Saturday, July 02, 2022

On shaky ground

Online gambling operators in the Philippines are facing a lack of clarity and regulatory confusion amid President Rodrigo Duterte’s clampdown on unlicensed sites

Since coming to power in June last year, Duterte has caused no end of confusion for online gambling operators plying their trade in the country. Back in December, he announced plans to pull down the shutters on iGaming sites, claiming they had no positive impact on the economy.

Days later he clarified his stance, saying it only applied to unlicensed, or illegal operators not paying statutory taxes. He then gave the green light to launch the Philippine Offshore Gaming Operator (POGO) program, allowing the regulator to issue 35 licenses to iGaming businesses for the first time and in direct competition to existing online licensor First Cagayan.  

Since then, Duterte has upped the ante on unlicensed sites with executive order EO 13. The order directs the Philippine National Police and National Bureau of Investigation to hunt down and prosecute illegal gambling syndicates and unlicensed operators, including online sites.

From the confusion has emerged some level of clarity – licensed operators can continue to offer online gambling products to players, while unlicensed businesses can either get with the program or be forced to exit the country via a showdown with lawmakers in court. But that is taking a somewhat simplistic view of the situation.

The impact of Duterte’s crusade is being felt even by those who hold the necessary online gaming permits. While those licensed by Pagcor and/ or First Cagayan remain out of the firing line for now, many operators are still enduring sleepless nights over what the President will do next and for how long their licenses will remain valid.    

“If an online operator has a signed service provider agreement with a POGO they will be ok,” says one industry insider. “If they haven’t, they should either be looking to sign up with one right away or move out of the country. This option is being looked at by several operators viewing the option of relocating in Taiwan and Vietnam.”

Uncertainty is also coming over the long-term role of First Cagayan now that Pagcor is supplying online licenses, with some operators opting to switch from the former to the latter. While there is nothing illegal about operating online gambling sites under a First Cagayan permit, the issue is where those operators are located.

“They should be in Cagayan, and by and large they are not,” says the industry source. “Most if not all are operating from Cagayan Economic Zone Authority (CEZA) buildings in the Central Business district of Makati. This leaves them vulnerable to closure by local authorities and by the NBI rather than by itself,” they add.

A source close to First Cagayan refutes these claims and says it has been issuing new, and renewing old, licenses since the President came to power. “We continue to issue and reissue licenses, granting approval to 13 operators and suppliers since June last year,” they add.

Operators remain concerned, however, particularly after Duterte claimed the scalp of PhilWeb founder Roberto Ongpin. PhilWeb’s business in eGaming and which is different to iGaming, in that it is local and venue based, held a valid Pagcor license. Despite this, Ongpin was forced to sell his stake in the business after PhilWeb was not allowed to renew its franchise after expiry in July 2016.

Following Ongpin’s departure, PhilWeb is anticipating a new franchise might be granted, but one that will no longer be exclusive. The company remains a shadow of its former self, however. Prior to Duterte’s announcement last year, PhilWeb operated 257 franchises across the country, the majority of those that remained open have since switched to the INSTAWIN platform.

“They have been stagnant since Ongpin’s departure,” the source says. “At present, it should be assumed they are preparing to enter a bidding war for what is understood to be two new electronic gaming licenses to be issued by Pagcor. This is anticipated to be a public bid with the full details and structure still being developed at Pagcor.  We would expect details to be released in March or possibly at the beginning of the 2nd quarter.”

The ongoing uncertainty, driven by Duterte’s unpredictability, is causing some operators and suppliers to consider applying for a licence with established regulators outside of Asia. Meeting the standards set by regulators in mature markets such as Europe is considered by some to mitigate the risk of operating in the Philippines under local licenses.

Susan O’Leary, director of eCommerce at Alderney, says the Alderney Gambling Control Commission received an influx of enquiries during last month’s ICE Totally Gaming from Asian, and in particularly Philippine, enterprises.

“We had a lot of interest from operators and suppliers based in the Philippines concerned about the recent changes in respect of online gambling regulation in the country. They want to ensure they are running their businesses to the highest possible standards while seeking additional protection from the instability and unpredictability of the Philippine market at present. To do this, they are turning to experienced regulators in mature markets, like the AGCC, as an alternative option.”

It could be argued, then, that the current regulatory framework in place for licensing online gambling operators in the Philippines is unable to keep pace with market demands. Duterte’s decision to issue POGOs was certainly a move in the right direction, but the incumbent systems and processes need to be overhauled if they are to be truly effective – particularly when it comes to shutting down unlicensed sites.

“The current regulations need improving,” says the source close to First Cagayan. “Foreign investors including online gaming operators look for predictability, consistency and continuity before a country becomes their jurisdiction of choice. If things don’t change, we will see businesses migrate to other jurisdictions such as Cambodia, Laos and Vietnam.”

But not everyone agrees that the current system is unfit for purpose. Rodney Hall, chairman of Bromhead Holdings, says POGOs have been a real game-changer for online operators in the country, and that the regulator has already made a start on upgrading its framework to ensure it is clear, concise and robust.

“The establishment of POGO is a significant step towards a well-regulated industry with a safe and permanent home in the Philippines. We are working with several companies now to establish their bonafides as service providers under the new POGO platform,” he adds.

Most recently, during the senate hearings on the Jack Lam bribery case, Philippine Senator Richard Gordon has called for the creation of a new regulator for online gaming in the country, leaving the Philippine Amusement and Gaming Corp to oversee land-based casinos.

The body, which would be known as the Philippine Online Gaming and Regulatory Authority (POGRA), will be better equipped to oversee the $250-billion industry using new technology, he said.

The situation is still therefore very fluid, with little long term visibility, but hopefully moving in the right direction.


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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