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The Growing Threat of Unregulated Betting in the Horseracing Industry

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The Growing Threat of Unregulated Betting in the Horseracing Industry

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September 1, 2024February 12, 2023
The Growing Threat of Unregulated Betting in the Horseracing Industry

The Growing Threat of Unregulated Betting in the Horseracing Industry

The horseracing industry is facing a severe threat from illegal betting markets that are not regulated, significantly jeopardizing the sport’s integrity and diverting billions in revenue. A prime example of such illegal operations is Citibet, an online platform that has become a major concern for the Asian Racing Federation (ARF).

The Unfair Advantages of Black Market Betting

Citibet operates primarily in southern China and is believed to handle a massive gambling turnover, estimated at around $50 billion annually. This figure is so substantial that it rivals the revenue generated by legal betting markets. According to a report by the ARF’s anti-illegal betting task force, Citibet’s operations are equivalent to about 25% of the legal turnover from horseracing in Hong Kong.

One of the most concerning aspects of Citibet’s activities is its allowance for punters to bet on horses to lose, much like legal exchange platforms. However, unlike these regulated platforms, Citibet operates in complete secrecy and refuses to share any information with racing authorities. This lack of transparency fosters an environment ripe for match-fixing and spot-fixing, severely compromising the integrity of the sport.

Illegal operators such as Citibet have a strong appeal because they can offer higher returns to bettors. This is possible because they are not burdened with costs related to taxes and regulatory fees, unlike their legal counterparts. These practices threaten the financial stability of the legal betting markets and deprive the sport of essential funding. This funding is crucial for various aspects of horseracing, including ensuring the welfare of the horses.

The Ease of Setting Up Illegal Bookmaking Operations

James Porteous, who serves as the senior due diligence and research manager for the Hong Kong Jockey Club (HKJC), has openly criticized these illegal operators. Porteous points out that the advancement in technology has made it easier than ever to establish an illegal bookmaking operation. Nowadays, an aspiring operator can get everything they need for just a few thousand dollars, allowing them to provide an experience nearly on par with that offered by high-profile regulated companies.

The illegals have zero regulatory overheads and zero concerns about reputational or ethical considerations about how they deploy technology to attract customers and boost their turnover.

To complicate matters further, the increasing presence of cryptocurrency in the betting markets is exacerbating the problem. Cryptocurrency offers anonymity and facilitates the easy transfer of funds across borders, making it a preferred choice for illegal operators. While regulators often manage to contact traditional payment gateways and block payments to black-market businesses, cryptocurrency transactions effectively bypass such measures, making it difficult to curb illegal activities.

The Need for Industry Vigilance

As illegal operators like Citibet continue to enhance their technological capabilities and expand their reach, it is imperative for the stakeholders in the horseracing industry to intensify their efforts to combat this growing menace. The preservation of the sport’s fairness and financial health depends on these efforts. Additionally, consumers must exercise caution and engage only with regulated betting platforms, which provide the necessary guarantees of safety, accountability, and transparency.

HorseRacing Betting in Asia

In Thailand, horse betting is tightly regulated and only permitted at a few specific venues, most notably the Royal Bangkok Sports Club and the Royal Turf Club. These legal betting options are controlled by the government, ensuring that revenue generated is subject to taxation and oversight, contributing to the country’s economy. However, the limited availability of legal betting opportunities has led to the growth of a significant underground betting market, where illegal operations thrive. These unregulated markets are difficult to control and often involve higher risks for bettors, including the possibility of fraud and lack of recourse in disputes.

Contrasting this with other countries in Asia, the situation varies widely. For example, in Hong Kong and Singapore, horse betting is legal and highly regulated, with large, state-run organizations like the Hong Kong Jockey Club and the Singapore Turf Club overseeing operations. These entities provide a safe, transparent, and reliable environment for bettors, with the added benefit of contributing significantly to public funds through taxes and charity donations. In contrast to Thailand, the prevalence of illegal betting in these regions is much lower due to the availability of legal and accessible betting platforms.

Meanwhile, in countries like Malaysia and the Philippines, illegal horse betting is more pervasive despite the presence of regulated betting markets. The allure of higher payouts and the anonymity of illegal operations attract bettors who are either dissatisfied with the odds provided by legal outlets or wish to avoid government oversight. This situation mirrors Thailand’s illegal betting market but on a larger scale, showing a common pattern in Southeast Asia where strict regulations or limited legal options drive bettors towards underground markets. The contrasts across these countries highlight the challenges and complexities of regulating horse betting in diverse legal and cultural landscapes.

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