Submission to the Home and Youth Affairs Bureau in Response to the Consultation Document on the Regulatory Regime on Basketball Betting

1. The Consumer Council (the Council) is pleased to submit its views with respect to the consultation document issued by the Home and Youth Affairs Bureau on the Regulatory Regime on Basketball Betting (the Regime).

The Council’s Overall Stance

2. Betting, often viewed as a matter of personal discretion, also presents crucial consumer-related consideration.  While the decision to engage in gambling is personal choice, it is vital to recognise that bettors are consumers and should be protected in an inherently cross-border environment_[1].  A recent study conducted by The University of Hong Kong showed that approximately 39.5% of Hong Kong citizens engaged in gambling in 2022_[2].  Such a high rate of participation highlights the importance of ensuring that adequate protections are in place.

3. Moreover, understanding the growing need to combat illegal betting activities, the Council opines that the introduction of the Regime is a feasible way to address it.  According to another study report on Hong Kong consumers’ participation in gambling activities by The University of Hong Kong in 2005, the participation in football betting with local illegal and offshore bookmakers dropped considerably from 1.6% to 1% and 1.3% to 0.4% respectively between 2001 and 2005, and the decline was, to a certain extent, attributed to the authorisation of football betting in 2003_[3].  Besides, a study report by the Hong Kong University of Science and Technology in 2015 indicated that 97% of basketball bettors would consider betting through a legal channel if one were become available_[4].  Recognising the effectiveness of this existing practice pertaining to football betting, the Council believes that the proposed Regime could bring a similar effect in addressing illegal basketball betting activities while safeguarding public interests.

4. The Council recognises the endeavour of the Government, the Hong Kong Jockey Club (HKJC), the Ping Wo Fund (PWF) and the Ping Wo Fund Advisory Committee (PWFAC) in preventing and alleviating gambling-related problems, such as the fact that the HKJC shall not accept bets from juveniles, and that the PWF has consistently prioritised public education and awareness campaigns to raise public awareness on the harms of gambling addiction, as stated in paragraphs 2.15 and 4.2 of the consultation document.  However, the Council considers that there is still room for intensification of the existing measures in order to prevent the deterioration of gambling problems in Hong Kong.  Thus, the Council suggests the following measures be adopted.

Stronger Identity Verification

5. The Council observes that Chapter 9 (Internet Betting) and Chapter 10 (Electronic Wallets) of the Betting Facilities Rules of the HKJC contain provisions that exclude liability for any loss sustained by a person whose bank account or betting account is accessed by a third party_[5].  However, the Council opines that these provisions might be too broad-brush and not able to provide sufficient specificity regarding the circumstances and timeframes in which they apply.  Moreover, such an exclusion in general may not adequately address the rising risks associated with online betting, such as unauthorised transactions and account hacking, thus creating concerns over the accountability for such issues and cybersecurity. 

6. Taking reference from the Code of Banking Practice issued by The Hong Kong Association of Banks, “unless a customer acts fraudulently or with gross negligence such as failing to safeguard properly his device(s) or authentication factors for accessing the e-banking service, he should not be responsible for any direct loss suffered by him as a result of unauthorised transactions conducted through his account”, and “customers may also be held liable for all losses if they have acted with gross negligence or have failed to inform institutions as soon as reasonably practicable after they find or believe that their authentication factors or devices for accessing the e-banking services have been compromised, lost or stolen, or that unauthorised transactions have been conducted over their accounts”_[6].  Despite the difference in nature between banking and betting, the Council considers such specificity still worth referencing.  As the sole operator in Hong Kong, the HKJC has an obligation to bear the responsibility to take proper measures to prevent unauthorised third-party users from accessing betting accounts.  In light of this, the Council recommends the HKJC conduct a comprehensive review of its existing rules, such as assessing whether this kind of liability exclusion is up-to-date and able to safeguard consumer interests. 

7. Moreover, the rapid advancement of technology makes online betting more accessible, increasing the likelihood of individuals, particularly juveniles, being exposed to gambling.  Therefore, in addition to the current multiple verification steps required for subsequent account access (paragraph 4.9 of the consultation document), the Council proposes that further identity verification should be established before placing bets.  In the current version of the HKJC app and website, there is no further identity verification required before placing a bet or transferring money from the linked bank account after logging in.  Unauthorised individuals are thus able to place bets via the HKJC online platforms, if the registrar logs in in prior.  Besides, while there is the 30-minute automatic logout feature to enhance security, this 30-minute window might provide ample opportunity for malicious actors to exploit vulnerabilities, particularly if a user forgets to log out or if a device is left unattended.  To tackle these potential loopholes and protect consumers, the Council suggests the implementation of further efficient verification, such as entering a transaction pin or enabling facial verification before placing bets and processing other relevant transactions, and more frequent logout intervals, all of which could significantly enhance the protection of user accounts and transactions.

8. In fact, similar approaches are also advocated by foreign jurisdictions.  According to a report from the European Commission in 2012_[7], a number of Member States have developed and adopted different techniques to protect consumers in the online environment.  For instance, there are regulatory systems providing sufficient age verification tools and ensuring controls by operators.  Software filtering in the home is also widely encouraged.  The Council thus stresses that preventive protection measures should be aimed at precluding minors gaining access to gambling content, and suggests that further identity verification should be implemented.

Further Assistance with Problem Gambling

9. The Council recognises the effort of the PWF in providing counselling and treatment for people with gambling disorder, and notes that the HKJC has taken necessary measures to ensure responsible betting, including staff training.  To further provide timely aids to the addicts, the Council recommends the HKJC provide training sessions to the frontline customer service personnels to proactively flag indications of problem gambling and provide appropriate assistance.

10. In fact, Canada’s Responsible Gaming Council_[8] has identified multiple behavioural markers that, when combined, make it more likely that a person suffers from a problem gambling disorder.  These behavioural markers include: (1) the volume and value of a person’s betting, and whether they increase over time; (2) how often a person bets and how much time elapses between bets or gaming sessions; (3) betting late at night; (4) the frequency and amount of time between deposits; (5) whether a person sees extreme variation in wins and losses; (6) whether a person uses multiple payment types, has had failed deposits, or has cancelled a scheduled withdrawal of funds in order to keep playing.  The Council deems that these findings could work as a crucial reference for the HKJC’s training to its frontline customer service personnel.

11. The Council recognises the existing research and monitoring efforts on the prevalence of gambling in Hong Kong undertaken by various organisations, including the HKJC, the PWF and the Tung Wah Group of Hospitals.  As the sole authorised operator in Hong Kong, the HKJC possesses comprehensive gambling data.  The Council opines that the HKJC has a unique position to take the leading role in monitoring gambling trends, and suggests the HKJC leverage aggregated data to identify overarching gambling trends in Hong Kong. 

12. In fact, in most states in the United States (US), operators are required to retain bettors’ betting history for a period of three years, which has also become a standard industry practice.  Operators use these betting records to detect patterns or indications of problem gaming behaviour and thus to flag accounts for customer service intervention if a bettor continues to exhibit concerning betting activity_[9].  To take a further step referencing the US, the Council proposes that the HKJC may consider, in compliance with relevant data protection regulations and guidelines, collaborating with appropriate organisations such as the PWF by flagging trends or issues reflected from the findings and identifying ways to address bettors’ problem gambling.

Customised Investment Limits for Responsible Gambling

13. Moreover, the HKJC can also provide customers with the option to set limits on their gambling activity within a defined timeframe.  Referring to the United Kingdom’s Betting and Gaming Council, operators must ensure that all players are required to choose, via the terminal, whether to set a voluntary time and money spending limit (or both).  When any player reaches their limit, they must be given the option to stop or to set new limits and continue playing_[10].  According to the Council’s observation, while the HKJC currently sets an overarching maximum investment amount for both football and horse racing betting (HK$500,000 per betting account on each betting day), there seems to lack customisation.  The Council opines that the HKJC should allow customers to set their own limits, with the maximum not exceeding HK$500,000.  The Council opines that this measure can prevent customers from spending beyond their financial capacity or engaging in harmful, impulsive behaviours within a short period.  Furthermore, it can serve as a safeguard against significant financial losses in the event of unauthorised account access.  By establishing predefined thresholds, the potential damage inflicted by hackers or those engaging in account theft, can be effectively mitigated, thereby protecting users from substantial financial harm.

Conclusion

14. The Council deems that combating illegal betting and addressing problem gambling require involvement of different stakeholders, including but not limited to the Government, the HKJC, the PWF and the PWFAC.  The Council foresees possible drastic changes in both the legal and illegal gambling markets after the authorisation of basketing betting; therefore, the Council urges continuous monitoring over new betting trends as well as existing betting activities, and tighter cooperation between stakeholders on both local and international levels.