Itching to play baccarat but don’t want to draw attention to yourself in the midst of a corruption crackdown by visiting a casino or break local law by gambling online? Don’t worry, you can still get a casino gaming fix, live before your very eyes, completely under your control and totally legally, at least until authorities decide otherwise. It’s called proxy betting and it’s an increasingly popular way for mainland China players to get action amid continued scrutiny of high rollers in Macau. The phenomenon poses new challenges to financial watchdogs hoping to stop money laundering and new opportunities for casino operators and junket promoters to engage their customers and expand their profits. Global Market Advisors estimates Macau’s proxy betting volume grew 15% last year, while overall VIP revenue fell 40%. Morgan Stanley estimates 8-10% of Macau’s VIP revenue came from proxy betting – before the government banned it in May.

Proxy betting in its simplest form involves a person outside the casino giving betting instructions to an agent inside the casino, most likely via mobile phone, to place bets on their behalf. The agent – a trusted friend, junket agent or even a casino employee – rather than the off-site party, buys the chips, places the bets and collects any winnings. That’s key from a legal standpoint and as a differentiator from online gambling, a very popular pastime in Europe that’s also gaining traction in Asia. At G2E Asia  trade show in May, a section dedicated to online gaming had 63 exhibitors, 38% of total companies on the exhibition floor. Show visitors most often identified online gaming as the product category of greatest interest.

But online gaming presents several issues that proxy betting sidesteps. Online players have to establish and fund an online betting account in order to play. Online casinos need relatively sophisticated software platforms for digital betting and account management. By contrast, proxy betting just requires people talking by phone plus video streaming from tables, something Macau never allowed, leading some casinos to install fax machines in the pit to send out results.

Since Macau banned proxy betting, much of the business has migrated to Southeast Asia, especially the Philippines, Vietnam and Cambodia, according to a white paper by Global Market Advisors Partner Shaun McCamley, a digital gaming pioneer and former president of Vietnam’s The Grand- Ho Tram. The paper estimates an eight table proxy betting operation would cost $65,000-80,000 and pay for itself within five months. Markets in Southeast Asia, strategically placed between the region’s economic giants, China and India, still have vast untapped proxy gaming potential, the white paper contends. It’s a very competitive gaming environment – among the 10 member ASEAN grouping, only Thailand, Indonesia and Brunei don’t have legal casinos – that often restricts casino size according to capital investment. Proxy betting offers casinos and junket promoters a new revenue stream from existing tables and generally falls into a legal gray area.

In online gaming, even when it’s legal where the game is taking place (or the server is located) – say the Philippines – if it’s not legal to bet in the jurisdiction where the player is located – say China – then the player is breaking the law. On the other hand, proxy betting, with all transactions undertaken within the casino by the agent, provides a legal fig leaf for the player, who can maintain anonymity and deniability while watching the game via video stream.

However, Macau demonstrated that authorities can quickly turn gray areas black. The white paper urges casinos to engage with regulators to establish proxy betting’s legality within workable parameters. If casino operators don’t take the initiative, global financial authorities, concerned that proxy betting undermines know your customer and anti-money laundry protocols, may write the rules for them.