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Apple’s New iPhone Pact Could Fuel Chinese Mobile Casino Market

May 3, 2014

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Millions of people defy the authorities by engaging in mobile gambling in China. Apple’s recent partnership with China Mobile could boost the market for iOS gambling apps.

When discussing the Chinese market for mobile casino apps, two facts stand out: mobile penetration is massive and still on the rise, and mobile gambling is illegal (as are most forms of the ancient pastime in China). Apple’s recent agreement to sell mobile devices directly to Chinese consumers has implications for both. Upper middle-class Chinese with means will be able to buy iPhones and iPads in growing numbers, as well as all of the apps which come along with them.

While behind Android mobile gambling in terms of volume and usage, the iOS platform has shown strong growth in this area. Will more Apple devices mean more (illegal) mobile gambling?

Apple’s watershed moment in China

Apple looks to have struck gold last December when it expanded its ability to serve China’s 760 million mobile subscribers, the largest market in the world. The silicon valley tech giant cut a deal with China Mobile, the country’s largest carrier. While Apple was already selling phones in record numbers on the Chinese market this deal will give sales an added boost.

Dow Jones estimated that Apple could sell 39 million in phones in China in 2014. To put that figure in perspective, the company sold 34 million phones worldwide during the fourth quarter of 2013. Apple stocks also rose significantly last year on the expectation of a deal with China Mobile, which had been in negotiations for six years. The carrier announced that it received over 1 million preorders for phones before they hit the market in January.

China Mobile CEO Xi Guohua had this to say about the partnership:

“Apple’s iPhone is very much loved by millions of customers around the world. We know there are many China Mobile customers and potential new customers who are anxiously awaiting the incredible combination of iPhone on China Mobile’s leading network.”

Underground gambling in China

China has some of the world’s most restrictive gambling laws. Land-based casinos as well as online and mobile gambling and all forms of sports betting are prohibited everywhere except the autonomous city of Macau. That does not mean that the people of China don’t gamble, however. Many analysts estimate that the underground gambling industry is worth one trillion renminbi annually, which exceeds total economic output in the city of Beijing. The activity is done primarily in underground gambling dens and betting rings, although citizens illegal access casino sites and mobile casino gambling apps as well.

Despite its “no no” approach to the nation’s unofficial pastime, the authorities haven’t been very effective in shutting down illegal operations. Countless underground sites serve domestic gamblers, and The World of Chinese reported that many industry players bribe government officials in exchange for the freedom to operate unhindered. In a country with a disorganized and corrupt bureaucracy, there is ample opportunity to do so.

Mobile gambling in China

While online casinos proliferate, the central authorities in Beijing haven’t been very successful in preventing people from gambling with mobile devices either. Most Chinese smartphone subscribers use the Android platform, which is the leader in gambling apps. The Ministry of Culture has ordered numerous providers to take down gambling apps, but they haven’t been able to keep up with growth in the industry. In addition, players can often download gambling apps directly from casino sites.

With more Apple devices in use, there is no question that the Chinese market will boost additional demand for iPhone casino apps. The company will certainly work with regulators to limit gambling with its devices but players can always get apps from third-parties. Major international sportsbooks Bet365, William Hill and Paddy Power offer popular casino and betting apps, just to name a few.

Potential limits to growth

While China could potentially come the world’s biggest iOS gambling market, there are numerous factors preventing short-term growth. The first is that while inefficient, government prohibition does restrict mobile gambling, at least more so than a legal, regulated system would.

The second reason is that Apple phones are too expensive for most Chinese consumers. The company is selling its somewhat outdated iPhone 4 in large numbers on the Chinese market, but the newer iPhone 5 carries a hefty price tag: between $860 and $1120 depending on where the device is purchased. That makes the phone available only to those among China’s new class of wealthy public officials and business leaders.

Millions of people will buy new Apple devices, but in a country of over 1.3 billion, sales figures will not be all that impressive. While growth will be significant, China’s mobile gambling market will remain a tale of untapped potential.

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