China’s chokehold on its iGaming industry has intensified with the latest decision to ban Tencent-developed Texas Hold’em poker video game, the news came on Monday. The government has been stepping up its efforts to phase out or downright prohibit products which it considers to not comply with the norms and rules of the socialist party.
Tencent is one of the country’s largest developers of gaming solutions for poker rooms, the iGaming business and even traditional video games, where Tencent’s involvement has been the strongest with billions worth of assets. However, even the Chinese behemoth has been buffeted by the regulation, which led to a $20 billion write-off of its share price recently, posting results for the first time in 13 years when quarterly profits didn’t go up.
Tencent is not going to fight the government on the issue, conceding that it’s prepared to phase out the product by September 25 when the servers will be finally shut. The affected customers will be allocated compensations up to a certain level, which will ultimately be determined by the Ministry of Culture.
With the bulk of its operations still rooted in iGaming products and activities, the Shenzhen-based company now has some difficult choices to make. As the regulatory noose tightens, the company is likely to cease more assets and shut more products.
What official statement Tencent made was brief, with a spokesman saying that Tencent has opted to close the game as part of a business adjustment.
A Business Adjustment Worth Billions
Tencent’s spokesman was not in the wrong. The company has been trying to diversify its assets, notably with copious investments in electronic sports, streaming platforms, mobile solutions focused on gamers and younger generations while fending off competition.
Despite its strategy to transition from iGaming into traditional game, Tencent has still faced problems with the Chinese government which has baulked at the idea of approving several video games for the mass market.
Meanwhile, a number of iterations of poker and even chess have been targeted by the Chinese ruling part as they are easy to associate with gambling. Even within Tencent’s own ranks, sources have revealed for Reuters that the government was systematically looking to uproot certain game types.
Tencent and Poker – Not an Accidental Relationship
Tencent has definitely not been sitting idly by when it comes to poker. The company struck up a deal with the World Series of Poker (WSOP) prior a ban on all online poker apps hit in April 2018. As a result, Tencent had to remove the WSOP app from its popular IMS service, WeChat.
Another report published in the The Wall Street Journal has revealed that poker users have already sought out the services of middlemen to cash out their winnings rather than entrusting the Ministry to return their rightful winnings.
Meanwhile, Reuters elaborated that the latest ban is part of a larger crackdown that Chinese authorities have been caring for a long while now. Beijing has been quite intransigent in meting out punishment to those gambling operations which it thought deserved them.
Several years ago, Macau was caught in the midst of another crackdown which sent gambling revenue in tailspin. Recovery has been strong in the past two years, with Las Vegas brands posting excellent numbers all throughout this period. However, there is still the lurking fear that the ongoing tit-for-tat exchange between the United States and China may affect the relative calm in which Macau has been able to restore itself to a gaming hotbed in the East.
The Fight Against Addiction
China has been intensifying its efforts to curb addiction, but often going to monstrous lengths. Despite Macau’s relative deregulation, a number of poker event have had to be scrapped in the country, because they didn’t meet the government standards and no formal approval was ever issued.
We have been talking about video gaming as well throughout our short write-up, but this is just as well, because China will want from Tencent to also check the age and identity of their userbase and be on the look-out for addiction symptoms.
From poker to Playerunknown’s Battleground, China has been buffeting industries all over.