and claimed that Phua owns IBCBET

• ‘Settlement Channels’ include casino junkets, Internet payment channels, and Montenegrin bank

• Phua Macau arrest: “Let me know if I need to activate the prime minister or San Marino ministry of foreign affairs…We just received a call from Macau saying that the one who arrested Paul is a friend and they are negotiating now. Hopefully they want money only”

FBI Exhibit

Illegal betting operators should worry us because of the threat to racing integrity

18


2014, Phua’s associate, Richard Yong, arrested in Las Vegas and pleaded guilty to ‘Accessory to Transmission of Wagering Information’, fined USD100k and forfeit USD400k in cash & property 1997, Yong arrested and convicted in Hong Kong of charges of illegal betting relating to race manipulation

2) Asian betting exchanges are illegal betting operators, and a great concern for racing integrity

• The betting exchange concept is well established – People bet against each other, not against a bookmaker – The exchange charges the winner a commission

• Customers can place a ‘Lay’ bet against a runner/player/team

– This is a bet on a runner / player / team to lose

• Citibet and Aastar are two of the most famous unlicensed and illegal Asian betting exchanges


Citibet uses multiple domains (citibet, lk988, ctb988)


Citibet has multiple betting products • Spread Betting - Bet on the price movement of

Forex, Commodity, Stock Indices

• In-Running Bets - Bet after the start of a race

• Fan Tan - Bet on number of buttons in a pile divided by croupier


Citibet spread betting on Foreign Exchange


…and Stocks Indices

Asian betting exchanges

…and Commodities

Asian betting exchanges

Citibet is estimated to have turned over around AUD 929.57 million on Australian races in 2013/14


Australia legal betting on racing turnover

Citibet turnover

AUD11.26 billion (USD7.81 billion)

AUD929.57 million (USD645 million)

Citibet is estimated to have turned over around HK$61.5 billion (US$479.7 million) on Hong Kong races in 2014/15


Hong Kong Jockey Club Citibet turnover

HKD103 billion (USD13.17 billion)

HKD61.5 billion (USD479 million)

3) Casino junkets are linked to criminals, they dominate Macau casinos, some operate betting portals, they are expending internationally


Casino junkets facilitate money laundering for criminals and threaten racing and sports integrity

Carson Yeung, convicted in 2014 in Hong Kong of laundering

USD88m from Neptune Casino Junket in Macau, operated by a

major criminal

Peter Pannu, former Hong Kong Police Inspector arrested in 1993 for accepting bribes from a major

criminal


Casino junkets are known to be investing in racing in Australia and diversifying assets


…and operating online betting

HKJC taskforce works to combat illegal betting

Combating illegal betting strategy

Functional Support

Management Office

Managers

Sponsor Executive Director,

Customer & Marketing

- Director of Security & Integrity

- Director of Trading

Security & Integrity

Public Affairs

Security Marketing Treasury Media / government Police / research Marketing Finance sector

We need to engage with multiple stakeholders to convince them that illegal betting is a social problem

Combating illegal betting strategy

Police & other government organisations

Police Home Affairs

Bureau

Betting & Lotteries

Commission

Media

Newspapers

TV

Radio

Opinion shapers Academics Think Tanks NGOs

Financial Institutions Banks Credit card companies

E-payment platforms

Telcos / ISPs / Web firms

Telcos / ISPs Advertising platforms

Search engines

Legislature Legislators

Summary

• Illegal / unlicensed bookmaking websites are expanding from a strong base in Asia

• Criminal groups control illegal bookmaking operations in Asia

• Illegal bookmaking has become a transnational organized criminal problem

• Horse racing is doing better than other sports dealing with betting related corruption, but we need to maintain our focus on racing integrity

• Legitimate racing and betting operators need a strategy to combat illegal betting, and competitive racing betting products and pricing

32

Documents

Illegal betting and organised crime in Asia' Presentation