China has been described as the main target of illegal gambling networks that continue to blight Southeast Asia, according to a new report by the United Nations.
The organisation estimates that China, alongside Hong Kong, Macau and Taiwan, collectively account for approximately half of global illegal gambling turnover, believed to be between $340bn and $1.7trn.
Though Mainland China has a strict prohibition on gambling, the report said that demand has not been suppressed, and instead has been ‘displaced’ abroad and online, as Chinese nationals represent the ‘primary consumer base’ for criminal networks.
The UN described the region’s online gambling sector as a multi-billion-dollar network that poses a ‘major financial crime challenge’ for lawmakers. It said that groups use tactics such as domain cycling and mule accounts to evade detection and blocking efforts.
According to the UN, multinational networks are often licensed in jurisdictions like the Isle of Man and Curaçao, hosted on servers located in Eastern Europe and operated by staff in Southeast Asia.
The report also pointed to the rise of cryptocurrency as having ‘fundamentally transformed the financial architecture of illegal online gambling’, which is now ‘dominated’ by Chinese-language money laundering networks that processed an estimated $16.1bn in illegal crypto funds in the last year.
Is prohibition working?
The report highlighted that online gambling prohibition across Southeast Asia, combined with the absence of appropriate enforcement, has accelerated the sector’s association with transnational crime groups.
It said that illegal online gambling has ‘converged’ with other crimes such as online fraud and people trafficking – acting as a revenue generator for crime networks, as well as a means to launder funds.
In particular, the UN noted that the Philippines’ decision to ban offshore gaming operators, known as POGOs, has not eliminated operators, but instead displaced them into other markets like Cambodia, Myanmar and Indonesia.
“Illegal online gambling did not emerge as a discrete criminal sector. It developed as an extension of pre-existing criminal portfolios,” added the report.
“As subsequent enforcement actions tightened on offshore gambling infrastructure, the same groups added cyber-enabled fraud platforms into existing gambling infrastructure, repurposing casino hotels, compounds, and associated financial networks originally established for gambling operations.
“These have become hubs for a booming illicit economy, with a single location frequently housing multiple tenants engaged in online gambling, cyber-enabled fraud, trafficking in persons, and money laundering simultaneously.“
Social media shifting the dynamics
The report also highlighted the rise of mobile phone adoption and social media for changing how illegal gambling is advertised across the regions, with operators using social media influencers as a primary method to reach a new demographic of younger players.
The UN described the exposure of youth populations to illegal online gambling through social media as a ‘public health crisis’ that current policymakers are unable to effectively respond to.
Last month, Thailand’s Consumers Council (TCC) filed a lawsuit against Meta, accusing the company of allowing scam advertisements and online fraud to spread unchecked
The TCC said at the time that Facebook continues to carry large numbers of scam adverts, including gambling adverts, and that Facebook’s algorithm is helping scammers to target specific groups, leading to significant financial losses.
“Illegal gambling operators in South-East Asia have systematically weaponised digital marketing infrastructure to penetrate youth demographics,” reported the UN.
“Operators deploy sophisticated strategies that leverage social media platforms, influencer networks, mobile accessibility, and gamified interfaces to lower participation thresholds and normalise offshore gambling in jurisdictions where it remains prohibited.”
“The systematic recruitment of social media influencers, particularly young women with substantial followings, appears to have become a core strategy for normalising gambling participation among youth audiences.”
The UN urged lawmakers in the region to commit to forming coordinated regulatory frameworks, as working in isolation simply displaces criminal activity with poor oversight and officials susceptible to corruption.
The gambling-fraud-trafficking nexus is not only a financial crime challenge but a regional security concern,” concluded the report.
“The same criminal principals, facilities, and financial networks that sustain gambling operations also sustain the coercive infrastructure in which tens of thousands of trafficked individuals are held.
“Enforcement strategies that treat these as separate issues, addressing gambling operators, scam compound operators, and trafficking networks through distinct institutional silos, will continue to fall short of the integrated threat architecture they face.”
