Why the chips on down for online gambling

Online gambling addict "Benson" was at his wits' end two years ago, having incurred a spiralling debt from his insatiable habit.

On the precipice, he made a decision that wrecked his marriage - he sold off his four-room Housing Board flat and squandered his share away on football bets within a week.

"My wife was so heartbroken that she left me," the 45-year-old father of one, who declined to give his surname, tells Insight. "She said that she could never trust me ever again."

The divorce made him come to his senses. He joined a support group at Blessed Grace Social Services' Gamblers Recovery Centre, quit gambling, and is now working on mending ties with his 10-year-old son.

It is tragic social plights such as this that the Government wants to prevent in tabling the Remote Gambling Bill in Parliament on Monday.

Under the Bill, remote gambling is defined as gambling through the Internet, telephone, or any other forms of communication technology.

If passed in its current form, Singapore will be adopting what is arguably the strictest anti-online gambling regime in the world, observers say.

Few, if any, jurisdictions have adopted such a multi-pronged approach in blocking websites, financial payments and advertisements.

For the betting public, many of whom are football fans who love a flutter on their team, the fines alone would present quite a penalty zone.

Punters caught placing bets online could be fined up to $5,000 and jailed up to six months.

Anyone who abets a person under 21 to gamble remotely could be fined between $20,000 and $300,000 and jailed six years.

Gambling experts tell Insight that the litany of measures will effectively "choke the lifeline of the industry here".

MPs who gave it the thumbs up include Mr Christopher De Souza (Holland-Bukit Timah GRC), who calls it a "positive and bold move".

The WongPartnership lawyer, who is a member of the Government Parliamentary Committee (GPC) for Home Affairs and Law, notes: "We should guard against excessive gambling, regardless of the means."

MP Denise Phua (Moulmein- Kallang GRC), who chairs the Social and Family Development GPC, says the growth in online gambling here has become a "cause for concern".

She adds: "The Government is absolutely taking the right and necessary step to provide a legislative framework to regulate remote gambling activities."

British-based Global Betting and Gaming Consultants (GBGC) estimates the remote gambling industry here will rake in US$416 million (S$526 million) this year - up by more than 50 per cent from the US$271.58 million in 2009.

While still a fraction of the US$6 billion in gaming revenues earned by the two casinos last year, observers praise the Government for its proactive approach in nipping the problem in the bud.

The laws will deter the average Singaporean from placing an online bet, rather than serial gambling addicts who will find ways and means to game the system, says Mr Jonathan Galaviz, managing director of Las Vegas-based Global Market Advisors, which specialises in economics and government strategies in casino gaming, airlines and technology.

Acknowledging that blocking websites and barring online payments is a complex task, he points out: "Just because it will be difficult to enforce doesn't mean you don't enforce it. The blanket laws instill confidence that (the Government) is protecting its citizens, rather than upholding the pretense that it is doing all it can."

Ms Phua, who has been vocal in Parliament about casino issues, adds: "Even if these will not completely curb online gambling, they will discourage the layman from trying and signal that this is not something encouraged in our society."

How the chips have fallen

Industry watchers believe there could be a link between the opening of the two casinos here in 2010 - after a decades-old ban was overturned - and the rise in online gambling.

"Generally speaking, when something is legalised in society, it brings greater awareness of the issue to citizens," says Internet law expert Hannah Lim Yee Fen of the Nanyang Technological University.

"Since it's in public consciousness, the mental psyche could have been: 'If I can gamble at the casinos, then I can do it in the comfort of my own home'."

Nascent concerns that the casinos would fuel problem gambling do not appear unfounded.

This is despite the social safeguards in place, such as a $100 entry levy for Singaporeans and permanent residents, as well as exclusion orders for compulsive gamblers.

Consider the statistics: Since 2011, the number of people barred from casinos here has more than quadrupled to a high of 215,331 this year.

The National Problem Gambling Helpline has also fielded about 21,000 calls annually for the past three years - a four-fold increase from 2009.

Mr Gerald Goh, clinical director of counselling centre ECMS Consultants, tells Insight that he has seen clients who, after being banned from the casinos, went online instead.

Ironically or not, one of the most vocal critics of online gambling has been Mr Sheldon Adelson, chief executive of casino firm Las Vegas Sands, which owns Marina Bay Sands.

He has decried online gambling as "fool's gold", writing in a Forbes magazine article last year that it causes people to lose their homes and hurts the young and economically vulnerable.

He has also claimed that with the diverted revenue streams, remote casinos will "cannibalise" land outlets which can better impose social monitors.

The odds of addiction

He may have a point.

Multiple studies have painted a grim picture of online gambling as more dangerous than laying bets at a bricks-and-mortar casino.

Nearly 40 per cent of online gamblers tend to overestimate their wins and underestimate their losses, says an academic study published in the Psychological Assessment journal.

While the latest National Council on Problem Gambling statistics from 2011 showed that only 1 per cent of those surveyed participated in online gambling, this group was found to have the poorest self-control.

They gambled longer and more frequently, and spent more money than planned.

However, some forms of gambling may be more addictive than others, studies have shown.

In a recent Harvard study, it was found that online poker, unlike sports betting, does not promote addiction.

Still, in a poll of 1,000 Internet users conducted by the Ministry of Home Affairs (MHA) last year, almost three in 10 said they had gambled remotely at least once within the year.

Second Minister for Home Affairs S. Iswaran said at the time: "This is not surprising, as one can gamble anonymously from almost any location at any time."

Minister for Social and Family Development Chan Chun Sing flagged the issue of online gambling as early as February 2012, when he said: "It's worse because there's no entry levy and that encourages people to chase their losses or double their gains."

Online gambling sites may offer perks such as free credits to lure people to place a wager.

Sports betting operators can also offer updates and time-based products, such as changing odds as an event progresses, says media and technology lawyer Bryan Tan, a partner at Pinsent Masons MPillay.

All this could well tempt punters to dip their fingers into different pies.

Benson, the reformed addict, says he would have huge bets on more than 10 football matches at a time.

On weekends, he would start betting in the afternoon - when the Asian leagues are in action, before moving with the time zones to the European leagues and then the South American ones.

"These offer better odds than (state-owned lottery company) Singapore Pools," he says, adding that the permutations of bets are endless.

"You can bet on the number of corners, the number of red or yellow cards, and even which team kicks off the game."

He could also bet on other sports, from golf to tennis to basketball. And on days when the major leagues do not play, he turned to obscure Middle Eastern leagues to satisfy the itch.

It is thus unsurprising that football betting emerged the leading draw of online gambling in Singapore last year.

British-based consultancy H2 Gambling Capital estimates that 44 per cent of last year's S$406 million gross win value - that is, the amount gambling businesses win from their clients - came from football bets.

The rest came from turf club betting (25 per cent), casino games like roulette and blackjack (21 per cent), poker (6 per cent) and bingo (4 per cent).

Advertising - which the new Bill prohibits - is a common hook.

H2's director of mobile, poker and special projects, Joel Keeble, says most operators advertise either directly on popular websites, or via affiliate businesses that often "have local connections or knowledge".

Stamford Law Corporation director Yap Wai Ming, who sits on the editorial board of the Gaming Law Review And Economics journal, says: "Unregulated online betting sites normally harvest information from visitors and, with no regard for data protection laws, spam them with information about the sites."

Pinsent Masons' Mr Tan adds that online gambling companies have advertised by entering shirt sponsorship deals with football clubs in top leagues.

Until last year, Real Madrid players - including household name Cristiano Ronaldo - sported jerseys bearing the logo of Bwin, which is the world's largest publicly traded online gambling firm.

This season, at least three English Premier League teams - Stoke City, Aston Villa and Burnley - are sponsored by such companies.

"This brings tremendous amount of exposure as these games are widely viewed."

A handle on the Bill

The Bill is intended to plug a loophole in laws which were enacted before the Internet era and so do not expressly address remote gambling, says an MHA spokesman.

"(This is) an extension of our approach to terrestrial gambling," she says. "The provision of gambling is not permitted unless specifically allowed for, by way of an exemption or licence."

Furthermore, remote gambling poses the additional risk in that it could potentially become a conduit of funds for other illegal activities and syndicated crime.

Mr Christian Kalb of Paris-based consultancy CK Consulting says that such activities include money laundering and match-fixing.

He adds that dozens of gambling operators are based in offshore tax havens, such as Costa Rica, Kahnawake in Canada and Alderne in the British crown dependency of Guernesey.

Stiff laws under the Bill would protect those under the age of 21, in tandem with the age limit of the two casinos here.

NTU's Associate Professor Lim says: "While (those under 21) are savvy with online technology, they may not be as savvy with the ways of the world. For example, they may not realise that unlike physical casinos where it is illegal to rig games, there are illegitimate online sites that do not play fair."

Statistics on the number of youth involved in remote gambling are not readily available, she says. "Even if the websites practise age verification, it is very easy for the under-aged to check the box and move on."

Stamford Law's Mr Yap offers another dimension to the need for stricter laws to protect the young. He says: "Many cases of loan-shark or gambling syndicate runners brought before the courts have involved teenagers, which goes to show how easily influenced they can be."

The MHA spokesman tells Insight that social games that simulate gambling are another cause of concern, because they "may result in youth becoming desensitised to actual online gambling products in the future".

The broad wording of the law in this respect has not gone unnoticed, and some observers fear that innocuous social games might be implicated.

The Bill defines a "gambling service" as "a service for the conduct of a game of chance where the game is played for money or money's worth, and a customer of the service gives or agrees to give money or money's worth to play or enter the game".

"Money's worth" in turn includes virtual credits, coins, or tokens purchased within a "game of chance", which includes any game that involves an element of chance and/or skill.

Mr Yap notes that many social games - including the likes of Farmville and Candy Crush - are largely based on "random generators" and thus can be construed to fall under the purview of a "game of chance".

"If all social games that have some element of chance are regarded as gambling and thus outlawed, the digital development industry may suffer a serious setback," he says, calling for more clarity to be introduced to the Bill before it is passed.

Mr Luc Delany, chief executive of the Britain-based International Social Games Association, agrees.

He tells Insight that this might have an unintended consequence on an industry that "has nothing to do with real money gambling".

"(This) could outlaw the 'freemium'-pricing model, which relies on virtual goods and currency that have no real money value in the real world," he says.

Yet others feel that the laws might end up driving activity underground.

GBGC chief executive Warwick Bartlett tells Insight that the exemptions granted under the Bill will likely protect the existing monopoly gambling services.

"The danger is that players will resort to illegal gambling operators where the payout ratio is higher," he says.

MP Phua, likewise, feels that the allowance for exemptions is the Bill's largest flaw.

She says: "It sends the signal that online gambling, as long as it is through an approved operator, is acceptable. Two wrongs don't make a right."

waltsim@sph.com.sg

This article was first published on Sept 13, 2014.
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