China’s push to crackdown on online gambling has brought with it a number of arrests within the country.
As recently as last week, the Chinese police in the municipality of Chongqing detained about 94 people suspected of being involved in online gambling, and another six Ourgame employees arrested bringing the toll of people since February to 453 – with some of the individuals who have been arrested being foreign nationals including an Australian. This high toll is on the rise in the country which has made a decree to crack down on the online betting practice in the country.
The country has also taken part in raids on gambling facilities with a raid on April 8. These raids were focused on 13 sites which registered over 100,000 users and which wagered about $55 million in total, including bitcoin betting.
Thus far, it seems that the country isn’t backing out from this fight, which raises the question, what caused this fight in the first place?
Well, a tip from a Chinese citizen to the authorities got the government looking into their operations. They then realized that the online betting platforms which were previously presented as virtual gambling platforms had been converted to real betting platforms where actual currency was being funnelled into the site. Furthermore, it was realized that some of the firms were providing unauthorized support – technological – for illegal gambling sites. The government since banned the online gambling sites, as other governments worldwide sought changes in their online gambling regulations, as well.
The ramifications of the above have been dire for the Chinese market especially given its sheer size.
Currently, the online gambling market in China is worth over 210 billion Yuan by volume and was expected to rise to 260 billion Yuan as at the end of 2018. Most of the players engaging in this field, such as Boyaa, a gaming company operating out of Hong Kong, will generally obtain most of their revenues – about 70% of their revenues – from online gambling.
The negative news, therefore, adversely affected the share prices of online gambling players. According to Reuters, some of these companies have lost as much as 18% of their stock valuations as a result of the same. Despite this, the Chinese government is still doubling down on their stand with their scrutiny of these companies being much higher. In the government’s view, their need for a transparent and well-governed gambling community overshadows the losses in valuation akin to these entities.
All in all, these entities have also come to align themselves with the government and are now working towards ensuring that they incorporate the laws which the government is trying to enforce.
The cryptocurrency spread
With the above being in the case in China, cryptocurrency traders are bound to be worried.
Over its term, cryptocurrency trading has been described by many as gambling. The fact that it has just recently begun and that the understanding of how to value cryptocurrencies is yet to be established by the financial market raises questions as to how most of these cryptocurrencies are valued. This, coupled with the high valuation that most of the cryptocurrencies have exhibited in the market – such as Bitcoin which was just short of crossing the $20,000 mark back in December 2017 – has caused the market to question the valuation model and suspect that the cryptocurrency market is currently at a bubble stage.
Well, China has taken action in the past regarding bitcoin regulation and again China has taken control of this situation.
The country begun by banning all domestic virtual currency exchanges, a move which the market considered to be a ban on cryptocurrencies. The country which just a few months back was ‘the largest bitcoin trading activity market’ according to Yahoo has since been hit by a drastic decline as a result of a change in the regulations.
Later after realizing that its citizens had turned to the international front and in a bid to halt the exchange of virtual currency in total, the country took to the international space by banning all foreign virtual currency exchanges from operating within the country.
It thus seems that the Chinese government is working at a fast pace to tighten the noose on both the cryptocurrency situation and the gambling industry – which most people presume can be equivocated. This brings with it a lot of questions such as the government’s eventual plan for the people of China with regard to gambling or cryptocurrency trading.