CITIbet in spotlight as authorities target illegal gambling

Horse racing authorities are intent on closing the net on exchange CITIbet, but leading officials in the sport admit “there is no silver bullet” and say they will need government and law enforcement assistance.

The Asian Racing Federation (ARF) recently formed the Anti-Illegal Gambling Task Force, with the ARF's 21-member nations represented in a group that will share information and work with government agencies to control what they feel is a growing black market.

The ARF Task Force has already signed memorandum of understandings with the Victorian Racing Integrity Commissioner and more recently the Australian Criminal Intelligence Commission (ACIC), while in late April task force chair and Hong Kong Jockey Club head of security Martin Purbrick spoke at an Interpol illegal betting conference in Bangkok.

ARF chairman Winfried Engelbrecht-Bresges said the formation of the task force, ACIC agreement and Interpol briefing were further steps towards keeping criminality out of horse racing.

“The agreement is the first that the ARF has signed with a law enforcement agency and illustrates the commitment of the ARF and its members to work with and assist law enforcement agencies in upholding the integrity of horse racing and combatting illegal betting, a key driver of sports corruption,” he said.

The prime concern for Asian racing administrators is the growth of CITIbet, with ARF research indicating the exchange now turns over in excess of US$50 billion annually.

CITIbet is similar in nature to Betfair in that customers can bet on horses to win or lose, but unlike Betfair, it is not licensed in any racing jurisdictions.

Nor does CITibet pay fees to horse racing, or share information with the sports' authorities, a particular concern given the company’s agent-based structure.

CITIbet's website also streams live racing from all around the world using pirated pictures and features loosely regulated bet types including in-play betting.

“CITIbet is not an exchange that cooperates with racing authorities,” he said. “There's no silver bullet but the question is whether or not something should be done about CITIbet now, because it has grown so much. It is clearly an unlicensed, unregulated criminal enterprise, and it's having an impact on racing now. That's one question we will ask government agencies, can you do something now?”

One of the first tasks of the ARF Anti-Illegal Betting Task Force was to undertake research on the size and scope of illegal betting in the region, including CITIbet.

“What we will do through the ARF Taskforce is produce a report on the illegal betting situation in each country, we've done market sizing, not just on CITIbet as a whole, but on each different racing jurisdiction, and there is some interesting data,” Purbrick said.

One of the key pieces of data is the astounding growth of the exchange, and illegal betting overall, in southern China.

The ARF research indicates that RMB500 billion ($72.5 billion) is bet illegally each year in Guangdong province alone, with more than RMB150 billion wagered on horse racing.

CITibet's biggest holds are, not surprisingly, on Hong Kong racing, with officials estimating that the site's turnover is around one-fifth of the Jockey Club's annual turnover of around HKD$100 billion.

“There has been a lot of growth in the illegal market in southern China and we suspect that it is where a lot of CITIbet's turnover comes from,” Purbrick said. “Southern China is where we have seen the growth of very large agents and conglomerates of bookmakers, and they are turning over huge amounts of money, and a lot is going through CITIbet. It's not a transparent market obviously, but we understand, through our research and talking to police, that it is absolutely huge. We have sized the Guangdong market at 500 billion RMB on racing and sports.”

It is virtually impossible to get informed, independent experts to speak on the record about CITIbet, but one professional gambler, speaking on the condition of anonymity, felt the exchange's hold on Hong Kong might be even bigger than the ARF numbers.

“Some of the biggest gamblers in the world are using it,” he said. “It's easy to see how big the market is, just take a look at the site on race day.”

Another tell tale sign that there is serious liquidity in CITibet is the uncanny way it pre-empts the 'market moves'.

“Horses that are not favoured on CITIbet always drift, and those that are bet on always shorten in price. Clearly illegal bookmakers are using the site, taking bets and then using the Jockey Club pools to manage their liability.”

CITIbet's growth seems to have been spurred by the relatively recent demise of its closest competitor, AA-Star, and although the site is mostly popular in Asia, with Macau and Singapore also holding significant amounts, other racing jurisdictions are catching on.

Because CITibet does not pay fees to racing it can operate with very low margins and as such offers much more competitive pricing than traditional betting operators.

Even though liquidity is quite low on racing in other parts of the world on the site, which also offers betting on harness racing and greyhounds, officials say the nature of CITibet means that its mere presence is a threat to integrity.

“The point we are trying to make to authorities is that CITIbet turnover in these other jurisdictions is growing, including in the United Kingdom, South Africa and Australia, and that is going to cause integrity issues – because you can bet on horses to lose,” Purbrick said.