China Sentences Affiliates of Online Casinos to 10 Year Prison Terms

Law enforcement agencies in China continued the crackdown on internet gamblers as well as promoters of online sportsbooks and casinos. Despite the government’s best efforts to stop online gambling, which is currently illegal in mainland China, the number of Chinese citizens gambling at online casinos has been rapidly growing each year.

Gamblers in China are beginning to discover the convenience and dependability of online casinos and sportsbooks, over local bookies, who frequently disappear with the money or refuse to acknowledge that a bet was even placed.

The Chinese legal system is becoming overwhelmed by a deluge of freshly arrested online gamblers, and sportsbook casino promoters. Judges of the Peoples Republic of China Criminal Courts began to sentence affiliates or promoters of online casinos to 10 year prison terms under the strict Chinese gambling laws, in an effort to discourage the spread of illegal online gambling.

The Criminal Act of 2006, introduced a new charge of ‘operating an illegal casino’, which is punishable by a ten year prison term as well as a large fine. Promoters, who are also known as affiliates, of online sportsbooks in China generate large commissions by introducing new players to specific online casinos and sportsbooks.

All losses generated by gamblers referred to the casino by the affiliate are usually equally split between the casino and the promoter. The affiliates are now arrested and charged with the ‘operating an illegal casino’ offense, since the affiliates receive – ‘a substantial portion of revenues generated by the casino from the gamblers referred by each affiliate, who therefore become part owners of the illegal establishment.’

The district court in the province of Fengtai estimates that twenty percent of all cases last year involved online football gambling. Just in the district court of Dongcheng province, there are twenty separate cases on the March docket, which all have a connection to internet gambling.

Gamblers are charged with illegally placing bets, while promoters/affiliates are charged with operating an illegal casino. All of the cases are related to online sportsbooks, specifically to betting on international football games and tournaments, which is illegal in the PRC.

February’s biggest case was that of Mr. Ben Fang and Mr, Chu Jianpeng who jointly made over seventy million Yuan by working as affiliates of an online sportsbook. The duo referred over 70 high-stakes punters to the sportsbook they were promoting. The punters lost millions of Yuan betting on football matches during the past year, of which 73.7 million yuan went into the pockets or Mr. Feng and Mr. Chu. Judges in China view affiliate programs as a form of a pyramid scheme or deceptive multi-level marketing program.

The two men, both thirty years of age, were convicted by the Judges at Dongcheng district court of running an illegal casino. Prosecution noted in the opening remarks that Mr. Ben was enriched by 70 million Yuan and Mr. Chu by 3.7 million Yuan from the pyramid scheme. Mr. Ben began gambling online after a fellow classmate recommended for him to play online casino in China, of which his friend was also an affiliate/promoter.

Mr. Ben lost a total of 300,000 Yuan between December 2009 and April of 2010. At this point Mr. Ben teamed up with Mr. Chu and became affiliate promoters of an online sportsbook to cover the original loses as well as earn money to play their own casino game of choice: baccarat.

Mr. Ben, who along with Mr. Chu were convicted and each sentenced to a 10 year prison term, stated in court that – ‘I never thought I’d be charged with running a casino. I didn’t even know about that charge. I thought the worst I could face was a few weeks of detention.’ In the past, offenders were released after a few weeks of incarceration at a local jail, and a small fine.

Mr. Zhu Xiping, the chief justice of the Dongcheng court remarked – ‘Online football gambling has now developed into a pyramid-like system, just like multi-level marketing.’