By James Porteous, Research Head, ARF Council on Anti-Illegal Betting & Related Financial Crime
Macau junket operators and their close associates in Chinese organised crime groups (triad societies) have long been key drivers of online illegal betting in Asia (both sports betting and online casino).
Recent regulatory and legal developments in Macau, partly motivated by efforts by the Chinese government to prevent capital flight caused by online illegal betting, have had a major impact on junkets, and the Asian online illegal betting landscape,  culminating, in 2023, in the arrest of the leaders of two of the biggest junket operators, Suncity’s Alvin CHAU and Levo CHAN of Tak Chun, who were subsequently sentenced in Macau to 18 and 14 years in prison respectively, on hundreds of charges relating to organised crime and illegal betting.
As a result of these regulatory changes, epitomised by the imprisonment of both CHAU and CHAN, online illegal betting operators have moved their bases-of-operations into even less regulated jurisdictions such as Cambodia, Myanmar and Laos, and expanded their business lines into cyber-scams and crypto fraud.Others have moved operations outside Asia (including to Dubai and Eastern Europe) and/or attempted to legitimise operations by investing into offshore Licensed but Under-regulated gambling companies.
The landscape is important for stakeholders in racing and other sports to understand, since these operators are transnational enterprises whose betting businesses touch on racing and all sports, and who are increasingly diversifying into Europe and the Middle East.
Macau is the only part of China where casino gambling is permitted, and pre-pandemic, its gross gaming revenue was five to six times greater than that of Las Vegas.
Until 2015, as much as 70%of this revenue was generated by VIP customers recruited by junket operators,mostly from Mainland China. A large part of this VIP revenue was laundered proceeds of corruption, and/or an underground means of moving money out of China. China’s anti-corruption campaign and pressure for Macau to diversify its economy meant that the percentage of Gross Gaming Revenue contributed by the junket industry had begun to fall in the years leading up to the pandemic, but it still contributed over 40%.
Although junket operators began as recruiters of gamblers, they diversified into the provision of credit so customers could evade Mainland China’s strict capital controls, and as a result also had to become debt collectors when these loans were not repaid.Since both of these key business lines are illegal in Mainland China, junket operators relied on extra-legal means, especially connections to organised crime, to collect such debts. Consequently, triad societies (Chinese criminal gangs) have long had extensive involvement in the Macau casino industry.
The biggest junket operators made enormous profits comparable to Macau’s licensed casinos. Because of the close links of junkets to organised crime, these profits supported a host of other criminal enterprises and money laundering, as well as seemingly legitimate investments, across Asia and beyond.
In the early 2000s,forward-thinking junket operators began diversifying to also provide online gambling, first to their core clients in Asia, then globally. This vastly expanded their potential market and increased revenues by orders-of-magnitude over their original modus operandi.
Unregulated and Under-regulated betting websites run by junket operators, while profitable in themselves, were also a useful channel of credit settlement between junkets and their clients, and to disguise proceeds of other criminal enterprises as legitimate online betting profits. Most, if not all, of the largest junket operators had such operations, with smaller junkets acting as customer referral agents.
Online betting thus became an extremely lucrative business until the authorities in Mainland China increased their enforcement efforts from around 2018.
In 2019, the authorities in Mainland China intensified an ongoing crackdown on illegal betting, cross-border gambling and related illicit capital outflows. State-linked media specifically highlighted the biggest Macau junket operator as a threat to China’s social and economic stability because of Suncity’s massive online illegal betting operations.
In 2021, the Chinese government revised the Criminal Codeto outlaw cross-border gambling (including online betting), in effect criminalising junkets and related illegal online betting operations.
In 2022, the Macau government amended the 2001 Macau Gaming Law, which regulates the operations of casino operators. The new Gaming Law in effect ended the junket business model by criminalising their underground banking operations and subjecting junkets to regulatory oversight (previously, oversight had been inadequate to non-existent) and ultimately, leading to the demise of the largest junket of them all: Suncity.
Formerly the largest junket responsible for as much as 50% of high-roller gambling turnover in Macau, Suncity is no longer a licensed Macau junket operator, though various related entities trading under different namesare still believed to be involved in the casino industry in Russia, Vietnam and the Philippines.
In January 2023, former Chairman of the Suncity Group, Alvin CHAU, was convicted of 162 charges relating to organised crime, illegal gambling and fraud and sentenced to 18 years in prison. Sixteen co-defendants were jailed or given suspended jail terms. Thirty-six Suncity agents were convicted in the Mainland on similar charges and jailed for between one to seven years. This trial heard that Suncity had more than 60,000 agents on the ground in China recruiting customers for online illegal betting.
The alleged scale of Suncity involvement in online illegal betting is supported by the high-profile2019 investigation into CHAU and Suncity published in Mainland China’s state-linked media. This stated that Suncity’s turnover in Mainland China alone from online illegal betting operations based out of Southeast Asia was greater than that of China’s state lotteries (equivalent to turnover of ~USD 145billion a year).
Suncity reportedly operated or had an ownership interest in illegal online betting from the Philippines and Isle of Man,  as well as operations out of Cambodia and Vietnam also – but its primary target market in both cases were customers in Greater China,and elsewhere in Asia.
The demise of Suncity and the clampdown on the junket industry has caused disruption to the online betting industry across Asia, and displacement further afield into the Middle East and Europe.
This new complexity is further underlined by the fact that certain operators are attempting to legitimise Asian-facing betting operations via investments in listed gambling technology companies and involvement in offshore betting licensing hubs.
This has and will continue to contribute to the hybridisation of online betting as described in the ARF’s The State of Illegal Betting Report –the blurring of the lines between Unlicensed and Unregulated illegal betting and Licensed but Under-regulated offshore illegal betting – and the confusion in stakeholder and customer perception as to whether such operations constitute legal or illegal activity.
Meanwhile, junket operators have and will continue to diversify their online betting operations across Asia – especially in jurisdictions vulnerable to corruption and regulatory weaknesses. This has and will continue to present major negative impacts to societies in these jurisdictions, such as the corruption of local officials, and violence and vice associated with the industry.
 DevinO’Connor, ‘China Warns Cross-Border Gambling Operators, Ministry to Strengthen Safeguards’, Casino.org, 17 February 2022 (‘https://www.casino.org/news/china-warns-bad-actors-regarding-cross-border-gambling/accessed 10 March 2023)
 Pierce Chan, ‘Macau’s DICJ releases list of 36 licensed junkets for 2023, down on previous years’, Inside Asian Gaming, 4January 2023 (https://bit.ly/3RD6bK0accessed 6 February 2023)
 ‘DICJ cuts number of licensed junkets to just 46 in 2022’, Inside Asian Gaming, 27 January 2022 (https://bit.ly/3Y853jG accessed 6February 2023)
 Macau Judiciary Police press release (http://www.pj.gov.mo/Web//Policia/202111/20211129/12920.html)and full press conference recording via Macau Daily News, 28 Nov 2021 (https://www.youtube.com/watch?v=OzmeONTFDhA accessed 10 March 2023)
 ‘Junket boss Levo Chan heard okaying illicit bets: court’, GGR Asia, 30 January 2023 (https://www.ggrasia.com/junket-boss-levo-chan-heard-okaying-illicit-bets-court/accessed 20 March 2023)
Official verdict on criminal case involving Suncity, Office of the President of the Court of Final Appeal, 18 January 2023 (https://www.court.gov.mo/zh/subpage/news?id=2799accessed 20 March 2023)
 Martin Purbrick, ‘The Displacement of Illegal Betting and Transnational Organised Crime’, Asian Racing Federation, January 2023 (https://www.asianracing.org/email/202301qb-the-displacement-of-illegal-betting-and-transnational-organised-crimeaccessed 13 March 2023)
 ‘How China’s Crackdown on Illegal Betting Impacts Global Betting Markets’, Asian Racing Federation Council on Anti-illegal Betting & Related Financial Crime, September 2021, p.7 (https://assets-global.website-files.com/5fbe2bde2b2ef4841cd6639c/613077d94afe115ac35264e3_How%20China%27s%20Crackdown%
20on%20Illegal%20Betting%20Impacts%20Global%20Betting%20Markets_v2.pdfaccessed 13 March 2023)
 T. WingLo , Sharon Ingrid Kwok, Triad Organized Crime in Macau Casinos: Extra-legalGovernance and Entrepreneurship, The British Journal of Criminology, Volume 57,Issue 3, 1 May 2017, Pages 589–607, https://doi.org/10.1093/bjc/azw014
 JohnLangdale, Transnational Crime, Money Laundering and Illegal Online Betting in Southeast Asia, in ARF Council Quarterly Bulletin, May 2023 (https://assets-global.website-files.com/5fbe2bde2b2ef4841cd6639c/6450c156ed8e3713a491b663_May%202023%20Bulletin_final.pdf)
 MartinPurbrick, Macau Casino Junkets, Illegal Betting and Organised Crime, in ARF Council Quarterly Bulletin, May 2022 (https://assets-global.website-files.com/5fbe2bde2b2ef4841cd6639/6290288fb547fe156d63c274_ARF%20Quarterly%20Bulletin_May%202022_.pdf )
 JamesPorteous, ARF Council, How China’s Crackdown on Illegal Betting Impacts Global Betting Markets, September 2021 (https://assets-global.website-files.com/5fbe2bde2b2ef4841cd6639c/61aed489a8a2fec2117b1184_How%20China%27s%20Crackdown%
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 BenBlaschke, ‘Macau law firm says amendments to Gaming Law a clear reflection ofChina’s shifting priorities’ Inside Asia Gaming (https://www.asgam.com/index.php/2022/07/14/macau-law-firm-says-amendments-to-gaming-law-a-clear-reflection-of-chinas-shifting-priorities/accessed 10 March 2023)
 ‘Amendment toChina’s criminal law targeting foreign casinos to include 5 to 10 year jailterm’, Inside Asia Gaming, 22 October2020 (https://www.asgam.com/index.php/2020/10/22/amendment-to-chinas-criminal-law-targeting-foreign-casinos-to-include-5-to-10-year-jail-term/accessed 10 March 2023)
 BenBlaschke, Macau law firm says amendments to Gaming Law a clear reflection ofChina’s shifting priorities, Inside Asia Gaming, 14 July 2022 (https://www.asgam.com/index.php/2022/07/14/macau-law-firm-says-amendments-to-gaming-law-a-clear-reflection-of-chinas-shifting-priorities/accessed 20 March 2023)
 Thereare no official figures for this, but this is the generally accepted figureamong industry sources and Macau gaming analysts
Official verdict on criminal case involving Suncity, Office of the President ofthe Court of Final Appeal, 18 January 2023 (https://www.court.gov.mo/zh/subpage/news?id=2799accessed 10 March 2023)
 The 12other guilty parties – all Suncity executives, agents or investors – are PhilipWONG Pak Ling (王柏齡); CHEONG Chi kin (張志堅);Tim CHAU Chun Hee (周振熙); Ali CELESTINO (馬天倫);SI TOU Chi Hou (司徒志豪); Ellute CHEUNG Yat Ping (張一平);LOU Seak Fong (盧石峰); HO Cheng I (何靜儀);LEONG Su Weng (梁樹榮); Vincent LOI (呂文傑);AU Wang Tong(歐宏東); DANG Yonggang (黨永剛)(https://www.court.gov.mo/zh/subpage/news?id=2799);
 PhilipConneller, ‘China Court Convicts, Imprisons 36 Suncity Operatives’, Casino.org, 4 October 2022 (https://www.casino.org/news/wenzhou-court-convicts-imprisons-36-suncity-operatives/accessed 1 March 2023)
 TonyLai, ‘Thirty-five defendants plead guilty in Wenzhou gambling crime caseslinked to Alvin Chau’, Macau BusinessDaily, 15 August 2022 (https://www.macaubusiness.com/thirty-five-defendants-plead-guilty-in-wenzhou-gambling-crime-cases-linked-to-alvin-chau/accessed 7 June 2023)
 ‘特大国际网络赌博平台深度渗透国内’, 人民网,8July 2019 (http://finance.people.com.cn/n1/2019/0708/c1004-31218699.htmlaccessed 10 March 2023)
 ‘'Goodriddance': Villanueva says reported POGO exodus 'not a loss' for Philippines’, CBN News, 29 June 2020 (https://bit.ly/3LkYl6iaccessed 10 March 2023)
 ‘MeetMr Chau’, Josimar, 16 June 2022 (https://josimarfootball.com/meet-mr-chau/accessed 10 March 2023)
 Suncityhas repeatedly been identified in gambling industry press to operate bettingwebsites through Isle of Man-registered, UK-licensed TGP Europe Limited, FesugeLimited and Xela Ltd. In the Philippines, it operated companies named directlyafter Alvin CHAU Cheok Wah and SC Ventures (SC = Suncity) which have beenpublically named by regulators as run by Suncity. Through TGP, Suncityreportedly licensed betting brands including 138.com, 12Bet, Fun88 and TLCBetamong others. Although these brands are licensed to operate in UK, they alsohave Asia-facing mirror websites not covered by the UK’s regulatory regime.Xela Holdings Limited (Xela) was reported to be the online arm of Suncity andheld a licence to operate online betting granted from the Isle of Man GamblingSupervision Commission.
 For thepurposes of this report, defined as Mainland China, Macau and Hong Kong SARs,and Taiwan.
 ‘TheState of Illegal Betting Report’, Asian Racing Federation, 18 May 2022, p.10 (https://assets-global.website-files.com/5fbe2bde2b2ef4841cd6639c/62844a249c7d1e17ec718f02_State-of-Illegal-Betting-2022_v11-RGB-opt.pdfaccessed 10 March 2023)