Billionaire Alvin Chau has found himself the latest target in China's crackdown on illegal online gambling based in the Philippines

Arrested Chinese Gambling Junket Operator’s Business Has An SBTech/DraftKings Connection

DraftKings is already facing a lawsuit from its shareholders, and this week’s news may thicken the plot further.

The shareholders claim that the company misled them about alleged black market activities by its subsidiary SBTech. The tech provider, which DraftKings acquired last year, may now end up drawn into some drama playing out in Macau.

Readers trying to follow this plot may need some corkboard and yarn, like the popular internet meme featuring Charlie Kelly, a character from the show It’s Always Sunny in Philadelphia.

SBTech entered a multi-year agreement with Suncity

News emerged on Monday of Alvin Chau‘s arrest. The Chinese billionaire is accused of facilitating online gambling within mainland China, where all gambling is illegal.

Prior to the current scandal, Chau was mainly known as a junket operator. These junkets ferry the wealthy from mainland China to retail casinos in Macau, where they can gamble legally.

Chau was also the CEO and chairman of Suncity Group Holdings Limited and Summit Ascent Holdings Limited. He stepped down from both positions following his arrest. Meanwhile, gambling insiders surfaced a 2014 press release showing SBTech entering a “multi-year deal with TGP Europe.”

TGP Europe is a subsidiary of Suncity.

The 2014 press release says:

“TGP Europe is owned by TGP Holding’s part of the Sun City Group, the largest provider of live dealer casinos in Asia, making the deal a significant step in SBTech’s progression into the European and Asian markets.”

Suncity describes itself as developing and operating “integrated resorts across Asia, including the Russia Federation, the Philippines, Vietnam and Japan, etc. The Group also operates in the travel segment and the mall operation segment.”

As of today, the TGP Europe site still advertises the use of SBTech’s platform to power its sports betting products.

According to the press release, SBTech provides TGP Europe with “a turnkey sports betting solution for the company’s white label operation, including leading UK bookmaker JenningsBet.”

Depending on how the story plays out, the link between SBTech and Suncity may not be helpful for DraftKings as it defends against the newly-combined class action.

Few specifics at this time

News reports don’t name the specific products or technology provider Chau allegedly used for “establishing overseas gambling platforms and conducting illegal virtual betting activities,” as CNN Business words the charges.

As Yahoo Sports reported on Tuesday:

“Prosecutors have accused the group of setting up an illegal online betting platform in the Philippines and soliciting mainland Chinese customers with live broadcasts for large-sum online gambling.”

If Suncity operated a China-facing offshore online gambling operation out of the Philippines, it wouldn’t be the first to do so. The so-called POGOs have been the source of repeated scandals over recent years.

Meanwhile, the South China Morning Post reported today that a court denied Chau bail. It described the junket operator as a “flight risk,” which may be understatement.

The billionaire will await trial from a Macau prison cell. The Morning Post article states:

“Alvin Chau Cheok-wa, 47 – the founder and CEO of the Hong Kong-listed Suncity Group – was placed in compulsory detention with four other suspects over the alleged offences, which are punishable by up to 12 years in prison, according to Macau’s Public Prosecutions Office. The remaining six suspects have been released on bail, but are barred from leaving the casino hub, and must regularly report to authorities.”

Suncity’s stock price dropped more than 48% today.

- Heather Fletcher is the lead writer with OnlinePokerReport. She's a career journalist, with bylines in The New York Times, Adweek and other publications. Reach her at [email protected]
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