Malaysia declares war on illegal gambling

Malaysia has launched a major crackdown on illegal gambling and this time says it will stamp out the practice for good, though some observers are less optimistic.

In September, the government established a committee to tackle illegal gambling, including online activities. It said its latest crackdown would be the biggest ever and there have been some indications it has been taking its toll on companies operating in the country.

U.K.-listed Playtech recently warned that its annual profits would be some 5 percent below the bottom end of market expectations, resulting in a GBP17.8 million annual loss and triggering a share slump that wiped about a fifth off its market value.

Although not the only factor, the situation in Malaysia is thought to have played a part in the profit warning amidst concern another of Asia’s grey markets will turn definitively black as far as online gambling is concerned. According to analysts at Investec, Malaysia accounts for about 5 percent of the company’s overall revenue.

Gambling is strictly limited in Malaysia. There is one casino operator, Genting Malaysia, which operates the Resorts World Genting property. Apart from that, gambling is legal on horse racing and through lottery providers and even then is not available to the country’s muslim population, which make up 60 percent of the total.  

However, illegal gambling has been rampant and a 2013 study found that 4.4 percent of the population were compulsive gamblers, raising government alarm bells and triggering a series of attempts to crack down.

The new action committee involves several government and law enforcement agencies from the country, with senior police officers checked and cleared of any connection with criminal groups.

Deputy Inspector-General of Police, Tan Sri Noor Rashid Ibrahim who leads the committee, said this time things will be different as it will encompass a broader range of stakeholders from the Malaysian Communications and Multimedia Commission (MCMC) through to local Internet providers who will play a key role in closing down online gambling sites.

“We have formed an illegal gambling action committee to plan, analyse, synergise and execute the actions to be taken to completely wipe out illegal gambling once and for all,” Tan told local media.

The first task for the committee is to find and remove corrupt police officers who are protecting the gambling syndicates that are behind illegal gambling. Embarrassingly for the government, pictures were published on the internet of policemen in Johor apparently partying with a gambling kingpin just a month after the crackdown was launched.

While ongoing raids against gambling dens are thought to be having an impact, local authorities are warning gangs are taking their activities online, which is more of a grey area.

The gambling industry in Malaysia is regulated under the Common Gaming House Act 1953, which makes no specific provisions for online gambling, which didn’t exist at the time it was drawn up. The government is now planning to close this loophole, though it is unclear yet whether or not it will amend existing legislation or craft a separate law.

“Special attention should be given to improve online gambling laws because online gambling activities, which can be conducted via smartphones, are becoming rampant right now,” Deputy Prime Minister Ahmad Zahid Hamidi told local media on the sidelines of a recent event.

"We are also collaborating with Interpol to create a firewall for telcos to prevent this from spreading," he said.

A senior legal source in Malaysia confirmed there had been increased activity against illegal gambling activities over the past year.

“However what is lacking in my view is specific legislation to tackle this issue. The legislation we have dates back to the 50s and 60s such as the Common Gaming Houses 1953 and the Betting Act 1953, and are not well equipped to deal with the problem,” he said.

“The Deputy Prime Minister has spoken recently about amending the CGHA or enacting new legislation, so this may be on the cards although there is no development yet. New legislation focused on online gaming would of course be more effective rather than amending existing legislation and trying to reconcile outdated concepts or terminology.”

Faced with a similar situation, neighbouring Singapore undertook a sweeping review of online gambling, resulting in the introduction in 2015 of some of the most draconian legislation worldwide banning the practice. It includes criminal penalties for those caught gambling, including jail time and blocking access to web sites..

Over the last few years, a number of crackdowns have been carried out across Malaysia  in an attempt to put an end to large underground gambling businesses.

Two years ago, Malaysian authorities created a special task force known as the Special Task Force for Anti-Vice, Gaming and Gangsterism (STAGG). STAGG was created by recruiting more than 200 specialists from law enforcement agencies. The special team includes 61 officers, 139 policemen and 20 civil servants. Deputy Police Commissioner - Datuk Mohd Rodwan Mohd Yusof – was assigned to lead the special task force.

In 2014, the fight against illegal gambling resulted in more than 20,000 arrests and the seizure of 138,000 computers used in illegal online gambling. Throughout the year, police carried out more the 62,819 raids.

In January 2015, STAGG and Penang police forces collaborated in an operation that targeted online gambling dens and family entertainment centers in several locations of the island, resulting in the seizure of 190 simulator machines with gambling options worth RM950,000, around RM15,949 in cash and tokens worth RM44,980. A total of 172 customers and 28 workers were kept for further questioning.

In the same year,   as part of the collaboration with Malaysian Communication and Multimedia Commission, 310 online gambling websites have been taken down.

In 2016, the Selangor police performed around 5,000 raids and placed 5,962 people under arrest, charged 2,458 with multiple offenses and confiscated 61,281 gambling machines. It is worth mentioning the 7-month operation “Ops Dadu” run by the police in Penang that targeted illegal gambling outlets and claimed to have destroyed 99 percent of the island’s gambling dens. In this large operation, 215 raids were conducted which led to the arrest of 268 traders and 384 gamblers.