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Gambling with the law

A screenshot of gambling website aa2888.com, which offers gamblers a live feed of games at Shanghai Resort. Photo supplied
A screenshot of gambling website aa2888.com, which offers gamblers a live feed of games at Shanghai Resort. Photo supplied

Gambling with the law

The exterior of the 388 Net internet café on Street 118 features logos from web giants Google, Apple and Microsoft.

But it’s not surfing the web, sending emails or chatting with friends online that bring in the cash.

Like many similarly adorned 24-hour internet cafés in Phnom Penh, 388 Net is a front for online gambling.

It is a type of franchisee in a network of agents dotted around the capital who provide access to a web-betting service run out of a remote casino some 165 kilometres away.

Behind the internet café’s translucent sliding doors, a dozen desktop computers rest on no-frills empty desks.

On a recent Tuesday, a receptionist initially balked at a reporter’s inquiry about placing a bet on an upcoming English football fixture.

“We only have internet here,” the young lady insisted, before conferring with some colleagues standing watch outside.

Five minutes later, the score had changed. A man approached with a smile and a question.“What do you want to bet on?”

A growing market
Online gambling is booming.

The global market was valued at $35 billion in 2014 and is expected to almost double in size by the end of the decade, according to an October report published by Research and Markets.

And casinos in Cambodia are rushing to get in on the action.

In 2015, the government began granting brick-and-mortar casinos licences to run online platforms for a fee of $10,000 a year.

At the end of 2016, 31 of the 65 casinos operating in Cambodia had web operations, according to Ros Phirun, deputy director of the financial industry department at the Ministry of Economy and Finance.

The licences allow casinos to deliver online betting to punters inside the casino’s premises – which are ostensibly off-limits to Cambodians.

Many of these casino websites cater to gamblers abroad, particularly in China, where gambling is illegal.

But online gaming from some local casinos is also available to Cambodians via agents running internet cafés.

This is explicitly illegal under the Kingdom’s Law on the Suppression of Gambling, which outlaws gambling outside unlicensed premises and prohibits working as an agent or running a gambling den.

But the agents are not difficult to find. In recent weeks, the Post visited 17 internet cafés at random across the capital. All offered accounts: 15 for the gambling website aa2888.com, one for sun2888.com and one for 855Play.com.

Most required a $10 deposit and a phone number to sign up, though one opened accounts for just a dollar. Some had a box on the counter with paper slips, prepared with logins and passwords. Their main cliental were clearly Cambodian.

Through the websites, gamblers can wager on soccer and basketball matches from around the world, Vietnamese and Thai lotteries, currency markets and electronic casino games – such as slot machines – and digital cock fighting, where users can wager on computer-generated matches.

They can also play live casino games including baccarat and roulette against dealers via webcam.

A man answering a hotline for 855Play.com yesterday said the site is run out of two casinos in Poipet and Bavet, and had eight “branches” in Phnom Penh.

Meanwhile, the online casino features for sun2888.com and aa2888.com – by far the most prominent gambling site at cafés visited by the Post – are from the same source.

The live feeds for both sites show dealers, young women in tight red dresses smiling and ready to play.

Behind them, gamblers can be seen wagering at tables. And in the background, emblazoned in gold: The Shanghai Resort and Casino.

“Aa2888 is based at the Shanghai resort,” said a man who answered the website’s help hotline, which is the same number for both websites.

“It’s in Svay Rieng.”

Bordering on illegal
Approaching the Shanghai Resort from the Cambodian side requires a bumpy ride down a pitted road, past rice fields and grazing water buffalo.

Set next to a small crossing on the border with Vietnam in Svay Rieng’s Chantrea district, the venue was opened in 2013. It boasts 40 deluxe rooms, six corner suites, a swimming pool, gym and private karaoke rooms, according to its website.

But the story of the Shanghai’s online gambling operation begins before the construction of its new border-side base.

In 2009, when Prime Minister Hun Sen, citing moral reasons, outlawed gambling outside the Kingdom’s casinos, Shanghai’s current director, Taing Hong; a man previously listed as its director, Phoun Thitieng; and a group of associated businessmen, were running an online sports betting firm, according to Ministry of Commerce filings and information available online.

Dubbed Sporting Live Group, the firm was founded in 2006 and employed 200 people in Phnom Penh and the provinces, according to a Post story at the time.

The prime minister’s edict shuttered popular Cambodian bookmaker Cambo Six – which was linked to former military commander-in-chief and factional rival to the premier Ke Kim Yan.

However, board members from Sporting Live Group, a then-competitor of Cambo Six, were busy branching out. Hong and linked associates now have interests in a microfinance institution, money transfer service and finance firm.

And though Sporting Live Group as a company was closed after the crackdown, its services were soon revived after talks with the government, according to a manager at the casino, who spoke under condition of anonymity.

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A motorist passes the entrance to the 388 internet café in Phnom Penh yesterday.

“[After the ban], our boss went to the government and they discussed with each other to make the rules for [this] website,” he said, explaining that the online platform was developed by a Chinese ex-Microsoft employee and run from the casino.

“The servers are behind there,” he said, pointing to a nearby wall.

Cutting the losses
As the online dealers worked in the background and punters gambled at tables nearby, the manager laid out the operation.

The Shanghai, he said, runs online betting sites tailored for gamblers in Vietnam, China, Singapore, Indonesia and Hong Kong.

For one of its flagship sites, win2888.com, which openly advertises its links to Shanghai Resort and is popular in Vietnam – gamblers can sign themselves up remotely online.

But win2888.com can also be accessed through a network of affiliates – small-time bookmakers who recruit players to the site and get a cut of their losses.

The agent network, meanwhile, is largely conducted through the site aa2888.com, which according to web analysis website similarweb.com, had 873,613 visits between October and December last year, 81 percent from Cambodia, where it’s ranked as the 37th most popular website.

There is also a28i.com – a site dedicated to sports betting, he said.

For aa2888.com, the manager said, the company arranged deals with senior agents in Cambodia and Vietnam who could sign up large amounts of players. In these deals, profits from losses were split 70/30 to the company.

He said he did not know the monthly or yearly revenue from online gambling, though he claimed the operation was one of the biggest in Asia.

“Some generals in Phnom Penh deposit $100,000” he said, before explaining the largest payouts were capped at $50,000.

The person who oversaw agents for aa2888.com in Phnom Penh, the manager said, was related to the Shanghai’s director, Taing Hong.

“It’s his brother,” he said, a claim the Post could not independently verify.

‘Credit-based betting’

Agent networks like the one used for aa2888.com are prevalent across Asia and also found in Eastern Europe, said Lorien Pilling, director at Global Betting and Gaming Consultants.

They all work in a similar way: Those running the operation extend credit to high-level agents, who extend credit to lower-level agents, who recruit players for the website, who exchange cash for credit to gamble. Each level gets a certain percentage of the losses of the players underneath them in the chain and covers a certain percentage of the risk.

“Credit-based betting is beneficial in cash economies or where access to banking facilities is restricted,” Pilling said.

“Credit agent networks rely heavily on trust and getting the risk profile right so that no one is extended too much credit.”

To learn how the aa2888.com network was arranged, the Post approached a high-level agent – known as a “master agent” – under the pretext of becoming an agent.

To access the software and begin opening player accounts, he said a safety deposit was required to guarantee the credit. The normal amount was $5,000, though more could be given if more credit was desired, he said.

At most, he said an agent could get 30 to 35 percent from players’ losses, though this also meant the agent would have to take on a higher percentage of risk.

“To be honest, the agents I know never lose, the players always lose,” he said, saying one agent could have as many as 1,000 players.

He said he was not linked to the Shanghai Resort, but dealt with a higher agent in the chain who he referred to as a “super master agent”, though he would not give their name.

He also said there were agents outside Phnom Penh, including some based in Kampong Cham province. As for authorities, he said not to worry.

“The police, when you start an internet café, they will come and get the money from you. It is normal; we just give it to them,” he said, adding, in fact, local police were “taking care of us”.

“When they crack down on a large scale, I will tell you to close for one or two days. I will get the information from above. It’s not a problem. ”

Police payoffs
In October, the Interior Ministry announced the creation of a new department to tackle illegal gambling.

But leaning on the counter of an internet café near the capital’s Old Market, the store’s manager, a recent high school graduate, was unperturbed by the threat of arrest.

The man, who requested anonymity to speak, said his boss had three locations, his being the newest, having opened in November. He said it had so far signed up 30 players for aa2888.com.

“When the police come, we are not worried, because we pay to the state when opening this business,” he said.

The Kingdom’s gambling law strictly forbids unlicensed gambling, which means betting outside an approved casino. Even at casinos, which are ostensibly off-limits to Cambodians, the rules are loosely enforced.

“As for government restrictions, I have no idea,” said another internet café manager, standing outside his shop café in Boeung Keng Kang II.

“In Cambodia, it is politics. Sometimes, the place like this is okay, but police arrest people playing small games at home. So it is hard to understand and it is not absolute.”

The manager, who has run the business for nine months and also requested anonymity to speak, said his boss paid local police between $30 and $50 a month. It’s a small price to pay, given the returns. The man said his café had 70 to 80 players signed up with aa2888, which brought in between $3,000 and $7,000 a month.

The arrangement with the next level up in the chain a “master agent” means they pass on 90 percent of their profits on customers’ losses, and keep 10 percent. However, they can also claim to have 90 percent of their losses covered, in the case their players win.

Content image - Phnom Penh Post
The entrance of the Shanghai Resort Centre about 20 kilometres south of Svay Rieng province’s Bavet town . Shaun Turton

“Most people play baccarat and football,” he said, adding that the biggest payout they had seen at their store was about $5,000, though most gamblers bet between $100 or $200 a month.

He said his shop had been warned to close, at least temporarily, because of “politics”. Reached this week, spokesman for the National Police Kirth Chantharith said all unlicensed gambling venues were illegal.

Asked why internet cafés, whose connection with online gambling can be established by merely a question, continued to operate, he said he did not know their locations. “I don’t have the report,” he said.

As for police taking bribes from owners of internet cafés, he conceded it was a problem.“If we find out, we will punish the police officer . . . but we don’t have any report on this case now,” he said.

“The new department will deal with this.”

Sieng Seng, the man who will lead the new anti-gambling unit at the Interior Ministry, said when fully operational, said his department would take action. “We are collecting evidence to find out where is the source,” he said.

Regulation headache
The highly profitable, multifarious and murky world of online gambling is causing problems for regulators across the world.

In his book Online Gambling and Crime: Causes, Controls and Controversies, criminology lecturer at Sheffield University in the UK James Banks observes that a fragmented, and often contradictory, patchwork of regulations across the globe has given rise to a number of crimes linked to the industry including money laundering, match fixing and online fraud.

Arguing for legalisation, Banks writes such threats are “amplified” in countries with little or no legal framework.

Cambodia-based gaming consultant Johnny Ferrari, who has helped casinos in Cambodia develop software for online gambling, said regulating, rather than outlawing betting in the local market could bring in a huge tax windfall to government coffers.

“It’s not going to stop. Cambodians are big on casino games; Cambodians are big on . . . betting on football,” said Ferarri, who runs the consultancy Global Gaming Network.

“Regulating would clearly make money, a lot of money.”

But Phirun, of the Finance Ministry, said legalising gambling for Cambodians was not on the cards. He said the ministry was developing an online server to monitor web betting, while a new law to better regulate the casino and online gaming sector was still in the works.

As for the Post’s findings, Phirun said the Shanghai Resort had a licence to operate an online platform. He said he had made enquiries about the aa2888.com network.

“For the websites you mentioned, I had checked several times, and also asked Shanghai Resort’s owner, but he said he had not involved with these at all,” Phirun said.

Under the table
Though there are no clear estimates on the size of the online racket operating in Cambodia, a balance sheet seen by the Post for one multi-store operation shows a single internet café can net more than $14,000 a month.

Even with the conservative figure of $3,000 given by one manager, and 17 cafés visited by the Post, the value is over $600,000 a year. Given there are likely dozens more internet cafés in Phnom Penh and Cambodia, the local scene likely stretches into the millions, if not more.

Sitting behind a computer at an internet café near O’Russey Market and sipping from a can of Fanta, Vireak* played Keno a lottery-type game on aa2888.com yesterday afternoon.

Like other gamblers spoken to by the Post, he said he was unfazed by the illegality of what he said was a lunch-time habit.

“If it’s available, I’ll play. I don’t worry about being arrested.”

He said he believed the periodic crackdowns were also a type of game. Even if it were legalised, he said, money would still flow under the table.

“Any arrests, it is just to show they crack down on it. Like near my house in Chbar Ampov. They made arrests and shut an internet café down for two weeks. Now, it’s open again.”

*Name has been changed to protect identity.

Large web of companies linked to casino director
Microfinance, a money transfer service, a foreign-exchange trading firm and an online shopping site are among the web business interests linked Taing Hong, the listed director of the Shanghai Resort and Casino in Svay Rieng province.

The casino runs a major online gambling operation which the Post has established is active in Cambodia via an illegal network of agents.

Hong, described in an online bio as a 47-year-old Cambodian businessman with a degree in finance and banking from the National University of Management, did not respond to requests to be interviewed for this story.

A number for Hong within Commerce Ministry filings was answered by a lawyer for the casino, Cheav Tola, who said his boss would not respond to the story.

The businessman’s companies, and associates, are listed clearly in Ministry of Commerce (MoC) filings and on some of his businesses’ websites.

He is among five co-founders of MFI Samrithisak, started in 2010 and based in Phnom Penh’s Tonle Bassac district.

The MFI’s 2015 annual report states four of the five founding members – Hong, Taing Nguon, Cheang Sivanleang and Phoun Thiteang – were all board members of Sporting Live Group, an online sports betting company, which was shuttered in 2009 when Prime Minister Hun Sen outlawed gambling outside the Kingdom’s casinos.

Thiteang was also at one point listed in MoC records as a chairman of Shanghai Resort.

Taing Nguon, the director of Samrithisak, is also a board member of money transfer service Asia Wei Luy.

According to that company’s website, Hong is the chairman and is also on the board of directors for foreign exchange trading firm Gold Financial Global, which is part of a group of companies called G Group, which also includes, according to its website, a diamond trading firm, an interior decorating business, a lounge and a charity.

This week, an operations manager for Samrithisak, who called himself Sokun, said there was no crossover between the casino and microfinance.

“We are not linked,” he said.

“We don’t lend money to people to gamble or to repay gambling debts.”

A representative of Asia Wey Luy promised to call the Post back, but had not responded by press time. Reporters could not reach a representative of Gold Financial Global via the numbers listed on its website.

A person who answered the phone for KHBUY– an online shop, which is also a “sponsor” of Samrithisak – said Taing Hong was the owner.

Shaun Turton and Niem Chheng


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