Patrick Jay works his way through a cut of meat. Jay is the head of the sportsbook at the Hong Kong Jockey Club. This may be the most profitable sportsbook in the world, though such rankings are impossible to calculate, given the nature of the business. Jay explains that the Hong Kong Jockey Club handles roughly $6.5 billion in betting on football per year. From its entire gambling portfolio, the book takes $1 billion in profit annually. The Hong Kong Jockey Club is the largest taxpayer in Hong Kong, representing 8 percent of the local budget.
Jay is a tall, large-boned man, with the gregarious and happily ravenous manner of someone whose strategic decisions have guided him to a windfall. He projects the attitude of that rare animal, the winning gambler. Jay is one of an expanding cast of Englishmen come east. They carry expertise in the traditional, respected, English way of making a book – at shops like Ladbrokes and William Hill – and they now apply these business principles to Asia, where their experienced hand is welcomed. The Asian market has grown exponentially in the last decade. Jay estimates that the market represented about $100 billion at the turn of the millennium. Today, he says, Asian gamblers wager $1 trillion on sports per year. “The numbers are absolutely unfathomable to everybody,” Jay says. “People back in the U.K. don’t believe it. If you show them financial numbers, they say, ‘You’re making this up. You got Enron to do your accounting for you.’ ” It is not only the size and growth of the Chinese economy that has attracted so many in Western gaming. Nor would adventure be a sufficient motive for someone as oriented to business as Jay to relocate this far from home. It is habit most of all that draws people in Jay’s line – Chinese habit, the role that gambling plays in Asian cultures, the well-documented acquaintance with risk. This, as much as Asian economic dynamism, is the guarantor of continued growth in the gambling business. Jay’s research tells him that in Hong Kong, locals allocate upward of two and a half times more of their disposable income for gambling than do people in the United Kingdom. “Asia is not the center of the universe,” Jay says. “Asia is the universe.”
Jay’s sportsbook is located at, unsurprisingly, a racetrack. It is public, open, legal. And it is categorized in the minority. Throughout nearly all of Asia, the most active gambling continent, gambling is illegal. It is illegal to bet on sports on mainland China, for this activity is antithetical to the precepts of the communist state. The Muslim religion does not permit gambling for Indonesia’s 250 million people. This doesn’t mean that legal statutes prevent gambling. On the contrary, illegal, unregulated bookies in China, Indonesia, and all across Asia predominate. Jay claims that the illegal betting market is ten times larger than the legal market. Of the $1 trillion total, he says that $900 billion is wagered in the dark, administered by the criminal entities that finance, regulate, and enforce a parallel industry.
At Wooloomooloo, lunch draws to a close, and Patrick Jay readies to make a demonstrative point. “Look around the restaurant,” he says. “What do you see?” There are tables full of what appear to be businessmen in the midst of congenial lunch meetings. There are a few romantic couples sharing their little moments. At other tables, friends speak loudly with one another, then laugh. It is the usual steakhouse crowd, but for one missing element. “No booze,” Jay says. He’s right. Plates of steaks and potatoes cover the tabletops, but no single glass of beer or whiskey accompanies them. “These people don’t spend their money on alcohol. They gamble.”
China’s market reforms of the late twentieth century incited one of the most remarkable periods of localized economic growth that the world has ever experienced. Throughout the 1990s, the Chinese economy grew at a rate of roughly 10 percent per year. In rapid fashion, this swelling generated both great personal wealth for some individuals and general liquidity in Chinese society.
While this miraculous event was unfolding, so was an episode of even greater global significance and revelation. During this period, the Internet was growing from a computer engineer’s curiosity into the world’s primary means of commerce and communication. At the moment that many millions of Chinese people all of a sudden possessed disposable income, there was a new place to play with it. When these fortunate Chinese considered how they might float their new wealth for the enjoyment and risk that had long been a central part of their culture, they were presented with a growing number of gambling options online.
The emergence of the Internet not only precipitated the growth of online betting sites, but also improved options for the gambler. Before the Internet, the corner-store bookie, such as Ladbrokes, had little incentive to offer its clients competitive odds. It possessed a quasi-monopoly, defined by location and the immobility of the gambler. Internet betting introduced choice to the betting market. A new catalogue of gambling sites began dropping odds and commissions in the competition to attract business.
In China, the new bourgeoisie within this population of 1.3 billion people flooded the Internet gambling market. As the millennium turned, European sportsbooks followed the lead of their Asian counterparts, establishing online portals. Eventually the European and Asian markets began to work in concert, online, following each other’s price and line movements, bookies on one continent laying off bets with bookies on the other as part of their risk management strategy. Asian books established European-registered subsidiaries under different names, the client none the wiser. As happened with other industries as they migrated online, in gambling, national borders dissolved. In short order, the Internet enforced global regulation, of a sort, on a largely unregulated, gray-market, underground industry.
“The Asian and European betting markets have come together and created one giant pool,” says David Forrest, an economics professor at the University of Salford, in Manchester, England, who specializes in the study of sports gambling. “It’s now one huge liquid market. And liquidity is the friend of the fixer. You can put down big bets without notice, and without changing the odds against yourself.”
The Internet altered what people bet on, as well as the way that they bet. Twenty years ago, roughly 15 percent of bets on the international sports market were placed on football. But as the Internet enabled betting houses to offer continuous propositions based on the various factors of a game in progress – including the time remaining, the score, the players on the field, and the intuition of the bookie adjusting the line and the odds – the rise of in-game betting enhanced the popularity of football as a gambling proposition. The game now accounts for roughly 70 percent of the international sports betting market, according to Interpol estimates. The Internet also allowed for a rise in the trading of bets between bettors. International gambling on football matches has come to resemble a stock market, with constant fluctuations, numerous propositions, and instantaneous arbitrage.
Along with these changes came heightened scrutiny on football matches and the valuable information secreted within them. Patrick Jay tells the story of a grizzled old bookie he worked with at Ladbrokes. “In 1995,” the man liked to say, “if the midfielder for Manchester United broke his leg, five people would know about it. His wife, his father, his coach, and his trainer. And me.” Now, said the man, if a minor injury afflicts an inconsequential player on an unknown club, “they’re betting $10 million on it in that Macau.”
Before the Internet, one of the only ways to bet on football was on the 1x2 market. The “1” represents a victory by the home team. The “2” represents an away-team win. The “x” represents a draw. The 1x2 market does not incorporate a line, or a point spread. Odds are simply established for the chances of each of the three possible outcomes. The final score is irrelevant. When the favorite builds an insurmountable lead in a match, the gambler doesn’t have much incentive to watch anymore. Despite this, the 1x2 market remains the most popular form of football betting in Europe.
Almost no one in Asia bets 1x2. The majority of people betting on football in the world – and this includes all sizable international match-fixing groups – operate on the Asian handicap and Asian totals markets. Locally known as hang cheng, the Asian handicap market takes the draw out of football betting. In essence, you bet on one team to win by an assigned handicap, or on the other team to lose by this same handicap. Bookies establish a point spread that recognizes one team as