Sports betting is not a 'pasar malam lesen'. It's a monopoly right.

The 2010 World Cup is already over and the Vincent Tan's BolaGate took a hike(for now). I was too busy to write something during that time. So I would like to dig it up now with my few cents.


Pics from anilnetto.com


Pics from anilnetto.com

The huge fiery(fanned by Pakatan Rakyat) public outcry caused PM Najib to make an U-Turn on awarding sports betting license to Vincent Tan. The 2 main spots that Pakatan try to hit are :
(1) Moral and Religious ground.
(2) That sports betting is just a tool to help Vincent Tan in bankrolling Barisan Nasional.
This post is going to stay clear of any moral and religious controversies. So I like to go a bit into some stuff that precedes point no (2).

One thing that struck me most during saga was MCA strong support for legalized betting. So it is going to be convenient their press statements as a tool to discover further.

MCA press statement on 15 May 2010 :
"MCA does not agree with any form of gambling, be it legal or otherwise, and raising revenue should never be used as a valid reason to justify legalization of the gaming industry."
Seems pretty harmless.
"Licensing conditions imposed must include the punter’s minimum age requirement, maximum betting amount, outlets’ location and business operating hours, etc."
Notice how it is just about normal stuff of a sport betting counter. (However Vincent Tan later alluded that it was possible for him to appoint sports betting agent without using his Sports Toto premises.)

And another press statement on 26 June 2010 :
"From Day One, this issue has been politicised to the hilt by Pakatan Rakyat leaders who were posturing for selfish interests."
So does this mean the rakyat are protesting because of PR self interest and not the nation interest.
"It is a shame that the Government has lost a golden opportunity to regulate a thriving sector in the underground economy. Had sports betting been legalised, the Government would have been able to manage and mitigate the social impacts that come with the industry."
A lost opportunity for whom?

What MCA is not pointing out that the government is not just dishing out a pasar malam license but is in real terms relinquishing her monopoly rights. This monopoly right will give Vincent Tan pornographic level of profits (free lunch).

So the question is really how the government is going to recover most of the proceeds of sports betting (not just a meager gambling tax). IMHO sports betting rights should be treated as a natural monopoly right of the state and must not be abused to enrich private individuals. So the there must be a legal plus operational in place before the awarding of any monopolistic or oligopolistic right. It is to ensure that the appointed 3rd party operator gets their decent management fee but cannot runaway with the money through accounting fraud. Malaysians already have endless nightmares with the PLUS, IPPs, utilties and other form of oligarchs.

Here are some points that I lifted from Josh Hong writings regarding the check and balance:
1) What are the limits for the profit of legalized sport betting and how to enforce it?
2) How does the government check for accounting fraud to steal profits (e.g through inflating operating expenditure)?
3) How do we measure the effectiveness of legalized betting? How do we gather data on the betting volume by new legalized gamblers versus the reduction underground betting volume? Is it going to be included in Najib's transformational KPI renaissance?
4) How to regulate the disbursement of legalized betting proceeds to charitable and good causes?
5) If legalized sports betting cannot fulfill its objectives, does unwinding it going to cost a bomb for the taxpayers?

Here is a very amateurish video I've made on this issue:






Regulating sports betting is just a lesser of two evils. The main reasons for gambling malaise in our society are :
1) Greed. (Too moral, spiritual and personal for me to elaborate).
2) A screwed up general economy. When people wages are so low compare to the real cost of living, they being being pressure to into huge debt. And in their desperateness to end this misery they get hook on gambling and become even more in debt. So herein lies the vicious cycle.


Vincent Tan and MCA argued that cash based legalized betting will deter people from borrowing from Ah Long. I think they are very far out with this one. Of course Ah long will prefer normal folks to gamble with them. But with their interest rate of 18-22% pa, they don't really give a damn who you are goings to gamble with or whether you are taxi driver borrowing to send your children to public universities(true story).

One last word for MCA. Since the ministers from your parties have approved so many licensed money lender, why are the Ah Longs still terrorizing every neighborhood in the country with impunity?

So it is not as simple as just giving license away.