China Acts to Close Loophole Used for Online Gambling

Chinese leaders announced that virtual currency could no longer be exchanged for real money, limiting the trade to services and goods provided by the supplier, in a move to continue to remove loopholes used to play at online gambling sites.

Chinese officials have decreed that virtual money can no longer be traded for real currency, or other items except goods and services provided by the source of the virtual funds, and that virtual money can no longer be used in online gambling. According to Chinese news agencies, as reported by the Wall Street Journal, over ninety percent of Internet gaming and lotteries employ virtual currencies.

This means points or currency won by playing online games, as well as prepaid gaming cards. The government had slapped virtual trading with a twenty percent tax last year, but clearly felt the system was being exploited by Internet gambling operators.

Companies issuing the currency made public pronouncements supporting the decree, and stated their desire to help prevent Internet crime, which in China includes gambling.

China is in a period of tightening controls to prevent Internet gambling by its citizens. The virtual currency move follows the decision to force blocking software onto all new personal computers sold in the country, as well as investigations into online gambling operations and the expansion of the Great Firewall, China's vast security block on Internet access within its borders.

While some critics in China say the virtual currency move will likely be ineffective, others note that the government seems poised to attack online gambling in a variety of ways, trying as many methods as it can until one sticks.