By Arthur Chan

Hong Kong, 31 January 2024: The Consumer Council has called for tougher regulation of virtual gambling games, arguing that existing legislation is “not fully effective” and that minors in particular are at risk of becoming addicted. The watchdog has highlighted a lack of safeguards, noting that such games “normalise gambling behaviour” and lead to a higher probability of engaging in real money betting.

The Council’s report places the spotlight on the Gambling Ordinance (Cap. 148), pointing out that loopholes allow simulated games such as slot machines, mahjong and poker to flourish, while it fails to “explicitly prohibit minors” from participating in gambling. “The Council is of the view that the existing Ordinance is not fully effective in targeting a wide range of online gaming behaviours and businesses of a similar nature to gambling, including but not limited to simulated gambling games,” it says.

While virtual gambling games have many of the characteristics of real-life betting, they do not allow wagering with real money. However, players can use money to purchase in-game currencies. The watchdog notes: “Like most mobile games, simulated gambling games can be played for free, but if players are willing to pay extra, they could get more ‘benefits’ such as virtual coins and items, or more privileges and rewards than ordinary players.”

The Consumer Council trialled six simulated gambling games – including slot machines, poker and mahjong – from two widely-used app stores and obtained further information from their terms of service and websites. It found that most games adopted four common tactics to attract continued play and spending:

Regular login and play incentives: The purpose of these was to build players’ dailylogin habits with promotions such as “daily check-in rewards” or “daily free lucky draw”.

Various offers and paid services: First-time purchase and stored value rewards, time-limited offers, and a wide variety of paid services, all repeatedly displayed during the game. Fees for paid services varied from HK$8 to HK$3,000. In one mahjong game, players had to spend an astonishing HK$2.5 million to reach the highest tier of VIP membership.

Player leaderboards: These encouraged participants to competewith each other and be rewarded according to their ranking. To win more rewards, players had to play continuously to climb the ladder. Some games featured social media sharing functions to encourage players to invite friends.

Paid lucky draws: All the surveyed games featured these, as well as scratch cards, lottery tickets and other in-game purchases, but not all had their odds of winning displayed.

While the games targeted adults, all six allowed players to enter without age verification. The Consumer Council opines that “operators have not taken sufficient measures to prevent minors from partaking in simulated gambling games”. It calls for immediate improvements in this regard.

The watchdog notes that gambling is illegal in Hong Kong unless specifically exempted, but cites legal experts’ opinions that online activities are a grey area, depending on the actual setup of individual games, and that current offences are usually tied to physical premises.

In conclusion, the Council recommends that the government “review existing legislation and refer to overseas regulatory regimes in introducing specific laws that target online gambling”. It also suggests stronger regulation of games with gambling features, such as loot boxes, mandating the display of the odds against winning prizes, and adding a voluntarily withdrawal function from in-game purchases.

The Home and Youth Affairs Bureau, which oversees this city’s gambling policy, has noted the Consumer Council’s report and it remains to be seen whether the government takes further action. It is clear, however, that the Gambling Ordinance, like some other legislation currently in force in Hong Kong, has failed to keep pace with modern technology and the digital revolution.

Arthur Chan is a Senior Associate with BC&C. He specialises in Criminal Litigation and cyber fraud recovery claim and also develops a broad range of civil and commercial litigation such as immigration, personal injuries and employment issues. He has successfully dealt with cases involving account freezing and recovery, in one notable instance retrieving more than US$1 million that was stolen in an email scam. He can be contacted at Arthur@boasecohencollins.com.