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China to allow horse racing, expand sports lotteries on Hainan

Sunday, 15 April 2018 20:16
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The Chinese government has revealed plans to develop a horse racing industry and expand sports lotteries to boost tourism to the holiday island of Hainan.

According to a report by official news agency Xinhua, horse racing will be one of a number of activities promoted on Hainan alongside beach and water sports as part of a reform agenda approved by cabinet. Hainan would also “explore the development of sports lottery and instant lottery on large-scale international games.”

China already allows certain forms of sports betting operated by the government’s China Sports Lottery while a government-run lottery system is also widespread across the country.

It remains unclear exactly how an expanded sports lottery might work, however reports that the initiative might eventually lead to legal casinos in Hainan seem to be both unfounded and sensationalist, with multiple reports of impending casino legislation in Hainan over the years having amounted to nothing. Attempts by some Hainan hotels to launch small gaming operations were quickly shut down in 2013, while China made no secret of its stance when it arrested employees of Korean casino operators Paradise Group and Grand Korea Leisure in 2015 and Australia’s Crown Resorts in 2016 for promoting gambling on the mainland.

Macau-based analyst Grant Govertsen has also been quick to downplay the news, stating in a Sunday note that, “While various media outlets are trumpeting the ‘gaming’ aspects – as if the center point of this PRC policy is gaming – the reality is that the policy in no way approves anything remotely close to casinos, nor does it even suggest this is a future possibility. Rather, what was announced was a free port concept within a special economic zone.

“Buried inside an exhaustive list of policies, it suggests the development of horse racing – but importantly omits any references to wagering. It also recommends that the idea of an international-style lottery be studied, and we highlight that the lottery verbiage says ‘explore’ rather than ‘develop,’ which suggests that even a lottery isn’t a done deal.”

Govertsen also quashed wildly ambitious speculation – first prompted by a recent Bloomberg article pointing to the potential relaxing of rules around online gambling, lotteries and sports betting – about the future of casinos in Hainan.

“It is critical to keep in mind that gambling in all forms (other than a small lottery exception) is illegal within China,” he said. “As part of the anti-corruption campaign the government made it a point that officials shouldn't even play mahjong given its gambling characteristics.

“While the government is encouraging the development of a horse racing industry in Hainan (as they have in other parts of China) they are not encouraging the concurrent development of a horse wagering industry. We therefore think the legalization of casinos within China remains highly unlikely.”

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