MANILA/HONG KONG • China and the Philippines have joined forces to tackle illegal gambling, part of Beijing's broader campaign to curb illicit capital outflows and a pledge by Manila to weed out unscrupulous operators from the country's booming gaming industry.
The coordinated crackdown comes amid warming ties between Chinese President Xi Jinping and his Philippine counterpart, Mr Rodrigo Duterte, who has made illegal gambling the third front in his war on crime, after drugs and corruption.
In their first joint exercise, the Philippine and Chinese authorities cracked a transnational cyber gambling operation last month, shutting four illegal websites running out of the Philippines, arresting 99 people and freezing more than 1,000 bank accounts, China's Public Security Bureau said.
Mr Martini Cruz, chief of the Philippines National Bureau of Investigation's cybercrime division, said the authorities were preparing further raids this month targeting illegal betting and online fraud originating in the Philippines and targeted at Chinese gamblers.
"We have been visited by Chinese police to crack down on these illegal gambling operators. They are also targeting possible fugitives who have made our country a sanctuary," Mr Cruz said.
We have been visited by Chinese police to crack down on these illegal gambling operators. They are also targeting possible fugitives who have made our country a sanctuary.
MR MARTINI CRUZ, chief of the Philippines National Bureau of Investigation's cybercrime division, on how the authorities from both countries are working together.
So far, the crackdown has not targeted proxy betting, which is permitted in licensed casinos in the Philippines and has contributed to a boom in VIP revenues. Casinos in the country raked in nearly US$3 billion (S$4.2 billion) in overall revenue last year.
The practice, in which a gambler outside the casino gives instructions to an agent via a live stream or online platform, allows people to bet anonymously and can allow players to escape the attention of the authorities in their home countries.
Industry executives have said increased scrutiny could impact the lucrative proxy business in the Philippines, particularly if it continues to ramp up ahead of the official opening of Japanese slot machine tycoon Kazuo Okada's new US$2.4 billion casino in the capital Manila in July.
Chinese law forbids citizens from gambling online and at home. The Public Security Bureau has made repeated statements since March that transnational cyber gambling is harmful to the country's economic security, image and stability.
Yet, proxy betting is growing so fast in the Philippines that Suncity, the top junket operator bringing in high rollers from China, said last month that 80 per cent of its business comes from proxy gambling and 20 per cent from customers travelling to casinos for live table games.
Mr Ben Lee, managing partner of Igamix Management and Consulting in Macau, said the latest directives this year from China were clear warning signs and that they "should be heeded by all, especially those operating in the online space", he said.
The proxy business in the Philippines is mainly facilitated by Macau junket operators who bring high rollers into the casinos' opulent VIP parlours, either in person or via proxies. The junkets take on the risk for casinos, settling all credit and debt for the players in Macau, Hong Kong and China via their own internal banking networks.
In a VIP area in a Manila casino, Chinese and South Korean nationals wearing earpieces shuffle from table to table after a series of bets, carrying rectangular white plastic trays containing gaming chips and smartphones.
Executives in Macau familiar with the VIP boom in the Chinese territory prior to Mr Xi's crackdown on corruption and tighter junket regulation cautioned against relying too strongly on the method. "Proxy betting in the Philippines is a ripe target for China," said a senior casino executive based in Macau.