Legalised sports-betting? No way

MARCH 31 — There’s a lot to be said for a government which seems to be running low on funds and ideas.

Rumours abound of how some ministries could be “dry” in a matter of months and won’t have enough to even pay for their electricity.

It’s all about the money as the song goes.

With their failure in trying to impose GST on the people, probably recognising the huge favour they would be doing the opposition parties, other sources of revenue needed to be thought up.

Even an old idea, which was practically dead and buried from just six years ago, seems good enough to resurrect as was reported last week.

The prime minister was said to have commented in Hong Kong that the government is reviewing the possibility of legalising sports-betting in Malaysia.

Having known the background behind the last effort to legalise sports-betting here, it is certainly a major stretch of the imagination to hope that the government could move in that direction again.

Last week’s report stated that the Berjaya Group was reportedly seeking approval to get in on the multi-billion-ringgit betting turnover that the World Cup usually generates.

That they mention Berjaya Group is especially of interest, firstly, as the chairman, Tan Sri Vincent Tan Chee Yioun, was the only person ever given a license to operate retail sports-betting in Malaysia.

Secondly, because this news came on the same day that an online news portal (not The Malaysian Insider) reported that Perkasa chief Ibrahim Ali had shares in Ascot Sports, the company that Tan had set-up to operate the retail sports-betting locally.

Before we go into a history lesson on sports-betting in Malaysia, I must say that it was rather surprising to read about the politician having shares in the company.

I am pretty sure that was never the case, simply because Ascot Sports was a wholly-owned entity of Tan Sri Vincent Tan in his personal capacity.

The tycoon quite rightly kept Ascot Sports out of Berjaya Group as it would be a lot easier to manage and operate independently. He maintained a firm control over the company with only his son and a couple of right-hand men as directors.

For the record, Ascot Sports Sdn Bhd was first set up in 1988 when Tan obtained a license from the government of Dr. Mahathir Mohamad to operate off-course betting shops offering prices on local and Singapore horse-races.

There were no other types of sports available for punters to wager on at the time.

The operation started off with three betting shops. The forecast presented to the government when obtaining the license was that the business would only be viable with about 120-plus shops across the country.

If one were to question its viability in just offering local races, then one would be absolutely correct too. The business volume would not be big enough even with 120 outlets let alone three.

So, Ascot Sports partnered with an Australian gaming company that provided the technical expertise as well as enabled more ‘markets’ to be offered in these off-course betting shops in Malaysia.

With that, punters in Malaysia were able to bet on races from Australia and New Zealand too, long before the Internet came along. Additionally, the major races in other countries would be offered, such as the Grand National from the UK and the Kentucky Derby from the US.

The partnership also enabled the betting shops to receive live telecast feeds from these overseas racing tracks for the benefit of their customers.

It was certainly a win-win situation for both the self-made billionaire and the government, as the tax revenue was sure to be ever-growing from the increase in number of betting shops and resulting turnover.

However, some people (especially those lacking any entrepreneurial spirit in them) in this country wouldn’t know a good opportunity even if it hit them in the face.

So, in less than two years, still with only three betting shops due to slow (or lack of) approval to open many more betting shops around the country, the ripples of negative reaction towards the government for having given a retail sports-betting licence came to a climax.

The government expressly informed Ascot Sports that it would have to stick to the three betting shops. There was no need to apply for any new betting shops as no further applications would be entertained.

The company realised that it would not be able to recover its investment by just operating three betting shops and came to an agreement to suspend the sports-betting license and shutdown its operations altogether.

Being a shrewd businessman, Tan wisely had a clause added to have the “first right of refusal” should the government ever decide to award such a retail sports-betting license again.

One can surmise that he felt that time would change the rules of the game in this country. That Malaysia would progress, rather than regress, and sports-betting would be more acceptable in the future.

With a forward-thinking prime minister (or so we thought at the time) and so much wealth to be generated around a long-term view of progress and development in the country, anyone would have thought the same way, in that the people would surely move forward in outlook too. But it was not to be, as we all know now.

Still, Tan’s gamble paid off, well almost.

In the year 2002, not long after the World Cup was held, there was a proliferation of online sports-betting companies. These companies made their presence known in Malaysia through various marketing channels, both online and offline.

Ladbrokes, William Hill, Victor Chandler and Interwetten were just a few of the UK and European gaming companies vying for Malaysian punters. Their websites were flashy, user-friendly, had attractive betting options but most importantly, guaranteed all winnings. This was attractive to the prudent punter who feared local (illegal) bookies might not pay in full if the weight of losses on the bookie was too great.

With a growing sports-betting market, brought on by the increase in live football telecasts and greater internet penetration, Tan made the case again to the government, justifying the need for sports-betting to be offered to the man on the street in Malaysia.

Quite easily, the outflow of funds due to online sports-betting made it an almost open-and shut case as far as the need to regulate sports-betting locally.

The government, seeing the viability and the huge tax revenue forecasted, approved Ascot Sports’ application for a new retail sports-betting license, with wider sports coverage.

Interestingly, the license also explicitly stated that greyhound racing was not to be included. I can only imagine that it was due to it being a case of double-haram – betting and dogs.

Hey, you never know with some of the ‘jokers’ in charge of important institutions here.

Anyway, this meant that for the second time during Dr Mahathir’s reign as prime minister, our government awarded a retail sports-betting license. It was issued under the purview of the Finance Ministry. This was in mid-2003, when Dr M was also the first finance minister.

It was said that the licensing fee was RM1million per year for a 25-year period of exclusivity to operate sports-betting in Malaysia. Ascot Sports duly issued a cheque for RM25million to the government. One can assume that this is the result of doing business in good faith, trusting the government without reservation.

The license also enabled Ascot Sports to work with Sports Toto, to use the latter’s betting shops across the country to take sports bets from the general public.

Industry sources said at the time that the move would leave the other two numbers gaming operators at a major disadvantage. The government, wanting to please as many people as possible (as our badly-planned LRT systems testify), supposedly stepped in to help Magnum-4D and Pan Malaysian Pools (now Da Ma Cai) to get some share of the lucrative business.

It was rumoured that their betting shops would also be equipped to take sports bets riding on the same Ascot Sports shared betting pool, with a percentage of their respective turnover kept as commission.

If all that was true, then it would certainly not have been good for betting margins to punters. But it would still be good for business for Ascot Sports and more convenient for the betting public who would be able to place their bets in more outlets than first intended.

All’s well that ends well, one might think. Unfortunately, a new prime minister was in place from October 2003, and when it came time to renew the license the next year, the new administration decided against it. Some reports carried in the local media back then said that the license was ‘frozen’.

But it didn’t matter, the end result was the same. Millions in investment hung in the balance due to the flip-flop nature of the government of the day.

Of course, the news that played out in the media was that the government had never issued such a license, and would never issue such a license.

The Badawi administration kept firm to its stand, possibly because the prime minister knew his position in Umno may be weakened, having espoused Islamic principles as a way of life for the people. The finance ministry was also reported to have returned the RM25million cheque to Ascot Sports. The company did not cash the cheque as a matter of principle.

Newspapers tried to get both sides of the story (for a change) and the successful businessman, who was obviously upset over the turnaround by the PM and the resulting loss in jobs and revenue, was said to have received legal advice to sue the government based on a clear case of having a contract and license in hand.

But Tan knows better than that from his (then) 25-plus years of doing business in this country. He held back his legal team, and opted for the alternative in maintaining good ties with the government. Doing so would be more beneficial in the long run.

Left with the hope that time could take its course again and allow for the renewal of the license after the noise from the detractors had died down, Tan opted to take the online route.

By the third quarter of 2005, AscotSports.com was born as a legal online gaming entity with a license issued under the legal gaming jurisdiction of the Isle of Man (IOM).

The IOM has a population of about 70,000 and is situated in the waters between England and Ireland. It is a sovereign island state under the United Kingdom and is most famously known for the annual TT motorcycle race.

It took another six months before AscotSports.com was ready to take any bets, just in time for the 2006 World Cup.

From what I have heard, a self-imposed restriction from utilising the vast network of the Berjaya Group of companies (not wanting to get on the wrong side of the authorities here) and the difficulty in competing for customers in China and other lucrative Asian markets at a profitable level meant that the online sports-betting venture was not able to generate the business forecasted.

In May 2008, the tycoon finally pulled the plug on AscotSports.com as reported by this website.

Ironically, this happened just one month before the anticipated high betting turnover from the Euro2008 tournament.

The sudden decision was quite justified from the tycoon’s point of view though. It was a time when other online sports-betting chiefs and heads of online payment systems companies were being detained in the US and in some European countries, on charges of taking bets from their citizens and moving money illegally across borders.

Insiders informed that when the tycoon was advised of such incidents, he knew he could lose a lot more should such a fate befall him. With the sports-betting business not being as profitable as hoped, there was only one solution.

After all, he had much more to lose with multi-million dollar business opportunities globally possibly going awry because of his ownership of AscotSports.com.

So, the simple solution was to shutdown operations. AscotSports.com duly refunded all customers with the balance of funds in their respective accounts by the end of July 2008.

In as much as it is hoped that sports-betting will be made available here legally, the chequered past in trying to establish legalised retail sports-betting in Malaysia, not once, but twice must surely make it a hard sell.

There is little chance of any change in the stance of the government or even the position of a smart businessman like Tan Sri Vincent Tan who has been there done that, and knows how risky and costly such a (mis-ad)venture could prove to be.

More so, with the way things have turned out politically in the country.

Therefore, the likelihood of the Berjaya Group or any other company restarting any retail sports-betting operation with the permission of the Malaysian government is as good as Datuk Chua Soi Lek becoming prime minister one day. Absolutely nil! And you can take that to the bank.

* The views expressed here are the personal opinion of the columnist.