Asian Racing Conference

Experts at ARC: Illegal Betting Enormous Threat

Money laundering goes hand in hand with illegal betting operations.

Martin Purbrick, director of security & integrity at The Hong Kong Jockey Club, provided an overview of the enormity of illegal betting and its threat to the integrity and financial health of the racing industry May 17 at the 37th Asian Racing Conference Seoul 2018.

Purbrick, who oversees a department of 220 people conducting investigations into organized crime and corruption threatening the HKJC, chaired the session on Anti-Illegal Betting and Money Laundering, and pulled no punches when he warned that illegal betting was growing twice as fast as legal betting, and that left unchecked, illegal betting could "kill" the sport of racing. 

"Understanding that risk prompted the formation of the Asian Racing Federation's Anti-illegal Betting Taskforce after the last Asian Racing Conference and we are making progress," Purbick said. "The involvement of law enforcement agencies is critical and we have established close ties with key bodies in Australia, Hong Kong and China." 

A measure of that progress will be documented in the coming months as part of a three-tiered focus in 2018. 
"To produce a tangible strategy going forward, we will do three things; firstly, in the next few weeks the Taskforce will publish a substantive white paper with the full results of our research into illegal betting; secondly, we aim to expand the Taskforce to include representatives from law enforcement agencies, academics, and representatives from the Northern Hemisphere to widen the impact of action against illegal betting; thirdly, we will convene the expanded Taskforce in the second half of 2018, to formulate and deliver a long-term strategy for racing," Purbick said.

Douglas Robinson, the HKJC's senior manager of due Diligence and research, security and integrity, provided the current update on the taskforce.  He outlined a summary of the current state-of-play of illegal betting markets in Asia, how they threaten the integrity of racing and sports, and how they are the prime cause of a number of associated social issues.

"Illegal betting is increasingly large and growing rapidly in Asia. It threatens the integrity of sports and facilitates money laundering. It causes gambling disorders and other associated social issues. It generates volume which eclipses legal operators," he said. "Solving the problem requires the cooperation of multiple jurisdictions, stakeholders and governments and greater cooperation with law enforcement agencies." 

Robinson said an estimated $140 billion is laundered via illegal betting markets each year.

Associate Professor Stacey Steele, associate director of the Asian Law Centre, updated the conference on recent developments on anti-money laundering in Australia, Japan, Korea and beyond. 

"There is a simple reason behind the current phenomenon of greater money laundering regulation. That is because of the increase in sports wagering on-line," she said. "The potential returns from wagering are now greater and it's cheap to launder money through wagering." 

Steele warned that anti-money laundering regulation was an issue in all sports including the racing industry. Recent law enforcement actions in Australia demonstrated the interaction between financial services and gaming regulation, she said; while the emerging challenge of dealing with increased betting on eSports was examined. 

Professor Changhun Lee (police administration, vice provost of foreign affairs, Hannam University) detailed the magnitude of illegal betting in the horse racing industry in South Korea and outlined counter-measures for the illegal horse racing betting activities.

He also questioned the accuracy of current estimates of illegal betting around the world. "We need to spend the time and money to more accurately estimate the size of illegal betting turnover," he said. 

Lee then presented a summary of his academic endeavors and statistical approach in his bid to produce an accurate estimate of the illegal betting on South Korean racing. He puts it at $US11.1 billion--much higher than previous estimates. 

He examined the cost-benefit analysis of controlling illegal gambling activities and the likelihood of betting migration from off-line betting to on-line betting when the on-line betting system is legalized and implemented in Korea.