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9
Jul 06
Sun

Gambling for the Cup


Asia might have no teams in the knockout stage of the World Cup, but they are still very much involved.

WHEN Totti slotted in the cruel penalty goal that sent Italy, Australia and a Chinese commentator by the name of Huang Jianxiang ballistic (all for different reasons), they weren’t alone. In that same instant around the world, millions of dollars changed hands among thousands upon thousands of people who were now either revelling in a sudden influx of pocket money or despairing the loss of several days’ worth of wages.

Backtrack to four years ago and the 2002 World Cup. Being the first Cup to be hosted in Asia, reasonable timezone differences meant that Australia was truly exposed to World Cup football for the first time. Only having a passing interest in football before that, I quickly gained an appreciation for the game watching the best players in the world strut their stuff.

I remember getting caught up in the event and placing a couple small bets on matches at the local TAB, just like people who have no idea about horse-racing do once a year at the Melbourne Cup. I was pretty proud with my winnings until I spoke to my friend Cheng about it, who scoffed at my paltry wagers. Cheng would have been an international student had he not obtained an Australian permanent residency visa through some vague family diplomatic connections. He was a fairly typical international student, his overseas study being funded by money sent from home. Not exactly poor by student standards, but not from an obscenely rich family either – you know the type, those who buy penthouse apartments for their children to live in while they study in a foreign land.

Cheng bet on nearly every match, each wager usually a triple digit number. Often he’d place a bet through his brother-in-law back in his home country, who would forward the bet onto a local bookie of some description using the cryptic quoting system of Asian odds (where giving or “eating” quarter-balls, half-balls and full-balls give a wider variety of betting choices rather than betting on a straight win or loss). When Cheng couldn’t get in contact with him, he’d resort to the TAB instead.

The 2002 World Cup was full of upsets, and a long string of bad bets saw him saddled with a deficit that was almost four digits long by the time Brazil held up the trophy. Nonetheless, I had been briefly exposed to the Asian culture of gambling that, in my naivety, I never knew existed.

Gambling is very much a cultural phenomenon in Asia. Just like going out for a drink at the pub at the end of the day is usual in some parts of the Western world, making a casual visit to the casino is a similar pastime in Asia. Similar to how we view drinking, gambling in Asia doesn’t attract the same sort of social stigma as it does here. Sure, gambling addicts can end up ruining their lives and the lives of those around them, but this is as large a social problem as alcohol addiction. The fact is that most casual gamblers don’t operate in the extreme, and it is just as easy to blow $100 on alcohol during a night as it is on the dai sai tables. (And with gambling there’s the advantage that you probably won’t end up in compromising positions on people’s mailboxes the next morning.)

When I was younger, I would often accompany mum to a relative’s or family friend’s house, and while I would muck around with the other kids, the grown-ups would always be busy at it on the raucous mahjong table. After the clattering of mahjong tiles had stopped, signalling the end of one hand, chips would be tossed across the table to the victor (along with mutters of disbelief or cries of joy). They always played for money. And I always remember responding with shock when people either lost or won a hundred or so dollars during the course of one night (which to a ten year-old was quite a lot of pocket money, especially for one who never got any pocket money!).

Interestingly, there were never any sour faces after those games, even from those who had lost the most. There were a few choice profanities tossed around by the losers, but it was always in good jest. I recall asking mum why they had to play for money and she explained that it was more fun that way, and the winner would always go off and buy everyone lunch the next day anyway, so in reality the money came back to you in the end. So really, even when the money never actually made a difference, they always still played with it.

Of course, in a casino, the money doesn’t always come back to you in the end, but I suspect it’s that culture of willing to take a loss and not see it as a loss but an expense incurred in exchange for a form of entertainment – a valid way of spending your money – that makes gambling so natural to many Asians.

It’s no coincidence that when you visit Star City at any given hour of the day, Asians will easily outnumber people of all other races on the casino floor. I was in Macau casino recently and was amazed to see that at 10.00am on a weekday, all the tables were at capacity, crammed with people two-rows deep, jostling to split their pair of aces, or place another hundred dollars on red.

The Asian gambling market is “officially” valued at about A$30 billion a year. That’s just the legal operations which operate under government license and pay their taxes. Underground betting organisations are estimated to comprise a massive 80% of the market, which means that the turnover of the whole market is well over $100 billion annually.

Clearly it’s a lucrative market. Centrebet, the Australian online bookmaker, is floating this week on the ASX, and in their prospectus they disclosed that they normally make about a 5% profit off their turnover. Who knows what unlicensed bookies make in their undeclared earnings?

Of course, the flow of wagers is not constant throughout the year, and it tends to spike heavily during large sporting events. And as far as large sporting events go, there is no larger one than the World Cup.

News articles abound of police cracking down on gambling for the World Cup. The Sydney Morning Herald recently ran a report of a police sting where a bunch of Hong Kongers and Malaysians were arrested. They had flown into Australia to run their sports betting operation and were nabbed in their hotel rooms with mobiles, computers, fax machines and tens of thousands of dollars in cash.

Illegal bookies often offer better odds (with odds changing in realtime and bets often being taken up until the final whistle), flexible betting systems (with exotic wagers on things such as how many corners there are in a game), and even personalised service, phoning up valued punters to ask if they’d like to place a bet on a match they’d probably be interested in.

Of course, it’s much harder tracking down gambling syndicates these days where electronic funds transfer makes everything so much less obvious. No longer do you have to lug a suitcase around to deliver on your wager. A bet is only a mouse click or phone call away.

I know someone who opened up an account with one of these underground online gambling operations. Unlike legitimate online operations, signing up only required a referral from a friend (since these operations don’t publicise themselves through traditional media channels), and a username. That’s it – no address, no contact details, not even money to fund his account with. The bookies extend all members an automatic line of credit, with normal accounts providing up to several thousand dollars of credit per day.

If an account goes into the red and hits a certain limit, the bookies will come around to collect. Without contact details, you might think that is a little difficult, but as all members come from referrals (with referrers effectively vouching for, and acting as guarantors for referees), a door knock from a debt collector with a penchant for dislodging kneecaps is only a few degrees of separation away. It’s a fairly insidious instant-credit facility which has shadiness written all over it, but nonetheless the odds they offer are quite competitive, and bets are taken and odds are recalculated all the way up to the final whistle. Conversely, I imagine that they would be reliable in paying up your winnings, since reputation is hugely important – and if the operators are shady, then surely some of their clients would be even shadier.

Meanwhile, during the World Cup a different group of punters hit the online bookies. Except that they aren’t really punters, but arbitrageurs. In traditional finance, an arbitrage is a transaction which exploits pricing mismatches in order to obtain a risk-free profit. For example, imagine you have two marketplaces in neighbouring towns that buy and sell widgets. The first town is selling widgets at $1.00, but in the next town, they are willing to buy widgets at $1.05. So you can buy a bunch of widgets in town A, drive over to town B and sell them for a 5% profit, which will be risk-free assuming the prices don’t change while you’re driving, or your car doesn’t break down on the way or something like that.

This principle works in the gambling world as well, since supply and demand is one factor which determines the odds bookies post. For example, in tonight’s Italy vs France World Cup Final, Italy might be odds on favourite to win the World Cup at $1.50, against France’s $2.00 to win (that is, if you give $1 to a bookie to bet on Italy to win, then you’ll get $1.50 back if Italy does win). However, if reports came out an hour before kickoff that Cannavaro and Buffon had eaten something dodgy at lunchtime and were out with diarrhoea, the sizeable influx of people betting on France to win would push France’s odds down and Italy’s odds up.

Because football betting occurs all over the world, this interaction of supply and demand tends to create pricing inefficiencies between different regions of the world. Casual gamblers often bet with their hearts. (Even Warren Buffet, for reasons of loyalty and sentiment, has been known to never bet against his favourite college football team, even if he knew they’d probably lose the game.) So in Italy, a stream of bets on the home side placed with Italian bookies would push France’s odds up. Likewise in France, patriotic French punters would cause the Italian odds to go up for French bookies. When that occurs you may get a situation where you can bet on Italy to win the Cup with a French bookie for $2.05, and then bet on France to win the Cup with an Italian bookie also for $2.05. Do the maths and you’ll see that if you place two $1000 with those two bookies, you’ll end up with a $50 profit no matter what the outcome of the match is. With the internet, you can place bets with bookies all over the world.

Because the World Cup is global, nationalism runs rampant, and the gambling turnover is mind-boggling, arbitrageurs have a bonanza during the whole competition. A friend has anecdotally estimated that the opportunities to place “sports arbs” (as they are known) have risen as much as fivefold during the last month.

In 2006, Cheng’s brother-in-law has since moved to America, but he still contacts him to place bets. He’s doing better this time around, being in the black. Unlike arbitraging – which is a mostly riskless, emotionless proposition when it comes to watching the match afterwards – Cheng said that knowing your money’s on the line makes matches that little bit more adrenaline pumping, that little bit more exciting and that little bit more sweet, when the team you’ve been cheering on thumps in a goal to win the match. That, and everyone else is doing it.

  11:51pm (GMT +10.00)  •  Culture  •   •  Tweet This  •  Comments (4)

This post has 4 comments

1.  Kev

I think the problems from alcohol in Asia would be very similar to the West. And I think the social stigma is very similar in both the West and Asia. Playing pokies and betting at the races is commonplace in Oz. I mean what other sporting event “stops the nation” like the Melbourne Cup? Look at the popularity of Texas Hold’em nights at the pub. If anything, alcohol and gambling go hand in hand.

I also don’t think that gambling in Asia is as relaxed as the mahjong table of your youth (though this would be ideal). From my personal experience it’s just as severe as here and probably worse, as I reckon Asians are willing to risk more, including everything; and the importance of the group and face. Some people, in order to be part of the group, will bet above their means to save face.

Around the time of the Asian Crisis I heard of quite a few suicides due to stockmarket speculation – Asians don’t ‘invest’ in shares, they punt. I’d say gambling creates a lot more social problems in Asia than the West.

Check out, “To Live”, an absolute classic. http://www.lovehkfilm.com/panasia/to_live.htm

2.  Stu

I disagree. Looking at alcohol, the west far outstrips the east in terms of per capita consumption of alcohol. This fact by itself does not mean that a country will have a higher prevalence of alcoholism. However, if you look at binge drinking, it’s endemic in parts of the west, particularly in America (even Australia isn’t quite as bad as America in this regard, let alone Asia). Not to say that Asians aren’t heavy drinkers – but I’m reasonably sure that statistics would show greater problems with alcohol in the west. There are definitely better epidemiological studies out there, but for example, look at http://www.teachervision.fen.com/alcoholism/substance-abuse/145.html

Pokies is quite an Australian phenomenon, and it does cause social problems for the minority of people (those who become addicted). The Melbourne Cup is a tradition – a once off national event which really can’t be waved around as evidence of a gambling culture. Quite the opposite – it’s the one occasion where betting, normally stigmatised, is legitimised for the day because everyone else is doing it and hey, it’s only once a year right? Texas Hold’em is a game of mixed chance and skill, so again, I wouldn’t agree that’s evidence of a gambling culture either (Hold’em’s popularity peaked in the US a little while ago – I’ve read articles that likened its surge in popularity being a fad rather than some sustained cultural shift).

I think your view of Asian gambling is somewhat skewed – perhaps influenced by the cultural stigma attached through a western upbringing. The horror stories stand out the brightest, and every family has one, or two or three gambling addicts which have brought misery to the extended family. But if you look at our age group, for Asians a trip to the casino or bookies is far more a regular event than it is for the typical Australian. Look at Chinese New Years abroad – families, young and old, sit down to gamble for several days straight. Very rarely will things get ugly – the percentage is extraordinarily low when you realise that most people will participate. I know a fair number of people, young and old, who regularly gamble (perhaps once a fortnight) and they all keep it in check. They aren’t all “willing to risk everything”, though I do agree they are willing to risk significantly more than the typical westerner. Again, I would analogise this to people drinking just to get drunk.

Sure, the threat is always there, but it’s like a gun society and the difference between Switzerland and America. Everyone may own a gun, but that doesn’t mean everyone will inevitably shoot everyone else.

You have to remember that gambling really is quite commonplace compared to the west. The sheer fact that there are more participants means that of course there will be more problems – but whether it’s something genetic that predisposes Asians towards gambling addiction (in the same way that Asians are genetically predisposed to being relatively alcohol intolerant) is debatable.

While gambling can lead to suicides, so does alcoholism – as well as depression, health problems, domestic abuse, sexual assault, and so on…

3.  Kev

I know my family and friends don’t sit down to gamble during Chinese New Year in Malaysia. Nor have the many families I’ve visited during Chinese New Year. Nor do I know of any gambling addicts in my family. I think your view has been formed from limited exposure to certain families and certain individuals. My view of Asian gambling isn’t skewed. Yes, it is amazing that Macau has so many casinos, but this is only a recent phenomenon motivated by Macau wanting to stimulate its economy. There used to be only one casino there. And a large number of these visitors today would be from mainland China, who only until the last few years have had access to legalised gambling. So just like HK Disneyland, it’s a novel thing to them.

I’ve been reprimanded for organising simple no-money card games at Malaysian country clubs and golf clubs. I’ve been lectured to by numerous people in Asia about their experiences with gambling and why I shouldn’t start. Ultimately, while it is a very social thing to gamble in Asia (just like it is in Australia), people still caution against it.

Why do younger Asians go to the casino and bookies? In Sydney, I think the freedom they have unshackled from their protective parents; boredom and wanting something to do at night because “shops close too early in Sydney blah blah” are key reasons. They are not as predisposed to outdoor / physical activities as locals, and have money to burn (which incidentally isn’t theirs, it’s their parents’). So the casino is ideal.

To give a local perspective, at everywhere I’ve worked, from the Opera House, to banks and brokers, after a night out drinking, people inevitably end up at the Casino playing Blackjack. At 2am in the morning, what else is there to do except maybe Kings Cross? And there is no stigma. The next morning people brag about their ability at counting cards in front of their managers.

Are you sure you are from Australia? At just about every workplace I’ve ever been at, most people gamble on something (last Friday I had offers on 4 different sporting events, including joining a punting club). Gambling is part of Australian culture. 2-Up is enshrined in the Australian psyche because of ANZAC Day. Channel 9 News used to have John Tapp, a horse racing caller, appear on the Friday and Saturday evening news for 5 mins out of its 30min broadcast analysing the odds and the horses. The Footy Show has its Lady Luck segment, and she donates her winnings to the Children’s Hospital. Some people think Makybe Diva is the greatest sporting achievement in Australia’s history. Ultimately, Australia’s sporting culture fits snugly with the gambling industry.

Of course, the above belies the seriousness of problem gambling. But I also think the fact that gambling is legalised in so many forms in Australia also means there is less stigma, as there is less need to go underground.

According to this book (which was written in 2001): http://www.spinneypress.com.au/153_book_desc.html

– One fifth of the world’s electronic gaming machines are in Australia.

– About 82% of adult Australians gamble, the highest rate in the world. 40% gamble at least once a week.

A Productivity Commission Report into gambling published in 1999 stated the following:

– “Gambling has been a feature of Australian society and its economy since the arrival of the First Fleet. But even by Australian standards, the recent proliferation of gambling opportunities and the growth in the gambling industries have been

remarkable.”

– “Australia has a long association with gambling and has been at the forefront of

many developments in the industry. The ‘totalisator’ used in racing around the world was invented here. Australia also has a longer history of legal gaming machines than most countries and leads the world in their technology.”

So I’m not convinced that gambling is more commonplace in Asia than Australia. Illegal gambling may be more prevalent (but that’s because there are less legalised forms of gambling); and I think that’s why there may be more publicity, because illegal gambling sounds exciting and sexy.

4.  Stu

On the contrary, I think that your exposure to different people has been relatively limited in this particular aspect.

No stigma in Australia? Going at 2am after a night on the town is one thing. What if you were to say just as you’re leaving work – I’m off for a quick gamble to the casino before I head home?

Gambling may be a facet of Australian culture, but it is not something you associate Australians with.

You can also compare volumes. As reported by Reuters: “Hong Kong may not have a team at the World Cup but that has not stopped interest reaching stratospheric proportions because of the craze for soccer betting. The current World Cup competition in Germany is the first since Hong Kong legalised soccer gambling three years ago and the territory’s already healthy appetite for betting is at fever pitch. Soccer gambling was legalised to curb illegal soccer betting, which totalled at least HK$20 billion in 2001, the government estimates.” That’s A$4-5 billion on one sporting event alone for a region of 6 million (not counting legalised betting).

But enough conjecture, have a read of some excerpts which would tend to confirm my view over yours:

http://www.asian-nation.org/gambling.shtml

Many Asians — especially Chinese — consider gambling an accepted practice at home and at social events, even among the young. Chinese youths often gamble for money with aunts, uncles and grandparents. While growing up in San Francisco’s Chinatown, Lee took betting to absurd levels — wagering on whether the teacher would assign homework. On rainy days, he bet on which drop would first reach the bottom of the classroom window.

http://seattlepi.nwsource.com/local/161827_gambling24.html

“The more I thought about it, the more I thought it has to do with our culture,” said Assunta Ng, longtime publisher of the Northwest Asian Weekly and the Seattle Chinese Post. “American guys, they go to bars after work. A lot of guys in Hong Kong, Taiwan or Vietnam, they gamble. It’s an acceptable thing.”

Connie Cheng, clinical manager of adult mental health with Asian Counseling and Referral Service in Seattle, said that for many men and women from China and other parts of Asia, gambling is a deeply ingrained social activity. “There is a socialization factor; this is how we get connected,” she said.

“It’s not accepted if we drink too much, or do drugs,” Cheng said. But for many Asian Americans — and especially for recent immigrants who were raised in cultures where gambling is accepted — gambling halls seemingly around every corner can be a potent lure. “It’s almost like they’re drawn there,” she said. …

The horse racing industry in Hong Kong annually rakes in about [US] $12 billion. In a city of 6 million, according to the 2001 book “Telling Lies and Getting Paid” by Michael Konik, 750,000 people have telephone betting accounts, and 1 million people place bets on each race day at any of 125 off-track outlets.

Publisher Ng emigrated from Hong Kong in 1971. She said her 73-year-old mother has also thought about coming over, but is hesitant, in part because she wouldn’t be able to find proper games of mah-jongg, an ancient Chinese game involving tiles. Her mother plays regularly with old friends, Ng said — and for money. “Always for money,” she said.

http://www.sfgate.com/cgi-bin/article.cgi?file=/chron

icle/archive/2001/04/08/MN112806.DTL


“Gambling is so much a part of our culture that a lot of people take it as an activity rather than view it as gambling,” said Woo, a San Francisco native who remembers growing up watching adults play mah-jongg for money during birthday parties and other celebrations.

Former gambler Christine Uong of San Francisco said gambling “is in our blood,” a phrase frequently said by Asian Americans trying to explain why so many flood the card clubs and casinos.

“It is in the culture,” said Uong, 47, who was born in China and grew up in Vietnam. “In the old days in China, they played the dice and they counted the sticks. Those games have been around for ages before poker or slot machines. They were games that children played. And when you grew up, you started playing with money.”

http://www.asianweek.com/080599/feature_gambling.html

“Here in the U.S., we talk a great deal about substance abuse and alcohol abuse, but not about gambling,” said Lee. “You have one million gamblers in California, and each of those gamblers affect 10 to 23 other people? Gambling is a severe problem that we need to pay attention to.”

Lee stressed that the program aims to treat both the family and gambler equally. This is particularly important when treating Asian Americans, agreed Mark, because family members are often the ones to bail out the problem gambler. “It’s almost as if families need to be treated alongside the gambler, because it’s the family that keeps the gambler from getting help, or getting out.”

Mark’s own parents knew of his gambling problem, but were kept in the dark when he was convicted of embezzlement.

“In the Asian culture everything gets swept under the carpet,” he said. “As serious as it has been, it’s kind of the philosophy of ‘My kids could never do wrong.’

“Yeah, there was a problem, but it was out of sight out of mind …In the Asian community that’s just how it is, and it’s not the most productive or normal way of handling things, but that’s the way it is,” he added.

“Until there is violence or incarceration or some really bad things happen, the families don’t get involved and look the other way,” Mark said. “In the Asian community there is a lot of dollars there and bailouts also happen. If someone gets in trouble and money is owed, the family bails them out, only to the detriment of the gambler.”

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(Please don’t construe any of this as necessarily condoning gambling – I only point out my observations on it.)

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