Chinese Gambler Apprehended after Defrauding Overseas Sportsbooks

Chinese police continue to put the crackdown on illegal gambling operations in the country. The latest news comes from Wenzhou Evening News, a local media outlet in the city of Wenzhou in the Zhejiang Province, home of nine million people and, apparently, one criminal organization that has been exploring a legal loophole to run sports betting activities.

Police arrested several dozens of people in relation to an online betting ring and seized assets worth $4.6 million. A man, identified as “Shi,” and the owner of an Internet cafe in the city, has been described as the alleged ringleader. Authorities have reason to believe that he may be the one behind the entire organization, detailing how it worked.

Shi’s Scheme Is a Stroke of Genius

Yet, to chalk up Shi’s operation as the greedy exploitation of vulnerable gamblers is not an exact depiction of what’s going on here. Apparently, Shi had a much more complicated plan to turn overseas sportsbooks into losers, not that Chinese authorities cared much who was winning or losing when they apprehended him earlier this month.

Regardless, Shi had a few bad experiences with gambling himself. He had lost money on various sportsbooks in the past. However, he stumbled across an interesting fact – sportsbooks would try to incentivize “losing accounts” to bet more.

So, an idea was immediately formed. Shi would use losing accounts to trick sportsbooks into giving him more money in the form of bonuses and then travel to neighboring countries or even Europe to make use of instant betting options while also taking advantage of latency in how odds are displayed and reflected in sportsbooks.

Essentially, Shi decided to create a quick platform from which he collected the information about such “losing accounts.” People who have incurred losses – and were, therefore, eligible for such bonuses – were welcome to sign up and hand over accounts. Right as expected, unsuspected sportsbooks would credit reactivated losing accounts with juicy bonuses.

Collecting the Accounts, Step One in Masterful Deceit

To get their scheme off the ground, Shi teamed up with a partner, named in the police report as “Zhou,” who would seek out the accounts and offer a payback of around $160 to $780 to willing participants who would give up their info to the organization.

A total of 200 accounts were collected this way, allowing Shi and his accomplices to continue with their plan. While Shi had valuable assets, he knew that he would not be able to carry out his overseas operations on his own. He teamed up with another operative, identified simply as “Wang” from the Hainan Province.

That person would help Shi and Zhou establish overseas teams in Europe and Southeast Asia to begin exploiting the instant-betting option. Because of delays in how the odds are displayed, the team was able to benefit from arbitrage.

Essentially, a point was scored, and Shi’s operatives would know about that, but various sportsbooks would not be as quick to act and reflect that change in the odds, leaving them vulnerable to Shi’s well-concocted plan, which was really just using a weakness in the sportsbooks’ offer.

Police, though, was little interested in the complexity of the operation. Rather, authorities apprehended Shi and his team, along with 3,000 bank cards purchased for the organizations’ use, because they had been violating country laws under which all forms of gambling are prohibited.

A total of 69 criminal suspects have been arrested and various assets, including computers and mobile phones, have been seized in the operation.