Chinese Authorities Crack Down Illegal Mainland Gambling Scheme

Chinese authorities reported they have dismantled a multi-million dollar scheme involving illegal high-stakes wagering carried out via WeChat, which is the most popular social media network in the country. According to the Chinese Judiciary Police, at least seven people were involved in the ingenious scheme which involved unauthorized baccarat gambling activities on the social media network.

The seven suspects operated illegal gambling activities from the Chinese Province of Zhejiang and were enabled to make bets on behalf of mainland players on the baccarat tables in landbased Macau casinos. This rendered it possible for the fraudsters to generate as much as US$1.3 million in March 2017.

The fraudsters made use of what is known as “side betting” and utilized the WeChat Hongbao service to carry through their scheme. The Hongbao service was first introduced in 2014 for the Chinese Spring Festival. The aim was to digitalize the widespread Chinese tradition of giving relatives and friends the so-called “red envelopes” that contained lucky money. The service allows people to send virtual credits to one another.

The digitalized red envelopes soon gained popularity among Chinese residents due to the immense convenience they offer. Statistics indicate that Chinese residents exchange billions of red envelopes, especially during specific times of the year, such as the aforementioned Spring Festival in February.

Users of the WeChat Hongbao service are given the option to exchange their red envelopes with specified groups of people while the total amount of virtual credits sent is randomized. This is to say that users are able to send greater amounts of money to specific members of the group while others receive less.

Apparently, there were ill-intentioned individuals, who decided to exploit the feature’s randomized distribution to further illegal gambling activities and organize unauthorized lottery pools. However, this also evolved into side betting which is yet another method of operating illegal gambling via WeChat that has plagued gambling regulators for the past years.

The fraudsters no longer needed to vocally impart the results in the casino’s VIP rooms over their mobile devices as has been the case prior to the introduction of WeChat. The wagers were made and the results were revealed in real time over the popular social media network. The players were reportedly provided with around a minute to make their wagers, which typically started at HK$300 and could reach “unlimited” amounts.

Chinese authorities revealed they were not able to immediately identify which landbased gambling establishments and VIP rooms were initially involved in the sophisticated scheme, but reported around forty customers were able to make their bets on the mainland where gambling is considered illegal. Two or three participants in the scheme placed the bets at the baccarat tables on behalf of the players and imparted the results of each hand, using the social media network.

Tam Wend Keong, Spokesman of the Judiciary Police, revealed that some of the suspects handled accounting via computers and controlled their accomplices’ wagering in the gambling venues. Other members of the fraudster team collected the bets of the WeChat group members. It is believed the fraudsters mainly profited from the commissions they charged players with as well as by hedging bets. Authorities believe the group had been operating for at least a month before their scheme was finally cracked.

This is hardly the first time Chinese authorities arrest fraudsters for operating illegal mainland gambling via the social media platform. In February, local media reported police officers had arrested two individuals, who were accused of operating an illegal gambling “den” through WeChat.

The accused were a man and his girlfriend who went by the names Meng and Hu, respectively. The couple reportedly had generated US$7,270 before they were finally detained by authorities.

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