China and the Philippines have teamed up to crackdown on illegal gambling as Beijing takes wide-ranging steps to stem capital outflows from the country. Closer ties between the two countries have come about after Chinese President Xi Jinping and Philippine President Rodrigo Duterte made attempts to make the relationship between the two countries stronger.
Joint Investigations
The first joint investigation was held last month when law enforcement authorities from both countries busted a transnational cyber gambling operation which resulted in four illegal gaming websites which operated out of the Philippines being shut down. According to China’s Public Security Bureau nearly 99 people were arrested and more than 1,000 accounts were frozen.
Martini Cruz, head of the Philippines National Bureau of Investigation’s cybercrime division, announced that several more raids were being planned this month on gambling ventures that were based out of the Philippines but targeted Chinese gamblers. Cruz confirmed that the Chinese police had been in touch as they wanted the two forces to share intelligence, work together and crackdown on illegal gambling operators. Chinese authorities also want to flush out Chinese fugitives who have settled down in the Philippines.
Proxy Gambling
Thus far the crackdown has avoided targeting the common practice of proxy gambling in Philippine casinos. The rising popularity of the practice has played a significant role in boosting VIP revenues for the casinos. Casinos earned around $3 billion in revenue overall last year.
Under proxy gambling, a gambler outside the casino relays instructions and bets via live stream or an online platform to an agent seated inside the casino’s gaming floor. This allows players to participate in gambling anonymously and avoid government scrutiny.
Chinese residents are banned from participating in gambling activities online or at home. The country’s Public Security Bureau has emphasized that transatlantic online gaming was a harmful practice, injuring economic stability and image.
This method of gambling has however been growing so fast that SunCity a top junket firm in the Philippines states that nearly 80 per cent of its business was from proxy gambling. Customers travelling for live table games formed just 20 per cent. Any action against proxy gambling is likely to have a substantial impact on the revenues of Philippine casinos according to industry experts, who are warning of an imminent crackdown on proxy gambling.
Warning Signals
Ben Lee, managing partner of Igamix Management and Consulting said that the recent government directives were a clear warning signal to those participating in online gambling. A senior casino executive from Macau added that proxy betting was highly likely to be the next target for a crackdown.
The collapse of Macau’s casino industry due to the anti-corruption crackdown forced China’s VIP gamblers to look at safer venues and the Philippines was an attractive destination due to its proximity to China and its friendlier gaming laws. Should the two countries continue their efforts to curb illegal gambling, China’s VIP gamblers will be forced once again to look at another alternative.
Macau Crackdown Slowing Down
The good news for Chinese gamblers is that Beijing has eased up on its anti-corruption crackdown targeting Macau’s casinos and as a result the casino industry has experienced a turnaround from August 2016. Gaming analysts have noted that the VIP market segment in Macau is also slowly gaining momentum but it might be quite some time before it begins to flourish like before.
Gambling is illegal in China and gamblers from the Mainland have to travel to Macau to indulge in gambling activities. The collaboration between the Philippines and China to crackdown on illegal gambling should turn out to be a good thing for Macau’s casinos as they lost a significant amount of revenue to casinos in the Philippines.
Money Laundering
The Philippines has also been used by criminals for money laundering activities. One of the biggest bank heists in history took place in 2016 when online hackers stole $81 million from Bangladesh’s forex reserves which were then routed via a casino in the Philippines, a gaming room promoter and a junket operator.
Since then, legislators in the Philippines have looked to introduce new legislation to target money laundering activities and wanted the laws to cover casinos that were suspected of criminal activities such as money laundering.

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