CryptoLogic and China

[Nichomacheo]

I came across this news article on CryptoLogic and China:

http://www.hemscott.com/news/latest-...38534446787029

[ QUOTE ]
Internet gaming software developer CryptoLogic Inc said it has signed a three-way memorandum of understanding (MoU) to adapt and licence its online casino, poker and other skill-based games for the Chinese market.

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Hope?

N

[HarmonicaMan]

holy ****!!!!
Even though most Chinese won't be netted up or play high enough, out of the 1.1b people, there must be at least a potential 100,000 players - 0.01% of the population.

And you must know that Chinese love gambling.

[adi]

[ QUOTE ]


And you must know that Chinese love gambling.

[/ QUOTE ]"Oh, I get it. Just because I Chinese you think I build a wall. That [censored]! I'm not stereotype, ok? Just because I Chinese doesn't mean I go around building wall! I'm just a normal person like all you. I eat rice and drive really slow just like the rest of you! I'm not a stereotype."

[HarmonicaMan]

lol

[Nichomacheo]

Does anyone know what obstacles online poker rooms will have to overcome to open the door in China? Is there even an interest in China? As was already said, you only need a very small percentage of the population to play in order for it to make a huge impact, but, is this even a realistic expectation? I mean, lets not forget they are a Communist nation. How does that come into play here?

N

[Zobags]

[ QUOTE ]
I mean, lets not forget they are a Communist nation. How does that come into play here?

[/ QUOTE ]

After the rake is taken, every pot gets chopped among all the players at the table. The low variance will be the biggest plus.

[ivo]

I think that internet gambling is prohibit !

[olivert]

CryptoLogic did software development deals with 2 companies, NEITHER of which have any explicit licenses to operate online gaming legally in Taiwan, Hong Kong, Macau, China, Malaysia (33% Ethnic Chinese), or Singapore (75% Ethnic Chinese).

I do know that the "ministries of finance" in China and Taiwan have oversight of the state-run lottery systems (ditto Vietnam and Japan). That means the banking system and the lottery system are supervised by the same government entity, which allows the government agency running a particular lottery to take a huge rake (on the order of 30-35%) from the lottery.

Because the governments in Taiwan and China have revenue streams from the lotteries that they need to protect, they are NOT going to stand still and allow "offshore" online gambling websites, including "offshore" online poker rooms, to operate without explicit licenses. (Same logic will apply in Vietnam and Japan.)

There is one other obstacle in mainland China: the "great firewall", which is a series of Internet "choke points" controlled by state-run telecommunications companies. Any "unlicensed" online poker room that attempts to do any hard marketing in mainland China can and will be choked off.

I also know that the Hong Kong Jockey Club (HKJC) has an exclusive legal monopoly on all forms of gambling in Hong Kong, including horse racing, sports betting (mostly English Premier League soccer), and the "Mark Six" lottery. (There are neighboorhood "Mah Jong Schools" not controlled by the HKJC which appear to be tolerated by the Hong Kong government.) Furthermore, anyone caught making a bet while he/she is physically in Hong Kong with any entity other than the HKJC is subject to criminal prosecution.

Macau is a bit different, with 3 gaming licensees (SJM/Stanley Ho, Galaxy Entertainment, and Wynn Resorts) and 3 sublicensees (MGM Mirage/Pansy Ho, Las Vegas Sands, and PBL/Melco/Lawrence Ho.) Currently, SJM offers online wagering on Horse Racing and Greyhound Racing in Macau ONLY. SJM's Macau gaming license does NOT permit SJM to offer online gaming in the rest of "Greater China".

Bottom line: in order for online poker to be successful in the long run in the Chinese-speaking world, operators will need to negotiate EXPLICIT licenses with governments in each jurisdiction. Otherwise, you will see a repeat of what happened in the U.S. and France all over again with government prosecution of "unlicensed" operators.

The likes of PartyGaming, Ladbrokes, and World Poker Tour Enterprises (WPTE) know that and they are lobbying governments to open up the Chinese-speaking markets for explicit licensing. They are also negotiating with potential local partners such as the HKJC in Hong Kong and SJM in Macau.

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One thing is almost certain: there will be big buy-in televised tournament poker in Macau. The World Poker Tour (WPT) in particular wants an event at the MGM Grand Macau, likely in 2008 or 2009, after the building opens at the end of 2007.

As for Harrah's or whichever entity that will end up running the World Series of Poker (WSOP), that entity will have to do TV business with pan-Asian sports TV giant ESPN STAR Sports (ESS), which is managed by News Corporation (Rupert Murdoch) and is headquartered in Singapore, through the year 2010. ESS has first and last rights of refusal to license WSOP broadcasts from ESPN's ESPN International Syndication unit for broadcast in 24 countries and territories spanning from Pakistan to South Korea (but NOT Japan, where the Sumitomo-managed J SPORTS joint venture has first and last rights to the WSOP).

[Nichomacheo]

[ QUOTE ]
Bottom line: in order for online poker to be successful in the long run in the Chinese-speaking world, operators will need to negotiate EXPLICIT licenses with governments in each jurisdiction.

[/ QUOTE ]

olivert, or anyone else with an educated opinion, how likely is this scenario?

[olivert]

[ QUOTE ]
[ QUOTE ]
Bottom line: in order for online poker to be successful in the long run in the Chinese-speaking world, operators will need to negotiate EXPLICIT licenses with governments in each jurisdiction.

[/ QUOTE ]

olivert, or anyone else with an educated opinion, how likely is this scenario?

[/ QUOTE ]

Macau will likely be the first territory in "Greater China" to license online poker explicitly, with SJM and Las Vegas Sands getting involved. One would expect World Poker Tour Enterprises (WPTE) to partner with SJM in some way.

As for Hong Kong: I do know that the CEO of PartyGaming has met with officials at the HKJC. PartyGaming is serious about getting a piece of the Hong Kong market and PartyGaming knows that the ONLY legal way to do that for now is via a partnership with the HKJC.

As for Taiwan: the Ministry of Finance will decide if online poker will be explicitly licensed, and which company will be granted an exclusive license. At this point, the Ministry of Finance has a lottery system, which is run under license exclusively by ChinaTrust Financial. ChinaTrust outbid a number of banks, including incumbent Taiwan Fubon Bank, for the new 5-year license starting January 1, 2007. The Ministry of Finance is very unhappy with offshore online gaming outfits operating in Taiwan (such as FunTown, which is owned by GigaMedia, the same company that owns EverestPoker), as the offshore outfits are cutting deeply into the sale of lottery tickets.

Mainland China officially has a "zero tolerance" policy on hard marketing of offshore online gaming at this time, though offshore outfits such as 888.com and MANSION are doing "ambush marketing" in China by sponsoring English Premier League (EPL) soccer teams (888 is sponsoring Middlesbrough, while MANSION is sponsoring Tottenham Hotspur), and in the case of 888.com, sponsoring a Mandarin Chinese-speaking pro snooker player from China in Ding Junhui who now plays in the U.K.

The viewership of EPL soccer in mainland China is big enough (bigger than the viewership in the U.K. for some matches) to the point where the government of GuangDong Province chose to start a new all-soccer cable TV channel and was able to outbid ESPN STAR Sports (Rupert Murdoch) for the video rights to the EPL in China.