Singapore online operators wait for the exception to the rules

Published in: Latest Intelligence The Singapore government has now made it clear it plans to regulate online gaming. What’s less clear however are potential exemptions to the rules that may allow operators scope to tap into the market’s potential.
To date, online gambling in Singapore has been a regulatory grey area. It wasn’t specifically banned, as rules governing gaming were drawn up prior to the Internet era. The general consensus has been that services targeted at locals probably fell outside the law.
The uncertainty left a significant number of online sites able to carry out operations in a seeming twilight zone.
The nation’s two legal and government-operated betting outlets, Singapore Pools and The Singapore Turf Club, both accept phone betting but do not offer online wagering.
The government earlier this year said it was considering regulation of the sector, amid concern about the social impact of online gaming, particularly on the youth of a highly tech-savvy community. Its decision is that a ban is necessary...but with provisos.
“The government intends to restrict remote gambling by making it illegal unless there are specific exemptions,” Minister for Home Affairs and Trade and Industry S. Iswaran told the third Singapore Symposium on Casino Regulation and Crime.
The new rules will include extra powers for enforcement agencies to act against facilitators, intermediaries and providers of remote gambling services. They will also introduce measures to block access to gambling websites and payments to remote gambling operators.
Ads for online gambling will also be prohibited.
“While such measures may not be foolproof, they will impede access to remote gambling platforms and send a clear signal of the regulatory stance in Singapore,” Iswaran said.
However, a potential ray of light for the online gaming industry is that the government may consider some exceptions. Iswaran pointed to the example of Hong Kong, where the Hong Kong Jockey Club is the only authorized provider of gambling services, both physical and online.
“It appears that alongside a ban on online gambling services, the new law will actually allow a limited number of tightly-controlled, legal, licensed online gambling services. In that respect, it would be similar to the limited “opening up” of the casino market a few years ago,” said Matt Pollins, an associate with international law firm Olswang. “ It would also be similar to licensing models seen elsewhere, including in Europe.”
Analysts said an outright ban would be too hard for police and could never be 100 percent effective, especially given that many online websites are hosted offshore, making legal or regulatory action difficult.
Pollins pointed to the experience of the TV and movie industries in attempting to battle pirate services.
“It’s the whack a mole problem,” he said. “As soon as one service is blocked another one pops up elsewhere.”
A ban may also be prejudicial for the government, with revenue from online gambling forecast to grow strongly.
The revenue of the global remote gambling industry in 2012 was estimated at US$35 billion, with an expected annual growth rate of about 9 percent. This is about five times the expected growth for conventional terrestrial gambling.
In Singapore, the market is thought to have already topped $300 million and is likely to grow at about 6 percent to 7 percent annually. The U.K.-based Global Betting and Gaming Consultants estimates that internet gambling in Singapore will grow from $342 million in 2012 to $519 million by 2017.
A recent online survey of around 1,000 Internet users commissioned by the Ministry of Home Affairs, found that almost 3 in 10 respondents had gambled remotely at least once in the past year.
Singapore, with its relatively small population, may not be financially attractive enough for large online operators. However, being licensed in Singapore could perhaps be a brand-building exercise for organizations looking to build a reputable online brand in Asia in the long-term, Pollins added.
Aside from online gaming, the government has also expressed concern about the proliferation of games that simulate gambling on social media networks, helping to blur the distinction between social gaming and online gambling.
Iswaran said Singapore will also plan a campaign of public education to make its residents aware of the problem. These seemingly harmless games can desensitize youths to the dangers and ills of gambling, he said.
As far as online gambling is concerned, the government is now planning a period of public consultation before drawing up the new legislation, with observers expecting new rules at some point in 2014.
If Singapore is successful in establishing a workable regulatory regime for online gaming, other jurisdictions in Asia, where web-based gambling takes place in a similarly murky legal framework, may follow.
The certainty is likely to be seen as a plus for reputable operators.
 

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