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Philippines turns to cockfighting to raise revenue

The Philippines continues to focus on the gambling industry to raise revenue to fund the government’s coronavirus response, this time passing a law to tax the country’s popular online cockfighting industry.

The House of Representatives voted 215-1 on Tuesday to amend section 125 of the National Internal Revenue Code of 1997. Speaking ahead of the vote, House Ways and Means Committee Chairman Joey Salceda said the measure taxes an industry previously not taxed, “without causing any economic harm.” 

According to the state-controlled Philippine News Agency, the operators of online “sabong” as it’s known will now need to pay a 5 percent tax on gross revenue, much the same rate as has been set for land-based companies accepting online bets.

They will also have to pay the existing local taxes and regulatory fees.

Legislator Sharon Garin said eliminating the ambiguity in the regulatory framework of digital activities such as e-Sabong will promote accountability and transparency in the system.

Cockfighting is legal and regulated in the Philippines, however taking bets online was a legal grey area. However, since the pandemic shutdowns, growth in the offsite bets have reportedly surged. 

“We need to maximize the national government’s revenue-generating capacity by regulating these activities without overstepping the powers of local government units and government gaming agencies,” Garin was cited as saying by the state news agency.

Gross domestic product in the Philippines is forecast to decline between 8.5 percent to 9.5 percent this year, its worst economic contraction since World War II, leaving the cash-strapped government looking for potential revenue streams.

Earlier this month, Philippine Amusement and Regulatory Corp. (PAGCOR) Chair Andrea Domingo detailed plans to allow land-based companies to accept online bets and to regulate domestic online gambling in the country.

Speaking on an Asia Gaming Brief webinar, she said the government is seeking to stamp out illegal gambling and to recoup potential lost revenue. She said PAGCOR had also recommended taxing and allowing online sabong bets, likening the practice to the Philippines’ national sport.

There are more than 2,000 legally licensed cockfighting arenas across the country, with the cockfighting industry estimated to be worth about $1 billion annually. 

Asia Gaming Brief is a news and intelligence service providing up to date market information for worldwide executives on relevant gaming issues in Asia.

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