PAGCOR Lowering Local Online Fees, Will Publish Licensee URLs

September 14, 2023
Philippine gambling regulator PAGCOR is lowering franchise fees for domestic online gambling and is set to publish gambling website addresses of its licensees amid ramping promises of internal reform, greater transparency and market growth.

Philippine gambling regulator PAGCOR is lowering franchise fees for domestic online gambling and is set to publish gambling website addresses of its licensees amid ramping promises of internal reform, greater transparency and market growth.

PAGCOR chairman and CEO Alejandro Tengco said on Wednesday (September 13) that franchise fees for domestic online gambling operators have been reduced from 47.5 percent to the low 40s and are set to fall further.

Speaking on the sidelines of the inaugural IAG Academy Summit in Manila, Tengco told Vixio GamblingCompliance that lowering fees anticipates a loss of revenue from its proposed divestment of land-based casino licences, and the need to compensate by growing the local online market.

Confirmation of additional cuts to franchise fees will cheer the nascent local-facing online gambling sector, whose operators complain of aggressive tax burdens and predatory, illegal online operators.

Tengco acknowledged the underground challenge to local-facing operators, suggesting the regulator is embracing the sector after a nascent period of tentative regulations tying operators to land-based facilities.

According to a fees framework document effective August 10, the PAGCOR share of revenue for domestic online segments will fall by up to 12 percentage points by 2025.

Fees for local-facing electronic casino (eCasino) games and virtual sports betting, down to 41.25 percent of gross gaming revenue (GGR) as of last month, will fall to 35 percent in April next year and then 30 percent from January 2025. Live sports betting falls from 22.5 percent to 20 percent in April and 17.5 percent in January 2025.

eBingo fees similarly fall from 42.5 percent today to 35 percent and then 30 percent by January 2025.

However, eCasino and other games integrated with PAGCOR’s troubled third-party online audit platform will pay an additional 10 percent audit fee.

Earlier Wednesday, in a combative keynote speech covering his first year in office, Tengco said his term will provide enough time to institute key reforms, including the sale of PAGCOR’s Casino Filipino licences.

The reforms also include streamlining regulator operations and enhancing protections for customers, such as publishing licensee website homepage uniform resource locators (URLs) for the first time.

The URL commitment for POGOs and local-facing online licensees followed a Vixio question on whether PAGCOR will release licensee URLs to back up its warning on Tuesday (September 12) that “more than 1,000” unlicensed websites worldwide are illegally displaying a PAGCOR accreditation logo.

PAGCOR co-opted regulation of foreign-facing online gaming operators (POGOs) from the Cagayan Economic Zone Authority (CEZA) in 2016, but the regulator did not adopt the practice of the CEZA-outsourced regulator First Cagayan of listing approved URLs under each licensee on its website.

Consequently, it has been impossible until now for the public and specialists to identify most of the websites operated by POGO licensees.

Tengco said that with the reissuing of all POGO licences at the end of this month, PAGCOR will “definitely” provide details of licensee URLs.

“That is definitely part of our efforts to inform the general public of who the legal and valid licences are.”

Speaking overall, Tengco said the transition of PAGCOR from dual regulator-operator to regulator only has been attempted several times, but this time it has begun “in earnest”.

However, PAGCOR is “treading very carefully” because of the impact on staff and other interests, he added.

“This shift … is also geared toward ensuring that the local gaming industry is insulated from accusations, rightly or wrongly, of perpetuating unfair and conflicted arrangements.

“Instead, what we want to achieve is a gaming industry that has no bias and that offers a most level playing field because it is only through such [a] level playing field that we can ensure future growth and viability among industry players.”

PAGCOR has come under severe pressure in recent years on several fronts, including internal governance, volatile revenue and criminal activities surrounding foreign-facing online gambling licensees (POGOs).

The agency has also been excoriated by the incoming head of CEZA over its “failed” regulatory scheme.

Despite his reform push, Tengco and his board have been blindsided by a series of raids on POGO-linked operations in and outside Manila that freed thousands of captive local and foreign workers.

Criticising PAGCOR’s predecessor management for the first time during a post-keynote panel, Tengco said his team inherited several serious problems that have to be “cleaned up”.

“It would take hours to explain what is wrong and what we inherited.

“The last board did not recognise” its accountability as an arm of government, he said. “Unfortunately, my predecessor [Andrea Domingo] did not recognise the authority” of that process.

The most pressing problems, such as a contract with a third-party auditor of online gambling operations that was “tainted with anomalies” and cancelled amid allegations of corruption and a criminal probe, should be resolved by early next year, he said.

Meanwhile, PAGCOR has been holding town hall meetings around the nation to inform communities of measures to minimise or avoid personnel displacement under its corporate reform program.

Tengco declined to share details of most of the reforms, but said they are “viable and very acceptable”.

He said PAGCOR operations are being streamlined, including the transfer of operations from three Manila offices into a new building.

Vixio sources remain sceptical about the value and appeal of the Casino Filipino licences, but Tengco is undaunted.

The casinos are being modernised and refurbished, with new electronic gaming machines on order, to attract more players and increase value ahead of the sale of the licences, he said.

A Casino Filipino-branded, domestic and foreign-facing online gaming platform is in the works to sweeten the deal.

“Do we have the resources to do all these [reforms]? Yes, is my answer,” Tengco said.

“Do we have the political will to do all these? A bigger yes is my answer.”

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