Illegal horse racing betting exchange Citibet has significantly expanded its potential market through technological advancements, enabling its presence on thousands of third-party illegal betting websites worldwide and exacerbating corruption and money laundering risks, a report by the Asian Racing Federation Council (ARF) shows.
Published by James Porteous, the Research Head for the ARF Council on Anti-Illegal Betting & Related Financial Crime, the report indicates that this growth is facilitated by a software “plug-in” that seamlessly integrates Citibet’s betting markets and pirated live streams into any illegal bookmaker’s platform.
The ARF Council stated it has ‘warned for almost a decade’ of the threat of Citibet (aka 长城, LK988 and other names in different jurisdictions), a ‘completely unregulated horse racing betting exchange’.
‘[The platform] has liquidity comparable to the biggest legal racing tote operators in the world – all completely untaxed, with zero know-your-customer or money-laundering controls,’ Porteous indicates in the research.
The report cited as an example of a cross-border police action between Hong Kong and mainland China in December 2017, when police confiscated the equivalent of $13.8 million in illegal betting records and $1.4 million in cash, and arrested 71 people, with most of this turnover believed to come from football and horse racing, via illegal betting networks Huangguan (皇冠) and Citibet respectively.
This plug-in model applied by Citibet, likened to the “McDonaldisation” of online illegal betting, was described as allowing “franchisees” to easily incorporate Citibet’s offerings into their websites with minimal technical know-how.
Citibet does not directly own or operate all of these thousands of websites, but makes its betting markets and pirated live streams on global horse racing available to them via its plug-in.
These “franchisees” can install this software by copy-and-pasting a few lines of code in the back-end of their website, or rely on one of the many gambling software providers which service unregulated betting operators to do it for them.
The ARF warned that Citibet’s exponential growth poses a significant threat to the integrity of horse racing and legal wagering operators globally and that despite efforts to combat illegal betting its turnover remains substantial, with markets like Hong Kong and Australia experiencing significant increases.
‘Citibet turnover is comparable in some markets to the legal market, such as in Hong Kong where it was estimated to have grown 9 percent in 2022 compared to the previous year while the local legal betting market on horse racing has shrunk. Citibet betting turnover on racing in Australia was also reported as having doubled in the period from 2019 to 2022,’ the report said.
The ARF Council warned that illegal betting turnover may surpass legal turnover, providing an avenue for corruption within the sport, with the emergence of Citibet’s plug-in model signifying a ‘new era in illegal betting’, with major operators adopting similar approaches to expand their reach.
This trend exacerbated the risk of corruption and money laundering associated with illegal betting activities.
‘With its operational footprint spanning across Taiwan, Cambodia, Malaysia, and Singapore, Citibet’s transnational nature necessitates a coordinated response from law enforcement agencies, sports authorities, legal betting operators, and internet service providers,’ ARF noted.
While blocking Citibet’s websites is one approach, the ease of setting up mirror sites complicates enforcement efforts. Additionally, the franchising of Citibet’s operations to numerous websites further amplifies its reach and impact.
‘An effective strategy to combat illegal betting involves not only enforcement measures but also the development of a competitive legal betting market. Consumers are inclined to wager in legal markets for the safety of their transactions and to avoid criminal involvement,’ the report added.
‘Therefore, enhancing legal betting options and disrupting illegal operators through international collaboration, website monitoring, and improving legal betting offerings are crucial steps to protect consumers and combat organized crime in the industry.’
