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Tuesday, June 29, 2010

Money from sports gambling: A sure bet? - The Malaysian Insider

KUALA LUMPUR, June 18 — Datuk Teh Kim Poo is steeling himself for more headache and misery.
As a MCA grassroots leader and ex-wakil rakyat, he gets a lot of sob stories from distraught wives and he is expecting more once legalised sports-betting takes off.
The Klang MCA division chief has seen it all in his career as a former state assemblyman for Pandamaran. This old Chinese new village in an ancient part of Klang is a hub for illegal gambling, he says.
Some of its faded wooden homes have vines of extra electricity cables snaking out from them — signs that the ramshackle-looking units house illegal internet-based gambling dens.
That is what an observant visitor can see of Pandamaran’s unofficial cottage industry. What is unseen are the broken families that it creates.
This is the fallout that Teh, as a wakil rakyat, has to clean-up because such problems are too personal for the police to solve.
“I get problems like this at least once a week. They may not be directly due to gambling but it plays a big part,” he says.
It is the reason why he and Kapar MCA recently went on a drive to collect signatures to oppose sports-betting.
Though it was only a small initiative that has been overtaken by events, Teh’s opposition to the Barisan Nasional (BN) federal government’s decision speaks of how intractable the issue is.
He believes that many of his BN compatriots privately share his stand. As it is not the finance ministry or the prime minister that has to negotiate with loan sharks over a gamblers’ debts or persuade gangsters to lay off a family.
Though it is not easily quantifiable, that kind of social ill has an economic cost. For critics and supporters of the move, it is a question of whether the benefits outweigh the cost.
Harmless vice?
A small straw poll of 50 respondents conducted by The Malaysian Insider showed that a majority of them, 37, do not support the idea of legalising sports-betting.
The most common reason the naysayers gave is that gambling is generally an unhealthy activity that should not be encouraged.
An equal number of non-Muslims disliked the idea compared to those who supported it. Muslim respondents overwhelmingly said no.
Out of the 16 who had bet on sports with their friends, nine said they would be interested in trying a legal league.
“You will get an increase in gamblers. Those who did not want to bet before because it was illegal will now want to try through legal channels,” says one of the respondents, explaining why he said no to the legalisation.
What many misunderstand, says a supporter of the move and a gambler himself, is that sports-betting is like playing at the casino or at slot machines.
Betting on sports is more like predicting how a game will turn out based on one’s knowledge of a sport and the teams. There is an illusion that skill and knowledge play a larger part than luck.
“It’s more to add to the thrill of watching a game. Because you have money riding on a team, you tend to get more passionately involved.
“Daripada tengok saja, baik dapat duit (instead just watching a game, you might as well get something from it),” says another respondent who bets with friends.  
Another big difference, says another gambler, is the nature of the pleasure. “In sports-betting, the pleasure is delayed. In slots or casinos, it’s more instant.”
It is this latter aspect, he says, that often hooks someone to games such as slots, roulette, baccarat and blackjack. The rush of laying money on the line for that instant high of doubling or even tripling your bet.
This difference is also why the gamblers interviewed and those who support legalising sports gambling see it as being less addictive and harmful than casino gambling.
“With sports gambling, you rarely see people trying to make ‘money from it’. It’s more of an added thrill rather than an end in and of itself, like in the casino,” says one gambler.
Calculating misery
Among the legalisation supporters in the survey, all of them cited how it would increase government revenue as a chief reason why they are for it.
At the same time, they felt that sports-betting might as well be legalised given that many do it illegally anyway.
“We’ll be able to cut away some of our subsidies,” says one supporter, echoing what tycoon Tan Sri Vincent Tan recently said.
Tan, whose Ascot Sports Sdn Bhd has been given preliminary approval to run the country’s only legal sports-betting operations, has been trying to calm fears and blunt criticism of the venture.
In a June 5 report, Tan claimed that the turnover from illegal betting was estimated at between RM20 billion and RM30 billion annually. He said 10 per cent of this, or between RM2 billion and RM3 billion, was lost revenue from taxes.
But economist Azrul Azwar Ahmad Tajudin disputes this.
“The overall sports-betting industry in Malaysia ranges between RM612 million to RM8 billion a year.
“The amount between RM20 billion RM30 billion annually sounds a tad too farfetched and a bit too bullish,” he says.
According to Azrul Azwar’s estimates, a tax of 10 per cent would only amount to RM800 million in revenue, at the most.
“What is RM800 million compared to its social costs?” asks Azrul Anwar of Bank Islam.
Though it is economically viable, says another economist, Dr Yeah Kim Leng, there has to be a social and economic cost-benefit analysis.
Meaning a real effort to calculate whether the revenue from taxing sports-betting eclipses for example, the lost productivity hours from addiction, the more police work that has to be put into dealing with “ah longs” and the bad loans that are usually run up.
“Some of the tax the government collects from it will have to be ploughed back into programmes to educate and prevent people from becoming addicted,” says Yeah of RAM Holdings.
Another unexpected side-effect, says Azrul Awar, is the birth of a generation of Malaysians with bad borrowing habits.
“We’ll have generations of youths who accumulate bad debts from a very young age. You’re teaching people to have bad debts.”       
The House always wins.
Some of the survey’s respondents also cleverly pointed out that the illegal betting rings will continue alongside the legal one.
At the most, says Yeah, about half of the illegal sports-betting industry will be substituted by the legal one.
“The illegal bookies will just become more competitive. They will want to pull punters away from the legal one by offering higher payouts for instance,” says one gambler familiar with the industry. And those higher payouts are almost a guarantee since illegal rings do not have to pay tax.
So in the end, says another respondent who opposed the plan, the government was not really dealing with illegal sports-betting.
“We’re just making gambling easier and accessible.”
Tan revealed that sports-betting will be carried out 220 Sports Toto Outlets through-out the country.
Though supporters argue that the revenue generated could in the end benefit the people, a commentator on The Malaysian Insider by the name “Alias” countered this by saying:
“Can anyone trust the government, whether state or federal, to honestly channel the money down to the people without first helping themselves first??”
Yeah says that in countries with legalised betting, it all boils down to individual discipline.
This echoes what another survey respondent and betting supporter said:
“Is it the government’s job to look after people’s vices?”
But in this case, the government and those running the betting rings are actually profiting and counting on more people to get involved in a particular type of vice.
“Remember, this isn’t some mega project that becomes a white elephant. Gambling can actually hurt people,” says Azrul Azwar.  


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