Tencent Axes Poker Platform in China Amid Expanding Gaming Crackdown

Tencent Axes Poker Platform in China Amid Expanding Gaming Crackdown

Chinese technology giant Tencent has announced that it will be shutting down its popular mobile poker title “Everyday Texas Hold’em.” This process began Monday, Sept. 10 and will conclude Sept. 25 with the termination of the game’s servers. Customers will be reimbursed according to the rules set forth by the Chinese Ministry of Culture and Tourism.

About “Everyday Texas Hold’em”

“Everyday Texas Hold’em” was distributed over Tencent’s widely popular WeChat social messaging app. It was a free-to-play poker room that used an in-house currency to denominate its games. Users received a certain amount of this play money just for signing up and logging into their accounts, but they could also purchase more from a store within the game. There were also third-party marketplaces where players could buy and sell the chips used in “Everyday Texas Hold’em.”

A representative of Tencent stated only that the decision to discontinue the game was a “business adjustment” and did not elaborate further.

Legal Background Info

It’s extremely likely that the real motivation behind this “business adjustment” was a desire to not run afoul of Chinese law. Although poker used to be considered a mind sport and afforded certain protections from anti-gambling regulations, this designation was removed some time ago. Also, China banned all social poker apps, even those involving strictly play money games, in June 2018.

Declaring a game to be gambling even when conducted for fake currency units seems like an unusually draconian step to take, even for a totalitarian regime like Beijing. The key to this puzzle lies in the fact that many people were using these apps to essentially gamble for real money by privately trading their practice chips for actual cash away from the tables. Reports abound of high-stakes action taking place on what were ostensibly play money-only gaming platforms. Because it was possible to transfer chips to others within “Everyday Texas Hold’em,” such illicit activity could have been occurring in this game too.

Besides disrupting the operations of virtual poker apps, the Chinese crackdown has also negatively impacted the country’s live poker scene. Legal uncertainty caused several tournament organizers to cancel events originally scheduled to happen in Macau, such as the Asian Poker Tour which recently moved one of its major live festivals from Macau over to the Philippines.

Even offline poker functions held in other countries were affected by the actions of the Chinese government because it prohibited not just playing poker-themed games but also promoting poker on social media. Thus, tour management and gambling sites were hindered in communicating with potential customers in the largest market in Asia, which has had an impact on live tournament participation figures throughout the region.

Video Games Also Targeted

This isn’t the first time that Tencent has had to discontinue or modify its product offerings in response to the diktats of the authorities. Besides being involved in social poker apps, the corporate conglomerate is heavily invested in video games, which have also drawn the meddlesome intervention of Beijing.

In July 2017, the Communist Party’s main press outlet, the People’s Daily, referred to Tencent’s “Honor of Kings” game as “poison.” A little bit later, a prominent armed services newspaper cautioned that the game could cause soldiers to neglect their duties. Tencent responded by limiting the amount of time that people could play each day according to their age.

In late 2017, Tencent signed a deal to become the Chinese publisher of the hit title “PlayerUnknown’s Battlegrounds,” but the company had to alter the gameplay significantly when crafting a localized version of the game. This was prompted by China’s declaration that the game “severely deviated from socialist core values.” While the decoding of such Marx-inspired jargon is more an art than a science, most onlookers felt that this was a reference to the high levels of violence and gore in the game.

More recently, in August 2018, Chinese authorities revealed new plans to combat video game addiction among children. The proposals include limiting the number of new mobile games that are released and monitoring individuals’ playing habits to make sure they don’t succumb to addiction. Weirdly, Beijing framed these steps as necessary to counteract the prevalence of poor eyesight among youth, which it says is caused by too much video gaming.

Tencent Hurting

The cumulative effect of all of this government interference has been a serious decline in the share price of Tencent. After opening the year at around 408 HKD per share on the Hong Kong Stock Exchange, it’s currently trading at around 324 HKD. Furthermore, the firm reported in August its first decline in quarterly profits in close to 13 years.

This entire story illustrates the dangers of the government getting too involved in economic matters. It’s rarely the case that proposed solutions from on high actually successfully address the problems that they’re intended to remedy. In the meantime, they interfere with the economic freedoms of both individuals and businesses.

Government Interference

The startling improvement in China’s fortunes since the 1980s was spurred by Beijing’s decision to take a more hands-off approach to the economy, but it now seems that forces are trending in the opposite direction.

Case in point, the island of Macau, the country’s only legal gambling resort, saw its gaming revenues reached a peak of $45.2 billion in 2013. That same year, the Chinese government also enacted its widespread anti-corruption campaign, which severely hit the industry and caused its revenues to plummet to just $28 billion in 2016. Only after authorities eased off on their corruption crackdown towards the end of 2016, however, did Macau’s casino industry finally return to growth, and in 2017 post its first annual gain in three years with revenues higher by 19% at $33 billion.

Nevertheless, there is currently an ongoing trade war playing out between China and the United States as President Donald Trump seeks to reduce his country’s $375 billion trade deficit with China and address the alleged theft of US intellectual property. This also has the potential to spill over into Macau’s casino market if Chinese President Xi Jinping decides to target Las Vegas-based casino giants with operations on the island. In the meantime, Texas hold’em is an American game that has become a cultural icon in the gaming community, giving Beijing  yet another opportunity to distance itself culturally from the United States if the trade dispute is allowed to escalate further.