Wednesday, August 10, 2022

PAGCOR’s targeting of Europe hits the spot

The news at the start of the year that PAGCOR was promoting the advantages of gambling operators from the UK and Europe basing themselves in the Philippines comes at an interesting time in the development of Europe’s jurisdictional map.

PAGCOR’s move – taking the opportunity presented by the ICE expo in London in February to extol the virtues of using Manilla as a hub – coincides with public concerns in the Philippines over the influx of Chinese workers among holders of Philippine Offshore Gaming Operator (POGO) licensees.

The latest news at the start of April was that at least three POGOs had shut down their operations amid a clampdown on tax avoidance by foreign workers. In response to reports, PAGCOR Chair Andrea Domingo was cited as saying: “I was told that they got scared because they might be over-taxed or something like that. But we don’t worry because what we’re doing now is that we’re marketing outside Asia; we started marketing in London.”

On the face of it, this jurisdictional raiding party would have found some willing listeners during its trip. While Europe remains a complicated regulatory patchwork quilt, there can be no doubt that in many of the regulated jurisdictions the level of scrutiny now involved in being an operator has become heightened.

In particular, the UK has within the past two years become a tougher market to negotiate as the UK Gambling Commission has moved to tighten up its oversight and more clearly flex its regulatory muscles.

This has had an effect on many of the offshore jurisdictions that are notionally within its ambit, particularly the Isle of Man which in recent years has become the jurisdiction of choice for many, mainly Asian-facing, brands which hope to take advantage of the marketing potential of advertising on English and Scottish Premier League football shirts.

“The news from the Philippines comes at an interesting time for the UK and largely Asian-facing brands,” said one legal source who preferred to remain anonymous. “188bet, for instance, will be pulling its UK operations at the end of the UK football season. We don’t yet know why that has happened.”

The source added that there were rumours circulating in UK regulatory circles of a “completely different approach” being adopted by the Commission with regard to issues around, for instance, the source of funds for any business with a UK licence.

“Certainly, the rumour is the Commission is looking more closely at the business plans it sees from its potential licensees,” he added.

Service centre

Of course, the Philippine already hosts many largely UK or European-focused brands for various aspects of their business, including in particular customer service centres. But as Keith McDonnell, consultant with KM i-Gaming, points out this is largely unrelated to whichever territories a company is operating into.

“This is all related to geographical location of service centres and the licensing required for that,” he says. “It doesn’t affect their target punter markets, whether serviced from Manila, Cambodia, Vietnam or Isle of Man. The Philippines is still a very attractive option given the costs and vast supply of knowledgeable resource available to operators setting up there.”

Indeed, the point about the number of Chinese workers at the POGOs is that they form only a part of the massive army of gambling-related employees throughout the Philippine-based gambling operator eco-system.

One experienced online gambling executive currently working in Asia suggests the numbers involved now is in the region of 400,000 employed in the Manilla region alone.

“These people have been here a long time and they generate a huge amount of money in the local economy and the vast majority are legitimate, paying taxes and behaving themselves,” the source says, again opting for anonymity.

It is also not entirely clear what the aims were of the PAGCOR ICE fishing expedition. It is, after all, one thing to offer non-core customer services from Asia; it is entirely another thing to look to launch operations into Asia.

As McDonnell says, while the Philippines offers attractive cost cuts in some areas, Asia is “not an easy market to crack.”

“Those who thought it was have usually found out the reality through their pocket,” he says, adding that Asia also won’t provide any regulatory option for targeting the UK or Europe.

“Of course, they could also decide to target Asia but their licensing structure is far from the greatest challenge in building a successful strategy for that.”

On a closing note, the experienced online gaming executive offers a word of caution regarding whether the pressure regarding Chinese workers at POGOs will continue and hence whether PAGCOR will feel the need to fill any kind of gap.

“(The business is ) not going to go away because there is a dispute between two official agencies at a local level. That dispute will resolve itself, as it did a few years ago. There is too much invested here and there are too many people employed in the industry for all of that to go south.”


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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