Beijing nods development of horse racing, sports lottery in Hainan

China’s government has given the greenlight for the development of horse racing and sports lottery in the southernmost island of Hainan, in moves that it says will help promote tourism in the province.

According to a reform agenda approved by China's Cabinet, which was reported by Xinhua News on Saturday, the recent moves form part of a plan to establish a free trade zone in Hainan, which will become a haven for foreign investors and multinationals.

Part of the reform agenda includes a recommendation to "explore the development of sports lottery and instant lottery on large-scale international games", however, it did not elaborate any further.

Earlier this year, discussions around the allowance of online betting and other forms of gambling gave rise to speculation that the island may eventually become a hub for land-based casinos - leading to a tumbling of Macau casino stocks in the days following.

However, analysts were quick to play down the potential risks to Macau, noting that the legalization of casinos in Hainan would not be an effective way to drive tourism, and would not compete effectively with Macau for mass GGR.

On Monday, Union Gaming analysts further downplayed the likeliness of casinos being allowed on the island, and its potential affect on Macau casinos. 

"While various media outlets are trumpeting the "gaming" aspects - as if the center point of this PRC policy is gaming - the reality is that the policy in no way approves anything remotely close to casinos, nor does it even suggest this is a future possibility."

"It also recommends that the idea of an international-style lottery be studied, and we highlight that the lottery verbiage says "explore" rather than "develop," which suggests that even a lottery isn't a done deal."

Nevertheless, interest in the island hasn’t seemed to have wavered, with many of China’s property tycoons still hoping the government will eventually allow gaming there.

Last week, a report from Bloomberg noted that Hainan's government had commissioned a group of scholars to study how gambling tourism could be developed on the island, as well as how to legalize gambling in China.

One member of the group, Associate Professor Pei Guangyi at the School of Economics and Management at Hainan Normal University, published a paper in March arguing that China should legalize gaming to reduce capital outflows through foreign casinos and introduce a body of regulations.

"Since you can't stop Chinese people from gambling, it is a better solution to make sure that foreign or private capital do not overly profit from it," he said.

At the moment, Macau remains the only jurisdiction under China where land-based casinos are permitted.

On the mainland, residents can only partake in two forms of gambling - the China Sports Lottery and the China Welfare Lottery.

The recent reform agenda did not make mention of any plans related to casinos.

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