China's Gambling Problem

The Chinese take their side of paradise very seriously, and by paradise we mean the island of Hainan, a.k.a. "the Hawaii of China." The beaches are kept pristinely white (good news, especially for those brave enough to try the clothing-optional one). The hotels, such as the Ritz-Carlton and the Shangri-La, carry five stars. The tourists even act the part. Many wear colorful floral outfits that are so loud they almost pulsate. A few have become so intoxicated by the tropical scenery (and perhaps a few tropical cocktails) that they have gone charging into the ocean—only to drown because they can't swim. But as John Milton more or less told us a few centuries ago, trouble manages to find its way into paradise, and so it has in Hainan. In part, the problem is the global recession, which has eaten into the base of 20 million or so tourists who visit each year. Even worse: their void—and the money vacuum they've left behind—is being filled by gambling, and the violence that so often comes with it.

Gambling was abolished when China's communist regime took power in 1949. But as free-market reforms gained hold during the post-Mao era, this stubborn vice clawed its way back. China's estimated illegal gambling revenues last year may have reached 1 trillion renminbi ($146 billion), estimates Wang Xuehong, executive director of the China Center for Lottery Studies at Beijing University. In a 2002–03 survey conducted by the center, "Hainan was China's worst hot spot for illegal gambling," she says. Underground casinos began proliferating faster after 2005, when central-government watchdogs barred officials and executives of state-owned enterprises from going on gambling jaunts overseas or to the former Portuguese-administered enclave of Macau. Illicit games of chance called Mark Six, in which players guess what numbers will be drawn out of a transparent cylinder with colored numbered balls, are so prevalent in Hainan that even vegetable markets and ancestral temples have become makeshift casinos. Much more sophisticated operations—with lottery machines, closed-circuit TVs, and security guards—are sometimes protected by local police and "administered by grassroots village or township committees. They take it as a sort of development model," says Hu Xingdou, a professor at the Beijing Institute of Technology. Hu is one of the few to publicly call for legalization, primarily because he's hoping that will help end the "murders, kidnappings, and people committing suicide by jumping off buildings" that most ascribe to the Chinese mafia.

The most dramatic sign of trouble erupted in March, when more than 1,000 residents of two villages went on a three-day rampage that left one dead and nine injured and resulted in 1 million renminbi (about $147,000) in damages, caused primarily by the mob tossing homemade Molotov cocktails at police vehicles and government offices. The two neighboring communities have been feuding over land for 80 years, like Chinese Hatfields and McCoys, but the rise of the underground casinos raised the rivalry to a new and deadlier level. Competing casino bosses had "incited" villagers to fight each other in a proxy turf war over gambling proceeds, said a local official familiar with the case who requested anonymity because he wasn't cleared to talk with the media. Mobs, gambling—what is this, Vegas? Atlantic City? Maybe—Hainan has even become a favorite spot for the Miss World beauty pageant. So who needs Hawaii? All Hainan needs now is a few of those $4.99 all-you-can-eat dinners, and it will have hit the jackpot.

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