Hong Kong authorities have proposed tightening the regulation of claw machine shops by implementing a licensing regime to curb addiction risks.

The Home and Youth Affairs Bureau’s proposal, included in a document submitted to the Legislative Council (LegCo) on Monday, comes as claw machine shops proliferate in the city as a low-maintenance business opportunity.

“Since these activities may involve gaming elements or addiction risks, appropriate restrictions on format or content may be necessary to protect participants, especially youth, from physical or mental harm or significant financial loss,” the bureau said.

The government seeks to introduce new requirements, such as posting a notice indicating that devices are licensed. The bureau is also considering mandatory addiction warning labels on machines.

A list of licensed premises has also been uploaded to the Home Affairs Department’s Office of the Licensing Authority, the document read.

The tightened regulations will function under the city’s Gambling Ordinance, which currently stipulates that claw machine shops must hold an Amusement With Prizes Licence (AWPL). Before that licence can be granted, a venue must hold a public entertainment licence.

However, a 2022 High Court ruling determined that claw machines do not meet the definition of “entertainment” and thus do not require a public entertainment licence, creating a regulatory gap.

The bureau is proposing to remove the requirement for a public entertainment licence and allow the Home Affairs Department to issue AWPLs directly.

Prize caps, addiction risks

Speaking on an RTHK programme, lawmaker Vincent Cheng said he agreed with the government’s proposal in principle but asked the authorities to consider whether the new curbs would stamp out the business.

“We have to consider whether [the regulation] will affect the industry’s development,” he said, urging the government to “strike a balance.”

Lawmaker Bill Tang, who chairs the LegCo Panel on Home Affairs, Culture and Sports, welcomed the tightened regulations, saying that some claw machine operations had “evolved” beyond their original leisurely purpose.

Prizes in certain machines now include high-value items such as mobile phones, encouraging gambling behaviour, Tang said. He proposed a HK$5 limit on the fee for each game and that the value of each prize be capped at HK$300.

The bureau has also proposed to regulate internet cafes, moving away from a Code of Practice model and introducing a mandatory licensing system.

One option is to bring internet cafes in line with the regulatory regime for traditional gaming arcades, imposing strict age restrictions for adult- or children-only venues and a ban on students in school uniform.

Another model would be to allow cafes to operate if they meet strict safety conditions.

The proposals are scheduled to be discussed at the legislature on Monday.

Hong Kong has suspended plans to legalise basketball betting, citing concerns about the rapid growth of prediction markets in the gambling sector.

The Home and Youth Affairs Bureau said in a email statement on Tuesday that legally introducing basketball betting at this time might fuel participation in prediction markets, which has soared in popularity. Betting on sports in prediction markets is considered illegal in Hong Kong, the bureau said.

It added that the trading volume of prediction markets reached US$64 billion in 2025, a threefold increase from the year before.

“Given these latest developments, as a responsible government, it is necessary to conduct a more in-depth study into the operations of these emerging models and platforms,” the bureau’s Chinese-language statement read.

The announcement came as the city was gearing up to launch basketball betting as early as September, to be run by the Hong Kong Jockey Club (HKJC). The introduction of basketball betting would have followed the 2003 legalisation of football betting, which the HKJC is also licensed to operate.

The city’s lawmakers passed a bill in September legalising basketball betting. The bill was not without controversy, with some lawmakers expressing concern that the move would promote gambling, especially among youth.

The government, however, maintained that there was a need to regulate basketball betting. It said illegal basketball betting had been growing at an “alarming rate” amid technological advancements and the rising accessibility of gambling platforms, with the estimated annual illegal betting turnover in 2023 being as high as HK$34 billion.

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Writing a blog post shortly after the bill’s passage, HKJC CEO Winfried Engelbrecht-Bresges said the dangers “posed by illegal wagering operators cannot be underestimated.”

“This landmark moment is undoubtedly as important as the legalisation of football betting 22 years ago and will ultimately enhance Club contributions to Hong Kong’s society,” he said.

HKFP has reached out to the HKJC for comment.