For those that still cannot see why it is important for online casinos to receive regulation and why the government cannot just slap prohibition on like a band aid forget about, the Chinese have offered a stellar example.

Put simply, without the regulation and licensing of online casinos, shady underground online gambling rinks emerge.  The Chinese city of Hangzhou was the seen of a particularly elaborate plot.  11 people were arrested in connection with a gambling operation the involved online casinos from the Philippines and wagers as high as $73 million.

“The network acted as a bridge between Chinese gamblers and overseas Internet casinos in the Philippines,” said Wu Jun, spokesman for the public security bureau of Xiaoshang district.

“About 80 percent of the gamblers are local businessmen, and chances are that the money they bet came from their companies' accounts.”

The story goes that a local businessman, referred to as Li, established the gambling Network back in 2008.  He was recruited as an agent from an unidentified online casino in the Philippines.  The plan was relatively simple.  Li bought into the deal by placing a 5 million yuan deposit.  17 percent of winning from players brought into the network by Li went to the online casino in the Philippines.   

Li’s cut of the action was 10 percent of winnings.  The whole plan worked like pyramid scheme.  Players were given incentive to attract new players.  Gamblers that introduced new players to the network would receive a 7 percent commission.

It is not likely that operations like these would occur of China offered safe and regulated online casinos.  People are going to gamble, the most a government can do is to keep the industry safe.