Euro 2016 Sparks Online Gambling Craze in China

Euro 2016 has everyone in world excited, not just the Europeans. So much so, that many punters are happy to put money down on their favorite team or the squad they think will take home the championship. In China, the tournament has sparked a craze in online betting which has caused China’s tech giants to put new and more sophisticated measures in place to crack down on illegal soccer betting.

In Hangzhou, in Eastern China for instance, bettors like Mr Chan, couldn’t watch as Portuguese striker Cristiano Ronaldo got ready and lined up a penalty kick in a difficult to predict Euro 2016 group match against Austria. Chan, like many other locals has a lot to lose since they had bet tens of thousands of yuan on Portugal to win.

In the group stage, in that match with only 10 minutes left on the clock in Paris, Real Madrid star Ronaldo ended up hitting the post, and so the game ended in a draw. That meant that Chan lost the money he had bet using WeChat, Tencent Holdings Ltd’s popular messaging app that has taken over instant messaging in China.

Due to the massive surge of Chinese interest in global soccer matches and tournaments, a major side-effect has been a record spike in illegal gambling online. China is invested in football. This has prompted the local authorities to organize multi-million dollar busts and raids on betting rings. And their latest plan is to get local tech giants like Tencent and the Alibaba Group Holding Ltd to crack down on any and all gambling activities that happen on their apps.

“There are so many gamblers, groups and platforms during the European Cup, though, that I think it’s really hard to find all of them,” said Chan, who when spoke to Fortune Magazine about his betting habits, asked to use his surname only since most gambling online in China is illegal.

Many Chinese are using private chat groups on WeChat to bet in circles where most of the bettors are ‘friends’. Winnings got distributed via bank transfer, Alibaba-linked Alipay, WeChat or ‘red packets’, which are digital versions of traditional envelopes stuffed with cash for Chinese holidays and special occasions.

With the UEFA European Football Championship final coming up in Paris next Sunday, Chinese police are warning local media that they have noticed a large increase in illegal betting and gambling online. They reported in the news that in a single bust last week, Guangdong police arrested 147 people and froze funds worth nearly 100 million yuan ($15 million) alone.

On Sunday, the Public Security Ministry of China told media that their office had detained 236 people across four provinces involved in illegal online betting on the championship. Alibaba and Tencent have acknowledged the issue and have installed anti-gambling systems in their apps to weed out and spot illegal behavior. But the system is not perfect.

Alibaba has an affiliate, Ant Financial, who operates Alipay. They have a three-tiered system to spot gambling, with algorhythms analyzing user behavior and identifying odd behavior with live human checks.

“If we find suspicious accounts, then we are going to freeze the account directly. It only takes a few hours from the first to the last step,” said Alipay spokeswoman Miranda Shek, adding the firm was looking to adding more anti-gambling staff.

Tencent also said publicly that it would do more to eliminate gambling on all its platforms like WeChat. Which would include restricting groups suspected of gambling behavior and punishing or banning individual account holders. So far, they report they have put limits on more than 8,000 WeChat groups, and are limiting the payment and ‘red packet’ capabilities on more than 6,000 accounts. It’s a start.

Recently, China’s interest in football has created an investment boom which has propelled the growth and knowledge of the game in the general public. Many Chinese firms have invested in overseas clubs, player agencies and media rights firms. Even so much as a few global soccer stars have moved to China in multi-million dollar deals to help grow the game locally.

“With the European Cup everyone’s betting on soccer, but also over the last couple of years China’s soccer market has developed rapidly. Big investments and star names create a real lure,” said Hu Naijun, an assistant professor at the University of Science and Technology Beijing.

An anonymous organizer who spoke about his online gambling group, said he and four other organizers had a pot of 5 million yuan ($750,706 USD) and that dozens of bettors would join in for each game hoping to win and split the earnings.

“In one night there will be millions placed in bets,” the anonymous source said, pitching in that it had become a new and enticing lucrative business. “For the final, we’ll probably go to Macau or Hong Kong and spend the whole week in the presidential suite.”

Chan told media he’ll be betting on Portugal, who are through to the semi-finals for Euro 2016 and could just win it all. Or so you can bet on it and go through the thrilling emotions that Chan experiences when betting; “I often can’t watch, my heart just can’t take it, I feel nervous at every chance. Especially when Ronaldo missed the penalty. I almost passed out,” he said.