Bet on the World Cup? Not in Hong Kong
 
Philip Bowring International Herald Tribune
Wednesday, June 19, 2002
HONG KONG Brazil to win the World Cup? Don't bet on it. Germany? Don't bet on that either. Turkey? Very risky. Indeed, if you like the occasional gamble and are unlucky enough to be in Hong Kong take my advice and don't bet at all. The risk: losing your money? No, a criminal record.
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This place, which proclaims itself "Asia's world city" and the regional "cyberport," this supposed bastion of competition and risk-taking, has scored a breathtaking own goal. Just in time for the World Cup, the government has pushed through legislation outlawing betting on any event outside Hong Kong.
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The only betting now permitted within Hong Kong is on local horse racing or a lottery. So be warned, tourists and visiting businessmen: If you log on to the Internet or pick up the phone and place a bet with an online site or your bookmaker back home, you will be committing a crime.
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Since the World Cup began, thousands of police hours have been devoted to tracking down now illegal betting through offshore centers, or through adjacent Shenzhen and nearby Macau, where gambling is the main industry. Such police priorities are shocking in a city where it is cheaper to smoke heroin than tobacco and where more than 50 percent of software used by businesses is pirated.
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Draconian but probably futile oppression of honest gamblers is in keeping with the current government's record of protecting local vested interests at the expense of freedoms and of the economy.
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One big interest is the Hong Kong Jockey Club, which runs local horse racing and a lottery, and thus the only legal gambling. It is an efficient organization with professional management, an excellent computerized gambling system and off-course betting shops all over town. Some of its monopoly profits go to socially safe charities and some to the government. But it is also an elite private club with splendid facilities for its few thousand members, and living conditions for horses that Hong Kong's poor would envy.
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However, the biggest beneficiary of the monopoly is the government. Gambling is in the blood here, so racing generates huge turnover. Betting taxes averaging 14 percent of turnover raise $2 billion a year, or around 8 percent of total government revenue. But offshore Internet betting on other sports, notably soccer, has been eroding the monopoly revenues.
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Long before the success of Asian teams at the World Cup, locals had become avid followers of the likes of Manchester United. Yet Chief Executive Tung Chee-hwa's government refuses to recognize that soccer and Internet gambling are here to stay. Instead of responding by encouraging the development of Hong Kong as an Asian center for well-regulated gambling on all kinds of sports, collecting tax on profits rather than levying duties on turnover, it has chosen to outlaw it.
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The other vested interests quietly cheering the ban are the syndicates that run local illegal (tax-free) gambling. This has long been a lucrative activity but illegal race betting had been losing business to the Internet and phone-based soccer and other gambling being offered by international firms such as Ladbrokes and Victor Chandler. Now, courtesy of the government, illegal bookmakers connected to the criminal gangs known as triads have been handed soccer betting on a plate.
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The legislation could even be viewed as a breach of Hong Kong's Basic Law, or mini-constitution, which guarantees freedom of movement of capital. Making it illegal to transfer money overseas to conduct what is a legal business transaction in, say, London could become the thin end of a wedge. Will stock options and hog futures be next?
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The legislation also introduces an extraterritorial aspect into Hong Kong laws, with dangerous implications for its foreign trade relationships as well as local freedoms.
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At the least, it is another example of Hong Kong failing to move with the times - and then wondering why its economy remains in the doldrums while China and most of the rest of the region are cantering ahead.
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International Herald Tribune
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