Over the last few years, the number of Internet users and the categories of online services have no doubt skyrocketed. Daily necessities, entertainment and work are all available; even with gambling, people no longer need to take a trip to their local district Hong Kong Jockey Club branch or Macau. These conveniences are ideal for many. However, with gambling available on the Internet, it must be regulated and controlled by the government in order to prevent fraud, underage gambling, gambling addiction, domestic violence, loan sharking, and the like. In addition, it is of much concern to taxation authorities.

The global gaming market is an industry which generates revenues of up to hundreds of billion dollars each year. The Hong Kong Jockey Club, the only dominate company in Hong Kong authorised to organise gaming activities, alone contributes over 10% of the Hong Kong government's tax revenues. However, with more and more gambling activities available on the Internet, the Hong Kong Jockey Club experienced an 8% fall in betting turnover. Adding to the fall in betting turnover, the number of Hong Kong Internet users visiting online gambling sites has increased significantly by 19 percent to a total of 41 percent. From these figures, it is not surprising that the government is attempting to regulate gambling activities of all variety.

Gambling activities are regulated under the Gambling Ordinance which had been amended in 2002 bringing the 30 year old ordinance up to date and in line with those of other jurisdictions. Under the amended ordinance, various loopholes have been patched, prohibiting the placing bets with an unauthorised bookmaker whether inside or outside Hong Kong. Hence, except those authorised by the law, all forms of gambling activities are prohibited, including online gamble.

Similar laws also exist in other countries. For example, in Australia it is an offence under the Interactive Gambling Act to provide an interactive gambling service to any person physically present in Australia and it applies to all interactive gambling service providers, whether based in Australia or offshore, whether Australian or foreign owned with a proscribed maximum penalty of AUD220,000 per day for individuals and AUD1.1 million per day for body corporate.

In Hong Kong, it is illegal to set up or organise any gambling establishment or activities without a license within the jurisdiction. So does the offering of gaming over the Internet amount to organising gambling within the jurisdiction even when the casino server is outside the jurisdiction?

There have been several US cases in this area. For example, in People v. World Interactive Gaming Corp., the defendant, a Delaware corporation ran its Internet gambling operations via its subsidiary, an Antiguan corporation of which it had acquired a licence from the Antigua Government to operate a land-based casino and with the casino servers in Antigua. The New York Supreme Court held that even if the company is incorporated elsewhere, as in the subsidiary's situation, the fact that the act of entering the bet and transmitting the information from New York via the Internet is adequate to constitute gambling activity within New York. In other cases, similar decisions had been arrived at.

From the above case, the implication for authorised gambling activities organisers in Hong Kong (HK Organiser) is that even when their operations are located in Hong Kong, the fact that a United States resident can place their bets via the Internet with the HK Organiser will put them in jeopardy of United States prosecution for violation of United States law.

In order to minimise the risk of violation of the laws of any jurisdiction, the HK Organisers are making it mandatory for online betters to apply for digital certificates (DC) issued by Tradelink's wholly-owned subsidiary, Digi-Sign or Hongkong Post normally issued to local residents so that the betters identities can be verified before they are allowed to engaged in any better activities online. Having such a secure betting service in place can certainly control unlawful gambling activities in an effective manner, nevertheless, certain loopholes do exist in odd circumstances. For example, United States expatriates that have been working in Hong Kong and have been issued with Hong Kong DC; will the HK Organiser be in violation of United States law if the United States expatriates returned to his country and place their bets with the HK Organiser via the Internet? It seems that if the United States expatriate can place their bets over the Internet with the HK Organiser, the HK Organiser may be in violation of the United States law. The law certainly needs development in this area, likewise, with the ever-advancing technology, it may also be possible to make arrangement with developers of Internet content filter software so that their local users cannot access the online betting website.

Betting has long been associated with our daily lives, albeit the ever-popular horse racing or the recently launched HKJC football, there are always legal issues arising. If you ever encounter related problem and need legal advice, you can drop a line to iLegalService at editor@i-legalservice.com for further assistance.