According to reports in local media publications, the Chinese government is cracking down on social online poker apps. Such apps will be banned starting June 1, and furthermore, social media sites will be barred from promoting poker.

Background

Gambling is already banned throughout China with the exception of specially designated zones, like Macau. Thus, all poker apps that are allowed within the country are for play chips only. Such apps have soared in popularity notwithstanding the fact that they can't be used for online poker real money play.

Chinese Quasi-Real Money Online Poker

Actually, there is a form of internet poker for actual cash that has been flourishing in China. You see, agent-based real money internet poker “clubs” have sprung up in the Chinese internet space. The way they work is that players join these private clubs and conduct all gameplay using practice chips. However, there's an exchange rate between these chips and real money. The organizer of each group sells these chips for cash and pays out winners at the agreed-upon rate.

This agent-oriented approach has its risks, most common among them being that players have to trust the agent to not run off with everyone's money. Online poker rooms that have employed this model, like PokerMania, have often closed their doors amid payment worries. Still, this is the most viable workaround to strict Chinese laws that has yet been devised by devotees of internet card games.



Home Page of the PPPoker Play Money App

Sites like PPPoker, Fulpot Poker, and Poker Monster have deployed what they claim are purely social poker apps with nothing of real value involved, but because of the ability to create private games, they're hosting what amounts to real money tables. Because these apps are generally open to players worldwide, not just China, the result in a net outflow of funds from China to the rest of the world because most Chinese players are not as experienced or skilled as their counterparts in other countries.

Expansion Hopes Now Thwarted?

Indeed, it is the relative newness of the game to most residents that makes China such a desirable market for operators and players both. Whereas the poker boom has largely run its course in the United States, the United Kingdom, and Australia, the game has not yet become mainstream in China. With a population of about 1.4 billion and a growing economy, it was viewed by many observers as the next big opportunity for poker expansion.

The recent crackdown on social poker has delayed any possible explosion of poker within China. Now, play money games must be relegalized before there's any hope of real money play being allowed. This will likely take many years if it happens at all.

Commercial Impact of the Ban

Beyond just the halt of private poker games online for real cash, the actions of the government are expected to have numerous consequences for the poker economy.

The inability to promote poker-related products and services via social media will have a depressing effect on poker revenues. Everything related to the game, from chipsets to strategy books, will likely see a decrease in sales.

Moreover, we could see Chinese representation in land-based poker events drop precipitously. It has been estimated that around half of the fields in live tournaments held in Asia consist of Chinese players. Many of them qualify for their seats through promotions on social poker apps, and they will no longer be able to do so.

Reactions to the News

The online gaming industry has already reacted to the new legal proscriptions against social poker apps. e-commerce giant Tencent has removed its successful World Series of Poker app – licensed under an arrangement with Caesars Interactive Entertainment – from its app market. Following reports of the ban, Boyaa Interactive in Hong Kong saw its share price decline by 12%. Boyaa sets up offline poker tours but uses an online app to run satellites to its events.

The Managing Director of the Hong Kong Poker Players Association, Stephen Lai, commented on the new legal rules:

Now, with the alleged policy change, there will be no “play money” poker in China, and you can’t talk about poker on social media. Chinese players won’t have a chance to practise, and they won’t get to know about legal poker events around Asia. Poker has gone back to square one in China.

Other Recent Online Poker Setbacks

In April 2018, we have seen several other legal challenges to online poker. Uruguay has blocked gambling providers from offering their services in the country. Meanwhile, a Washington court decision held that poker for play chips was against the state's anti-gambling laws. PokerStars opted to stop offering games to Washingtonians as a result of this judgment.