KONGBrazil to win the World Cup? Don't bet on it. Germany? Don't bet on
that either. Turkey? Very risky. Indeed, if you like the occasional gamble and
are unlucky enough to be in Hong Kong take my advice and don't bet at all. The
risk: losing your money? No, a criminal record.
This place, which proclaims itself
"Asia's world city" and the regional "cyberport," this supposed bastion of
competition and risk-taking, has scored a breathtaking own goal. Just in time
for the World Cup, the government has pushed through legislation outlawing
betting on any event outside Hong Kong.
The only betting now permitted within
Hong Kong is on local horse racing or a lottery. So be warned, tourists and
visiting businessmen: If you log on to the Internet or pick up the phone and
place a bet with an online site or your bookmaker back home, you will be
committing a crime.
Since the World Cup began, thousands of
police hours have been devoted to tracking down now illegal betting through
offshore centers, or through adjacent Shenzhen and nearby Macau, where gambling
is the main industry. Such police priorities are shocking in a city where it is
cheaper to smoke heroin than tobacco and where more than 50 percent of software
used by businesses is pirated.
Draconian but probably futile oppression
of honest gamblers is in keeping with the current government's record of
protecting local vested interests at the expense of freedoms and of the economy.
One big interest is the Hong Kong Jockey
Club, which runs local horse racing and a lottery, and thus the only legal
gambling. It is an efficient organization with professional management, an
excellent computerized gambling system and off-course betting shops all over
town. Some of its monopoly profits go to socially safe charities and some to the
government. But it is also an elite private club with splendid facilities for
its few thousand members, and living conditions for horses that Hong Kong's poor
However, the biggest beneficiary of the
monopoly is the government. Gambling is in the blood here, so racing generates
huge turnover. Betting taxes averaging 14 percent of turnover raise $2 billion a
year, or around 8 percent of total government revenue. But offshore Internet
betting on other sports, notably soccer, has been eroding the monopoly revenues.
Long before the success of Asian teams at
the World Cup, locals had become avid followers of the likes of Manchester
United. Yet Chief Executive Tung Chee-hwa's government refuses to recognize that
soccer and Internet gambling are here to stay. Instead of responding by
encouraging the development of Hong Kong as an Asian center for well-regulated
gambling on all kinds of sports, collecting tax on profits rather than levying
duties on turnover, it has chosen to outlaw it.
The other vested interests quietly
cheering the ban are the syndicates that run local illegal (tax-free) gambling.
This has long been a lucrative activity but illegal race betting had been losing
business to the Internet and phone-based soccer and other gambling being offered
by international firms such as Ladbrokes and Victor Chandler. Now, courtesy of
the government, illegal bookmakers connected to the criminal gangs known as
triads have been handed soccer betting on a plate.
The legislation could even be viewed as a
breach of Hong Kong's Basic Law, or mini-constitution, which guarantees freedom
of movement of capital. Making it illegal to transfer money overseas to conduct
what is a legal business transaction in, say, London could become the thin end
of a wedge. Will stock options and hog futures be next?
The legislation also introduces an
extraterritorial aspect into Hong Kong laws, with dangerous implications for its
foreign trade relationships as well as local freedoms.
At the least, it is another example of
Hong Kong failing to move with the times - and then wondering why its economy
remains in the doldrums while China and most of the rest of the region are