US embassy cable - 05RANGOON220

C O N F I D E N T I A L SECTION 01 OF 03 RANGOON 000220 
 
SIPDIS 
 
STATE FOR EAP/BCLTV, EB 
COMMERCE FOR ITA JEAN KELLY 
TREASURY FOR OASIA, EOTF/FC 
USPACOM FOR FPA 
 
E.O. 12958: DECL: 02/17/2015 
TAGS: EFIN, ECON, SNAR, PGOV, BM, Economy 
SUBJECT: GAMBLING IN BURMA: ILLEGAL, BUT INEVITABLE 
(C-TN4-01119) 
 
REF: A. 04 STATE 255493 
     B. 04 RANGOON 631 AND PREVIOUS 
     C. 04 RANGOON 165 
     D. 03 RANGOON 859 
 
Classified By: COM CARMEN MARTINEZ FOR REASONS 1.4 (B,D) 
 
1. (C) Summary: This cable is in response to tasking in ref 
A.  Gambling has been illegal in Burma for 106 years; 
however, it occurs with impunity across the country.  Most of 
the gambling is surreptitious -- illegal lotteries in 
particular -- though some is in garish casinos on the Thai 
and Chinese borders.  We know of no specific allegations of 
money laundering in the gambling industry, and Burma's 2002 
money laundering law does not include gambling as a predicate 
offense.  However, the size of the illegal industry and the 
prevalence of money laundering in Burma's economy at large 
leads us to assume money laundering -- by locals and foreign 
criminals -- must be occurring.  Despite this, we see no 
movement by the GOB to address the illegal gambling problem 
in Burma so long as it remains relatively covert and a cash 
cow for corrupt authorities.  End summary. 
 
Gambling Law is Sound, Enforcement Not 
 
2. (U) Gambling has been outlawed in Burma since 1899.  The 
Gambling Law of 1986, which replaced the 1899 colonial 
statute, defines gambling as: "any game of chance, or any 
game of human skill for money or for things of value..."  It 
makes it a jailable offense to gamble, "abet" or promote 
gambling, or be present in a place were gambling is 
occurring.  It is even against the law to import playing 
cards.  The law allows authorities to seize all assets and 
property being used or having "potential use" for gambling. 
The only exception made to this law is for the 67-year old 
official lottery, which has drawings on the first of each 
month. 
 
3. (C) Despite occasional high-profile busts by police, 
enforcement of the gambling law is very weak.  Gambling is 
widespread in Burma, taking place under the nose of, and 
often in cahoots with, police authorities.  Not surprisingly, 
illegal gambling is a source and destination for vast 
quantities of unaccounted cash.  As a very large percentage 
of the Burmese population participates in some sort of 
gambling, much of this cash is likely from legitimate 
sources.  However, it is also likely that significant amounts 
of "black" money sloshes through this unregulated industry. 
This money may come from such traditional sources as illegal 
narcotics, gem, and teak smuggling, but also from otherwise 
law-abiding traders who play with invoices in order to comply 
with the GOB's complex and irrational trade polices.  Despite 
the circumstantial evidence of money laundering in the 
gambling industry, gambling is not a predicate offense under 
Burma's 2002 money laundering law. 
 
The Lottery: The Poor Man's Monte Carlo 
 
4. (C) The most common type of illegal gambling in Burma is a 
sort of lottery; daily betting on the last two digits of the 
closing Bangkok stock exchange index, and twice-monthly 
betting on the last three digits of Thailand's official 
lottery.  Though it is impossible to know how many people 
participate in these lotteries, one estimate we've heard from 
an organizer is that 70 percent of the adult population plays 
regularly (perhaps upwards of 17.5 million people).  In any 
event, businesspeople and others with whom we spoke see such 
gambling as a serious social and economic issue.  They say 
that poor people will spend their last kyats trying to "hit" 
the numbers, while middle-class participants often neglect 
their families and businesses to focus on picking the right 
numbers.  A cottage industry of "experts" has arisen to help 
players strike it rich, and many people seek auspicious 
numbers from Buddhist monks or other soothsayers. 
 
5. (C) The three-digit lottery (or "Chai") started in 1983, 
and pays out at 550 to 1 for those who pick exactly the last 
three numbers of the twice-monthly six-digit winning Thai 
lottery number.  The two-digit lottery (or "Hnalone Hti") is 
more recent, and by far the most popular form of illegal 
betting in Burma because there is daily weekday action.  This 
lottery pays out 75 to 1 for those who correctly choose the 
last two digits from the Bangkok stock exchange's SET Index. 
All across Burma, at around 4:30 pm daily, satellite TVs are 
tuned to Thailand's iTV channel to see the "winning" numbers. 
 
6. (C) The volume of betting for the two illegal lotteries is 
significant.  There is no minimum or maximum bet, and people 
are known to lose their cars or homes to bookies.  The 
organization of these lotteries is quite shadowy.  Branch 
organizers, who get commissions of 5-15 percent, take bets 
and make payoffs on behalf of main dealers.  No one with whom 
we spoke could (or would) hazard a guess about the identity 
of these central brokers.  Before the fall of former Prime 
Minister, and military intelligence chief, General Khin Nyunt 
in October 2004, we assumed that MI had a very active role. 
With MI's fall from grace, it is unclear who has taken over 
its gambling activities.  In any event the lotteries continue 
unabated.  One lottery branch organizer said that he has no 
difficulties running his operations in Rangoon so long as he 
pays his 50,000 to 60,000 kyat (about $55-$65, or about a 
year's wage for the average patrolman) monthly bribes to 
local police. 
 
Casinos: Your Renminbi's Good Here 
 
7. (C) Despite its prevalence, illegal gambling in Burma 
tends to be covert.  Though there may be surreptitious gaming 
rooms run out of homes or offices, there are few (if any) 
overt casinos operating in urban areas under the firm control 
of the regime.  There are major exceptions however.  Two 
casinos, the Andaman Club hotel and casino (where all players 
must buy at least $6,000 in chips) and Treasure Island 
resort, operate on an island off of Kawthaung, Tanintharyi 
Division in Burma's southeast.  The hotels, owned by Thais, 
are in Burma but are given special immigration status. 
Visitors fly into Ranong (in Thailand) and are conveyed to 
the island by hotel boats.  Only if the guests wish to visit 
the mainland do they need a Burmese visa.  Similar Thai-owned 
casino/hotels operate on the Burmese side of the "Golden 
Triangle" near Tachileik, Shan State -- one on a Mekong River 
sandbar just inside Burma.  Like for visitors to the casinos 
in Tanintharyi, gamblers in Shan State are given special 
immigration arrangements and are bussed directly from 
airports in Thailand. 
 
8. (C) The most blatant violations of Burma's gambling law, 
however, occur in some of the Chinese border regions of Shan 
State.  This is particularly the case in the semi-autonomous 
"Special Regions" of the Wa, Kokang, and other ethnic Chinese 
Burmese groups.  We have seen ourselves the Las Vegas-like 
neon and garishness of vast hotel/casinos in Mongla (the 
capital of Special Region #4) and Laukkai (the capital of 
Special Region #1; ref C).  There is no attempt to hide the 
nefarious activities within these buildings, though some 
require membership for entry.  These towns, quite remote from 
the Burman heartland, operate as "sin cities" for visiting 
Chinese tourists and businessmen.  All bets are in yuan, the 
languages spoken are Chinese dialects, and seemingly all 
staff (from croupiers and waiters to prostitutes) and 
customers are imported from China.  They use China's telecom 
and electricity services, and even keep clocks on Chinese, 
not Burmese, time. 
 
9. (C) The areas hosting these casinos are notorious for drug 
trafficking, and Burmese black money is omnipresent.  Oddly, 
though, according to a UN official who spends significant 
time in Mongla, the largest casino hotels in that town were 
built with foreign money.  In particular he mentioned one 
casino built several years ago as an Australian-Burmese joint 
venture and one new casino constructed by a Macao business. 
 
10. (C) How can this happen?  The answer is corruption and 
the GOB's limited writ in the Special Regions.  A Ministry of 
Home Affairs official told us that the Attorney General's 
office initially rejected investment proposals that mentioned 
gambling, but approved revised applications for hotels.  The 
fact that the gambling goes on regardless, the official 
complained, is due in large part to side agreements cut later 
with respective regional military commanders -- with 
acceptance from the SPDC top leadership he assured us.  So 
long as the regional commander and his Rangoon overlords 
approve of the illegal activity, there is nothing that the 
police can do.  The situation is more complex in the Special 
Regions, the official said, because these areas have 
significant autonomy for law and order issues.  Indeed, 
Mongla is patrolled not by the Burmese army or police force 
but by a James Bondian private police force funded by 
regional leader and drug trafficker Lin Ming Xian (aka Sai 
Lin).  However, Chinese and Burmese authorities have shown 
that they can at least temporarily shut down casino 
operations in these regions if violent crimes occur or when 
there are large VIP delegations visiting.  Whether the 
authorities force these shutdowns, or have to beg the ethnic 
leaders for them, is unknown. 
 
Comment: Money Laundering?  There Must Be. 
 
11. (C) We know of no investigation of money laundering 
associated with Burmese gambling.  However, with money 
laundering so prevalent in the Burmese economy, and law 
enforcement so weak (ref B), it almost certainly is occurring 
in the large and illegal gambling industry.  This laundering 
benefits local smugglers.  However, in the vast border zone 
casinos it may also be benefiting foreign criminals.  These 
casinos are under Burmese jurisdiction, but operate as if 
they were in the neighboring country -- using the currency of 
the neighboring country, and having better transport and 
communication connections to China and Thailand than to 
Rangoon. 
 
12. (C) (Comment, cont.) The SPDC leadership apparently has 
no qualms about allowing these blatant violations of Burmese 
law, so long as they and theirs get a cut, and the "moral 
turpitude" is limited to foreigners.  Indeed few Burmese 
gamble in these casinos -- or, in some cases, are even 
allowed to travel to the locations.  As for the more 
democratic illegal lotteries, we can only assume that (like 
the illegal but flourishing hundi network of financial 
transactions; ref D) senior officials allow them to continue 
because they and their families are tremendous consumers, and 
because they are very lucrative for people close to them. 
End comment. 
Martinez