Hong Kong: Gambling Comparative Guide

1 History of and overall attitudes to gambling

1.1 How prevalent are different types of gambling in your jurisdiction? For example, does the current law reflect: (a) Religious or moral objections to gambling? (b) A permissive approach which also seeks to address the social consequences of gambling? and (c) The promotion of gambling as an ‘export' industry?

Gambling is generally not against public policy in Hong Kong. The Hong Kong government allows legal and authorised gambling in a restricted and regulated manner in order to address persistent public demand, so that the public will not resort to illegal gambling. However, the government maintains a clear stance on its policy not to promote gambling.

The government has adopted a multi-faceted approach in tackling various social consequences caused by gambling, such as fraud, money laundering, underage gambling and other Triad and criminal activities. Among other things, it has:

• cracked down on illegal gambling;
• increased public awareness of the harm of gambling addiction through public education; and
• provided counselling and support services to people who need help with gambling problems.

2 Legal and regulatory framework

2.1 Which legislative and regulatory provisions govern gambling in your jurisdiction?

The primary legislation governing gambling activities in Hong Kong is the Gambling Ordinance (Cap 148).

Other ordinances which regulate gambling or activities that may be regarded as gambling include:

• the Betting Duty Ordinance (Cap 108);
• the Chit-Fund Businesses (Prohibition) Ordinance (Cap 262);
• the Amusement Game Centres Ordinance (Cap 435);
• the Government Lotteries Ordinance (Cap 334); and
• the Broadcasting Ordinance (Cap 562).

2.2 Which bodies are responsible for regulating and enforcing the applicable laws and regulations? What powers do they have?

The Hong Kong government enforces the Gambling Ordinance in Hong Kong.

The Home Affairs Bureau is responsible for formulating gambling policy and monitoring its implementation. Within the Home Affairs Bureau:

• the public officer appointed by the secretary for home affairs is the licensing authority responsible for issuing various licences under the Gambling Ordinance and the Amusement Game Centres Ordinance; and
• the Betting and Lotteries Commission, an advisory committee under the purview of the secretary for home affairs, advises the secretary for home affairs on, among other things, the regulation of:
• • betting on horse races and football matches, and lotteries;
  • the issuance and revocation of licences; and
  • the variation of the conditions of licences.

The Hong Kong Police Force is also empowered by the Gambling Ordinance and the Gambling Regulations to enforce the applicable laws and regulations.

2.3 What is the regulators' general approach in regulating the gambling sector?

The Home Affairs Bureau's gambling policy is to restrict gambling opportunities to a limited number of authorised and regulated outlets in order to meet substantial and persistent public demand and thus to discourage participation in illegal gambling. Under the Gambling Ordinance, all gambling activities are illegal except:

• those expressly authorised by the government under the Betting Duty Ordinance (ie, authorised horse racing, authorised football betting and the Mark Six Lottery);
• those licensed by the public officers appointed by the secretary for home affairs (eg, tombola, mahjong/tin kau parlours); and
• those exempted under Section 3 of the Gambling Ordinance (eg, social gambling).

In Hong Kong, the Hong Kong Jockey Club is the only racing club and legal bookmaker authorised by the government.

3 Definitions and scope of gambling

3.1 How is ‘gambling' defined in your jurisdiction?

Section 2 of the Gambling Ordinance defines ‘gambling' to include gaming, betting and bookmaking.

3.2 What different types of activities are defined in the gambling legislation and what specific requirements apply to each? Please consider: (a) Betting (fixed odds/pool and spread)/betting on lotteries; (b) Gaming (house and ring games); (c) Lotteries/scratch cards and (d) The interface with financial products (if relevant).

(a) Betting (fixed odds/pool and spread)/betting on lotteries

There is no statutory definition of either ‘bet' or ‘betting', despite both terms being used in various statutory provisions; and the definition of ‘gambling' in the Gambling Ordinance includes ‘betting'.

A ‘bet' is generally the act of risking a sum of money or valued item against someone else's on the basis of the outcome of an unpredictable event such as a race or game; while ‘betting' simply is the making of bets.

The lawful types of betting allowed under the Gambling Ordinance are:

• betting authorised under the Betting Duty Ordinance; and
• betting between persons who are not engaging or assisting in bookmaking or holding out that they solicit, receive, negotiate or settle bets by way of trade or business.

Two types of betting are authorised under the Betting Duty Ordinance:

• ‘fixed odds betting' – that is, betting on the terms that any dividend payable on a bet is fixed at the time when the bet is placed; and
• ‘pari-mutuel betting' – that is, betting on the terms that any dividend payable on a bet depends on the respective shares of all winning bettors in the total amount of dividends available.

(b) Gaming (house and ring games)

‘Gaming' is defined in the Gambling Ordinance as "the playing of or at any game for winnings in money or other property whether or not any person playing the game is at risk of losing any money or other property".

A ‘game' is defined in the Gambling Ordinance to include:

(c) Lotteries/scratch cards

A ‘lottery' is defined in the Gambling Ordinance to include the following, whether promoted, conducted or managed in or outside Hong Kong:

• raffles;
• sweepstakes;
• tse fa;
• hung piu;
• po piu;
• any competition for money or other property success in which involves guessing or estimating the results of future events, or of past events whose results are not generally known, or which does not depend to a substantial degree upon the exercise of skill by the participants; and
• any game, method, device or scheme for distributing or allotting prizes by lot of chance.

Lotteries promoted and conducted by the Government Lotteries Management Committee are regulated by the Government Lotteries Ordinance (Cap 334); the Gambling Ordinance does not apply to such government lotteries. Under the Government Lotteries Ordinance, a ‘lottery' is defined as any scheme for distributing prizes by lot or chance which is promoted and conducted by the Government Lotteries Management Committee.

The requirements for lotteries are set out in the Reference Guide on the Organisation of Lottery Activities issued by the Home Affairs Department. Among other things, they include a requirement that the funds collected from lottery ticket sales be used for charitable purposes or for purposes which would contribute to the development of the representative government in Hong Kong.

(d) The interface with financial products (if relevant)

According to the Gambling Ordinance and the Securities and Futures Ordinance (Cap 571), the Gambling Ordinance does not apply to:

• ‘contracts for difference' – defined in the Gambling Ordinance as agreements whose purpose or effect is to obtain a profit or avoid a loss by reference to fluctuations in the value or price of property of any description or in an index or other factor designated for that purpose in the agreement – which are listed on any specified stock exchange or traded on any specified futures exchange; and
• any transaction or activity which is regulated by or under, or which is carried out in compliance with, the Securities and Futures Ordinance, unless the Securities and Futures Commission issues rules to prescribe the class of transactions or activities as a class of transactions or activities to which the Gambling Ordinance will apply, whereupon the Gambling Ordinance will apply accordingly.

3.3 What are the main mechanisms and features of the control of gambling in your jurisdiction? What are the consequences of breach of the regulations, both for operators and for players?

The Hong Kong government:

• restricts lawful gambling activities through legislation, which provides that gambling is unlawful unless the act falls within one of the exemptions under the Gambling Ordinance (e.g., social gambling);
• controls the number of licences issued; and
• tackles illegal gambling activities through law enforcement.

The penalties for committing an offence under the Gambling Ordinance by operators and players are set out in question 8.1. Breach of licensing conditions may result in revocation of the operator's licence and prosecution for an offence.

4 Issues of jurisdiction

4.1 What approach do the courts take to the issue of jurisdiction? Where an operator which is physically outside the jurisdiction offers services to individuals within the jurisdiction, is such gambling treated as taking place offshore and outside the control of the authorities? If not, what triggers establish when such gambling is subject to the laws and control of your jurisdiction?

If an operator is physically outside Hong Kong but offers services to individuals within Hong Kong, practically, it is not subject to the jurisdiction of Hong Kong; although theoretically, it may still commit the offence of bookmaking if it receives, negotiates or settles a bet placed from Hong Kong. An individual within Hong Kong commits an offence under the Gambling Ordinance if he or she uses foreign gambling services, even if the operator is physically located in another jurisdiction.

4.2 Can foreign operators provide remote gambling services in your jurisdiction without obtaining a licence? Can licensed domestic operators provide services overseas?

The current legislative framework does not expressly regulate online (remote) gambling; hence, foreign operators providing remote gambling services need not obtain a licence from the government. However, this does not make it legal for any user in Hong Kong to use foreign gambling services. In theory, the foreign operator may still commit the offence of bookmaking if it receives, negotiates or settles a bet placed from Hong Kong; although in practice, the government may be unable to take enforcement action against a foreign operator.

On the other hand, whether licensed domestic operators can provide gambling services abroad will depend on the law of the overseas jurisdiction in which the service is used.

5 Remote versus non-remote gambling

5.1 Does the gambling regime in your jurisdiction distinguish between remote and non-remote gambling? If so, how are these defined?

The current legislative framework makes no specific references to online (remote) gambling.

5.2 Are there any restrictions on the media through which gambling can be provided (eg, internet/mobile telephony)?

There are no restrictions in the legislative framework on the media through which gambling can be provided.

6 Licensing

6.1 What types of licences are available? Please consider: (a) Operators; (b) Activities (if relevant); (c) Premises; (d) Key individuals (if relevant) and (e) Equipment (if relevant).

The following licences are available:

• amusement game centre licence;
• amusements with prizes licence;
• lottery licence;
• mahjong/tin kau licence;
• tombola licence; and
• trade promotion competition licence.

Please see question 6.3 for key features and question 6.4 for the requirements for each licence.

Although a number of gaming licences are available, casino gambling in land-based casinos is not legal in Hong Kong and no licence for such is available.

6.2 Which bodies award and oversee such licences?

The Office of Licensing Authority of the Home Affairs Department awards and oversees gambling licences in Hong Kong.

The public officer appointed by the secretary for home affairs is authorised by the Gambling Ordinance to issue the following licences:

• amusements with prizes licence;
• lottery licence;
• mah-jong/tin kau licence;
• tombola licence; and
• trade promotion competition licence.

In addition, the public officer is authorised under the Amusement Game Centre Ordinance to issue amusement game centre licences.

6.3 What are the key features of such licences (eg, term/renewal/any limit on overall numbers/change of control)?

Term and renewal: A licence may, on payment of the prescribed fee, be granted for a particular lottery, game or competition, or be granted or renewed for a period of 12 months. An application for renewal of a licence must be made in writing and submitted to the public officer for approval.

Limit on overall numbers: There is no statutory limit on the overall number of licences to be granted; however, it is the government's policy to restrict the number of licences issued.

Change of control: Not all licences can be transferred. The following requirements apply:

• For an amusement game centre licence, an application to transfer the licence must be submitted.
• For an amusements with prizes licence, changes to the licence particulars should be submitted in writing and a fee will be charged to record them.
• For a lottery licence, changes to the licence particulars are allowed only if the lottery event has not yet commenced. The changes must be submitted in writing and can only be made once.
• For a trade promotion competition licence, changes to the licence particulars are allowed only if the competition has not yet commenced. The changes must be submitted in writing and can only be made once.
• For a tombola licence, there is no published guidance on changes to the licence, but best practice is to submit a new application in writing.
• A mahjong/tin kau licence is personal and non-transferable. An application for a new licence is required.

6.4 What are the substantive requirements to obtain a licence (eg, company established in the jurisdiction/physical presence/capitalisation?)

The licensing requirements and conditions are set out in the application guidance of each licence. Non-compliance with licensing conditions may result in revocation of the licence and prosecution for an offence. In general, all licence applications will be considered based on individual merit.

Amusement game centres licence: The public officer will consider the suitability of the applicant and the suitability of the proposed premises.

Amusements with prizes licence: The premises must be covered by a valid place of public entertainment licence under the Places of Public Entertainment Ordinance (Cap 172).

Lottery licence: The funds collected from lottery ticket sales must be used for charitable purposes or for purposes which would contribute to the development of representative government in Hong Kong.

Mahjong/tin kau licence: The proposed premises should not be located within a pure residential neighbourhood or close to an educational/religious institution or facility catering for youth and children.

Tombola licence:

• The organisation must be a bona fide recreational/social club;
• The premises should be suitable for conducting such activities;
• Tombola games should not be the only primary attraction;
• No financial harm should be caused to the players; and
• The organiser should not make any personal gains from the games.

Trade promotion competition licence: The competition must:

• be in the public interest;
• be incidental or ad hoc to the promotion of a business;
• not have the undesirable effect of inducing people to participate in gambling; and
• not be an alternative form of gambling opportunity.

6.5 What are the formal and documentary requirements to obtain a licence?

All licence applications must be made in writing. The completed application form and the necessary supporting documents should be submitted to the Office of the Licensing Authority of the Home Affairs Department for approval.

The supporting documents that must be submitted are listed in the licence application guidance as follows:

• Amusement game centre licence: Enclosure 9 of the Amusement Game Centre Licence Guidance Note.
• Amusements with prizes licence: Enclosure 6 of the Guidance Notes on Application for the Grant of Amusements with Prizes Licence.
• Lottery licence: Appendix I of the Reference Guide on the Organization of Lottery Activities.
• Mahjong/tin kau licence: Part B, Chapter IV of the Mahjong/Tin Kau Licence Application Forms and Guide.
• Tombola licence: Part A, Chapter III of the Tombola Licence Application Forms and Guide for Applicants.
• Trade promotion competition licence: Chapter I of the Trade Promotion Competition Licence Application Forms and Guide for Applicants.

In addition to the document requirements, the application guidance may set out additional formal procedures – for example, for an amusement game centre licence, all applicants must:

• advertise their applications in the local newspapers and return the ads within 10 working days of the date of acknowledgement of their applications; and
• provide a written statement in the pro forma at Annex C authorising the appointed public officer and staff of the Home Affairs Department to enter information relating to their applications in the register.

6.6 What is the typical timetable for obtaining a licence?

The table below sets out the timeframe of the application process for each licence.

6.7 What costs are typically incurred in obtaining a licence?

The table below sets out the fees for the grant of each licence.

7 Ongoing compliance

7.1 What are the operator's rights and obligations under the licence?

Operators have the right to conduct gambling activities as authorised in the relevant licence, and must comply with the licensing conditions as set out in the Gambling Regulations and in the guidance notes for each licence. Non-compliance with any of the licensing conditions may result in revocation of the licence and prosecution for an offence.

7.2 Can licences be transferred? If so, how? What restrictions apply?

Please see question 6.3.

7.3 What requirements and restrictions apply to the different types of gambling facilities in your jurisdiction?

Amusements with prizes licence: The premises must be covered by a valid place of public entertainment licence granted by the Food and Environmental Hygiene Department under the Places of Public Entertainment Ordinance (Cap 172).

Lottery licence: Except with prior written permission:

• no lottery ticket may be sold or offered for sale on any road, street, pavement, footbridge, path, lane, alley, square or court in the control of, or which is the property of, the government; and
• no lottery ticket may be sold in any other public place except with the permission of the owner or other person with lawful authority to give such permission.

Mahjong/tin kau licence:

• The proposed premises should not be located within a pure residential neighbourhood or in close proximity to an educational or religious institution or an institution or facility catering for children and youths; and
• The establishment of the proposed premises should not result in an undue concentration of mahjong/tin kau parlours in the locality.

Tombola licence: The premises should be suitable for conducting such activities. The applicant should provide:

• a copy of the layout plan of the premises, which should be drawn to scale to indicate the position of the place where tombola games will be conducted;
• the licence number of the certificate of compliance, if any, issued under the Clubs (Safety of Premises) Ordinance (Cap 376); and
• the name of the organisation.

8 Penalties and sanctions

8.1 What penalties and sanctions are available to the authorities for breach of the gambling legislation?

Offences and penalties are set out in Parts III and IIIA of the Gambling Ordinance.

9 Advertising and marketing of gambling

9.1 What requirements and restrictions apply to the advertising and marketing of physical and remote gambling in your jurisdiction? Do these vary depending on the type or location of the activity, or the medium through which it is carried out?

Marketing activities for gambling and gambling-related services are not prohibited under Hong Kong law. However, very rarely are such ads seen in public.

The promotion of casinos and gambling-related services is usually conducted by marketing executives to targeted customers.

10 Consumer protection

10.1 What social responsibility obligations apply to land-based and remote gambling operators in your jurisdiction? Do these vary depending on the type or location of the activity, or the medium through which it is carried out?

There are no land-based casinos in Hong Kong. There are no specific social responsibility obligations imposed on gambling operators in Hong Kong. However, to assist the government in tackling illegal gambling activities, the Hong Kong Jockey Club:

• openly urges the public not to gamble with illegal and offshore bookmakers; and
• reminds the public about the risks associated with credit betting and illegal gambling.

10.2 What other general consumer protection requirements are of relevance for gambling operators in your jurisdiction?

There are no consumer protection requirements for gambling operators specifically.

11 Financial crime

11.1 How does the gambling regime interface with money laundering/terrorist financing/proceeds of crime legislation in your jurisdiction?

Hong Kong has a well-developed legal framework to combat money laundering and terrorist financing. The relevant laws are:

• the Drug Trafficking (Recovery of Proceeds) Ordinance (Cap 405);
• the Organised and Serious Crimes Ordinance (Cap 455);
• the United Nations (Anti-Terrorism Measures) Ordinance (Cap 575); and
• the Anti-money Laundering and Counter-Terrorism Financing Ordinance (Cap 615).

Under these laws, it is a criminal offence to deal with property knowing, or having reasonable grounds to believe, that the property is the proceeds of an ‘indictable offence' or of drug trafficking. The definition of ‘indictable offence' includes offences under the Gambling Ordinance.

There is an obligation for a person to make a suspicious transaction report (STR) where he or she knows or suspects that any property in whole or in part directly or indirectly represents the proceeds of an indictable offence or drug trafficking or represents terrorist property. Failure to make an STR when required to do so is a criminal offence.

The Joint Financial Intelligence Unit (JFIU), comprising officers from the Hong Kong Police Force and Hong Kong Customs and Excise, manages the STR regime. The JFIU receives and analyses STRs and shares them with law enforcement agencies in or outside Hong Kong.

Any person arriving in Hong Kong and in possession of currency and bearer negotiable instruments of a total value more than HK$120,000 must make a written declaration to Customs.

The aforesaid legal framework does not apply to gambling specifically, but to all walks of life in Hong Kong.

12 Non-gambling activities/social gambling

12.1 What specific activities, if any, are exempted from the gambling regime in your jurisdiction (eg, prize contests/sweepstakes/free prize draws/e-sports)?

Section 3 of the Gambling Ordinance states that gaming is lawful if the game:

• is played on a social occasion;
• is played in private premises; and
• is not promoted or conducted by way of trade or business or for the private gain of any person other than to the extent of that person's winnings as a player of or at the game.

12.2 How is ‘social gambling' defined in your jurisdiction and how is it regulated (if at all)?

There is no statutory definition of ‘social gambling'. The court will consider the predominant reason for gambling.

‘Private premises' are premises to which the public have access (whether on payment or otherwise) only by permission of the owner, tenant or occupier of the premises.

There is no statutory definition of ‘trade or business'.

In general, a game is played on a social occasion if:

• it is played in:
• • premises licensed as a restaurant under the Public Health and Municipal Services Ordinance (Cap 132);
  • premises where intoxicating liquor is sold pursuant to a licence or other authorisation granted under any ordinance; or
  • a clubhouse in respect of which a certificate of exemption or a certificate of compliance under the Clubs (Safety of Premises) Ordinance (Cap 376) has been issued;
• a fee is not charged for admission to such premises;
• the game is not played by any person in charge of, managing or involved in the operation of the premises or the clubhouse, or employed at the premises or the clubhouse;
• the game does not involve playing against a bank kept by one or more of the players exclusively of the others; and
• the game is not promoted or conducted by way of trade or business, or for the private gain of any person other than to the extent of a person's winnings as a player of or at the game.

13 Disputes and legal enforceability

13.1 Are gambling contracts enforceable as a matter of law?

Gambling contracts can be enforced through the Hong Kong courts as long as they are legal under the applicable governing law.

13.2 In which forums are gambling disputes typically heard in your jurisdiction? What issues do such disputes typically involve?

Gambling disputes usually involve an action to recover gaming credit that was legal under the law of the jurisdiction where it was advanced. Gambling disputes can be resolved through civil litigation in the Hong Kong courts or through arbitration if the dispute is subject to an arbitration agreement.

In civil litigation, the forum in which gambling disputes are heard depends on the amount of the plaintiff's claim.

The Court of Appeal will hear appeals from the CFI (final and interlocutory decisions) and the District Court.

13.3 Have there been any recent cases of note?

There is a long line of authorities in Hong Kong jurisprudence that a plaintiff can enforce a foreign gambling credit through applying for summary judgment if the same was legally granted in the foreign jurisdiction.

14 Trends and predictions

14.1 How would you describe the current gambling landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

The legal framework and jurisprudence in Hong Kong on gambling are quite settled. The law is not expected to change in any material way in the foreseeable future.

15 Tips and traps

15.1 What are your top tips for gambling operators in your jurisdiction and what potential sticking points would you highlight?

Top tips for gambling operators include the following:

• All gambling operators should read carefully the licence guides issued by the Home Affairs Department and ensure that all pre and post-licensing conditions and other administrative practices are fully observed. Non-compliance is an offence and may result in revocation of the licence and prosecution for an offence.
• Not all licences are transferable. In that case, a new licence application must be submitted to the public officer for consideration and approval before the relevant gaming activities can commence.
• For prospective gambling operators that wish to offer online or remote gambling, there are many uncertainties under the current legal framework, so they are highly recommended to seek legal advice before commencing operations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.