China Considering Legalization of Online Gambling, Expert Says

, should the Congress have the nerve to prohibit gambling, will be long forgotten, as online entrepreneurs target the nascent Chinese market.

The world's biggest market for online gambling -- the U.S. -- is conflicted. Some in the government want to outlaw the recreational activity. Others, in business, want to ensure that online casinos there can continue to flourish. This indecision may soon be costly.

The government of People's Republic of China is considering legalizing online gambling, said Tony Tong, chief executive officer (CEO) of Pacific Net, a developer of Baccarat machines. The government would likely license companies to establish themselves in Macau, already a conventional casino capital, Tong said.

Reason: Revenue

The government has a significant motivation to legalize online gambling -- take significant portions, around 40 percent, of the house winnings in Macau. Legalizing gambling online would create a massive government windfall for new revenues, said Tong.

Tong's company, and others, are expanding in China right now, hoping to ride the coming wave of online gambling growth there to prosperity. According to the firm, GigaMedia, a developer of software poker and other online games, an expansion is already planned for China. Business there is already starting to grow, as the company's FunTown site is already the largest Mahjong site on the planet. Players play for points as well as prizes. Amazingly, more than 50 percent of its subscribers spend over 100 hours on the site a week, the company said. Many gambling observers may recognize GigaMedia as the force behind EverestPoker, the rapidly growing poker site in Europe. The company also runs an online gaming blog in Taiwan called Wretch.

Pacific Net's Baccarat machines, Tong said, are not regular computerized gaming machines, as Chinese gamblers don't like random number -- and card -- generators. Rather, the machines stream video of a live dealer dealing live hands, Tong said. This feature will be available online too, he added.

A GigaMedia representative said the U.K. will likely become a center for online gaming in Europe in the coming years.

World’s Biggest Market

But, China is definitely heading toward being the world's biggest online gaming market. According to the director of the Chinese development firm, Sino, Richard Li, the Chinese gambling market turns over $100 billion, 95 percent illegally. Just like Western countries, China needs to fund social services for its aged population, so pragmatism, rather than intolerance for bourgeouis entertainment, is triumphing.

Rather than seeing all of this incredible revenue flow to Internet sports betting, overseas, the government wants to develop the legal market several years ahead of the 2008 Beijing Olympics.

Sino unveiled a joint venture this week through which it will provide subscription online gaming, which it calls functional entertainment centers (MECs), to aged-care facilities in 50 cities throughout mainland China, said Li.

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