From page 25, issue no. 373 June 23 2008
Translated by Ren Yujie
Original article: [Chinese]
While the EuroCup played out in June, an untold sum of yuan flowed from China through an ecosystem of gambling and e-payment websites that spanned three continents.
Online payment sites such as ChinaPay signed agreements either directly with branch offices of foreign gambling sites disguised as legal bisunesses, or with other pay sites lower on the food chain, who then funneled funds to Western gambling networks.
One gambler told the EO of his experience. Shortly after midnight on June 15, the 500 yuan that Miao had bet on the EuroCup was tranferred from his Commercial Bank of China credit card through Chinese e-payment sites ChinaPay and HappyCZ, ultimately being deposited in an overseas account held by European gambling company Victor Chandler.
Miao said the process was extremely easy, and that many of his friends had also bet on the EuroCup through it, despite the fact that gambling is illegal in mainland China.
But this was just the tip of the iceberg. Miao's transaction was just one of countless in an underground industry that has been difficult to shut down by Chinese regulators, partly due to the ad-hoc nature in which e-payment sites can easily plug into the system if competitors fall out.
Gambling Network Pervasive
On June 18 at 2:40 AM, with only five minutes left before the beginning of the Italy and France Eurocup game, thousands upon thousands of bets from China began flooding the Chinese websites of large gambling portals in the US, Europe, Macau, the Philippines, and Gibraltar.
Data obtained by the EO showed that links to electronic payment companies had also appeared in online gambling websites.
In one case on June 9, gambling funds were transferred from China Minsheng Bank through 99 bill.com (99bill) to a European gambling company's account. On June 17, an amount was transferred through ChinaPay to HappyCZ, and then to the latter's partner business, A-OS, before finally being transferred to a European gambling company's account.
Gambling funds were transferred through payment platforms provided by tens of different electric payment companies, poured into partner businesses' accounts first before being transferred to overseas gambling businesses.
Overseas gambling companies usually established branches in China but registered as legal businesses in various internet payment platforms, an industry insider told the EO. After that, they settled funds with the third-party payment companies through those legal registered businesses.
Third-party payment companies said they knew nothing of the correlation between their partner businesses and gambling companies. They said the pay channels would be cut if it was discovered that their partners were involved in illegal activity.
But information about contracts between payment companies and websites were not publicly available. Furthermore, most electronic payment companies could drop contracts through escape clauses in the agreements with their partners.
According to supervisory figures released by Analysis International Consulting, the overall turnover of China's third-party electronic payment market in the first quarter of 2008 had increased to just over 45 billion yuan.
ChinaPay ranked the third with 13 percent of the market. Both 99bill and IPS tied for fourth, 3.6 percent market share each. China Bank Payment and Yeepay also had a place among the top ten large electronic payment companies. However, there were no specific figures about exactly how much money flew into overseas gambling markets.
ChinaPay
An employee from HappyCZ who wished to remain anonymous told the EO that they chose ChinaPay as their payment platform mainly due to its size and reputation, but also because China Union Pay, as its the holding company, had a countrywide payment platform and was able to obtain more favorable rates from various commercial banks.
ChinaPay would charge a 1.8 percent procedure fee for each online-bank trading, stated the agreement.
ChinaPay confirmed with the EO that their transaction volume exploded while connected to HappyCZ, which was linked with overseas gambling websites.
HappyCZ said they had claimed innocence in the matter, adding that it was impossible monitor partner businesses or discover illegal activity in time.
An insider resource revealed that ChinaPay was the first tier payment platform. Once other third-party payment companies signed service agreements with ChinaPay, they could cooperate with other businesses and charge for commissions higher than 1.8 percent. Indeed, some even up to 3 percent. As online trading costs were so high, their partners would engage in businesses with higher benefits, especially porn and gambling.
If HappyCZ was investigated and punished, ChinaPay could easily cut its connection. Gambling companies could find another e-business company to corporate with ChinaPay and the online gambling "payment link" would be revived quickly.
The EO found that the portal of gambling site, man－sion88.com, was chinapnr.com, whose president had worked previously at ChinaPay.
- The Trial of Xu Ting | 2008-04-23
