How One Chinese Man Defrauded Sportsbooks

Online sportsbooks have made the opportunity to gamble much easier for bettors for many reasons. The convenience of placing bets without leaving the comfort of their own home is one of the biggest reasons. But did you know that this can also put a sportsbook at risk for fraudulent activity?

A Chinese man, referred to as “Shi”, defrauded sportsbooks by creating a team of criminals to take part in an illegal gambling ring. This organization was able to find a loophole that resulted in a profit of around $4.6 million dollars.

To learn more about how this man and the criminal organization he formed defrauded sportsbooks, keep reading. 

The Scheme

Disgruntled by the many losses he experienced during his sportsbook gambling past, Shi, who was an owner of an internet cafe in Wenzhou, was able to discover that there may be more to win if he played his cards right. He realized that when an account was lost, the sportsbook would offer bonuses to get them to keep betting.

Shi discovered that if he was able to get ahold of these losing accounts and control them, he would have the upper hand. This scheme could result in Shi not only gaining back what he had lost prior but could also make quite a bit of money.

The scheme itself entailed luring those who had current losing accounts with sportsbooks and offering monetary incentives for them to give their accounts over to Shi and his accomplices. Once this was done, the team was able to reactivate those accounts and bank on the bonuses offered by the sportsbooks.

Division of Labor

Although Shi was the mastermind behind the whole operation, he did not do this alone. Once his idea was formed, he reached out to a man only known as “Zhou” to help him pull it off.

Zhou’s job was to track down the account holders and pay them between $160-$780 to give the rights to their accounts over to their budding organization. They reportedly found these people by placing ads online.

While the two could handle most of the operation, at least locally, their desire was to go bigger and make more money. They could do this by bringing in another person to the organization that could make this happen in foreign countries.

This is when they brought in a “Wang” who is from the Hainan Province to help make his vision of an overseas operation a reality. With Wang involved, they were able to expand the operation to Europe and Southeast Asia by following the same scheme. Wang recruited several other operatives to help him as he expanded the original operation. While their organization knew the game and was well aware of what was happening, the sportsbooks, unfortunately, were not aware.

Since there was no way for the sportsbooks to know that these losing accounts that they were offering incentives to were being fraudulently sold, this scheme continued for seven long months. The total profit taken in by the team of crooks is said to be around $4.6 million. 

It is important to note that in most of the countries where these activities occurred, gambling of any kind is considered illegal. So, not only were they defrauding the online sportsbooks, but they were actually betting illegally.

The Takedown

Although the organization was successful long enough to profit from their heist, the police were able to catch wind of the scheme and shut them down. Because laws that prohibited gambling of any kind were broken, the police were able to arrest the team members.

Additionally, several of the organization's assets were seized and bank accounts were frozen during the course of the raid. It was reported that a combination of 3,000 bank cards that were being used by the team of criminals were also found.

While Shi, Zhou, and Wang were at the helm of the organization, there were a total of 69 suspects were also apprehended. This along with computers, and numerous mobile phones that were used for the scheme.

Why Defrauding a Sportsbook is a Bad Idea

Now this scheme was easy for the men to commit, and while it may seem attractive to start a scheme of your own, committing fraud of any kind is a criminal offense that carries with it some pretty harsh punishment. The course of action taken is typically dependent on the type of fraud that was done. This is especially true for defrauding a sportsbook.

It is important to keep in mind that gambling, in general, is considered illegal in some states as well as some countries. To participate in these activities in and of themselves is a crime. Getting involved in fraudulent activities that have to do with gambling can hold even stricter consequences.

In most cases, if a sportsbook becomes aware that a customer may be attempting to commit fraud, they can, at the very least, suspend their account until further investigation can take place. Once they look into the case, they typically will make decisions based on how far the fraud has gone. They can also refuse to pay out any accounts that they suspect of fraudulent activity.

Sportsbooks have the right to notify authorities if they learn that fraudulent activity is occurring. These authorities can be anyone from financial institutions that the customer is involved with, as well as law enforcement.

There are times, however, that the sportsbook may only become aware of the situation once the police or federal investigators have gotten involved. Much like the case in China, there was little to no information about the illegal activities until it was all said and done.

It is important to note that criminal activity, specifically fraud when it comes to sportsbooks and other gambling entities can result in either jail time or fines for the offender. The higher amount of money that is involved usually ends up with the harshest punishment.

 

Overall, although there may be many more cases such as this one of people who try to defraud organizations like online sportsbooks for their own profit, it is clear that, in most cases, it does not go unpunished. Shi and his band of criminals took advantage of many people, and while they got away with it for some time, they were stopped and likely face severe consequences.