China's plans for online gambling in Hainan Island

China’s plans for online gambling in Hainan Island

As a result of its potential and in a hope to strengthen China’s economy, the province has urged the Chinese government to attract more foreign investment to Hainan. So, in April of this year, Xi Jinping, the Communist Party President , who was recently appointed as leader for life after term limits were listed, announced a plan to gradually make the island a pilot free trade zone by 2020 and a full free trade port by 2025. The idea is to encourage foreign investment in various areas including agriculture, entertainment, sports, gambling and tourism, with a focus on medical tourism, i.e. hospitals and pharmaceuticals. Medical tourism has become popular but would be even more attractive as a free trade opportunity. The country said the advantages to medical professionals under the plan are fast-track approval for new drugs, technology and medical devices, extending up to three years the time foreign physicians are allowed to practice medicine, allowing 100% foreign direct investment and ownership in hospitals and a reduction of tariffs on certain medical devices and equipment.

And in the area of gambling, the country is encouraging companies to come forward and offer online gambling, lotteries and sports betting with a possible expansion to land-based casinos in the future. The advantages to gambling companies, of course, are easier access to the very lucrative Asian market, although it’s uncertain whether Chinese residents would be allowed to partake. Currently the law in China makes it illegal for Chinese residents to gamble, except in Macau and Hong Kong, and any person gambling or any company promoting gambling within any other part of China are subject to prison sentences. Macau was given an exemption since it was originally a Portuguese port and the economy was built around gambling, and Hong Kong was given an exemption because until a few years ago it was a British colony. In Hong Kong, the only legal gambling, however, is that offered by the Hong Kong Jockey Club. The Chinese government still has strong influence in Macau and Hong Kong and take a large percentage of the winnings, but in Hainan they would have full control. The law prohibiting gambling in mainland China can be changed easily under a communist government as there is no opposition party to try to hold the government to account.

The decision to offer another gambling region in China has sent shock waves throughout Macau. The gambling the industry there is worth about $33 billion a year and it is almost certain that a second gambling destination in China would cannibalize the revenues from Macau. Plus, if the law is changed to permit Chinese citizens the ability to gamble online, it would really affect gambling revenues in Macau, since the area is known for corruption and no doubt vast numbers of citizens would forego visits to land-based casinos and would bet online instead. Currently Macau hosts many U.S. casinos such as MGM and The Sands, but its doubtful either would have interest in an online presence in Hainan. Sheldon Adelson, CEO of the Las Vegas Sands Corporation, has fought tooth and nail to get online gambling banned in the U.S. and it would be the height of hypocrisy to challenge U.S. online gambling laws but promote online gambling elsewhere in the world.