Philippine Local-Facing Online Operators Call For Protection

March 23, 2023
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Domestic-facing online gambling operators in the Philippines are calling for government action against “enablers” of the illegal targeting of Filipino gamblers, and to be allowed to enter foreign markets.

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Domestic-facing online gambling operators in the Philippines are calling for government action against “enablers” of the illegal targeting of Filipino gamblers, and to be allowed to enter foreign markets.

Already frustrated by a steeper tax burden than that of foreign-facing operators, the Philippines’ clutch of first-generation, domestic-facing operators now want the regulator and the government to confront illegal access to the local market.

With gambling regulator PAGCOR intent on restoring and improving its pre-pandemic revenue, domestic-facing operators are also calling for a piece of the foreign-facing pie.

Joe Pisano, Manila-based CEO of Jade Entertainment and Gaming Technologies, told the ASEAN Gaming Summit in Manila on Thursday (March 23) that his and 19 other companies licensed to offer online gambling to Filipinos are being hurt by illegal competition.

Illegal operators “are currently our biggest competitor, not the other 19 operators”, he said.

“When you talk to regulators, they say, ‘Well, we block the sites’, but it’s the enablers of these illegals that we need to go after.”

Pisano pointed to platform providers and game providers as important conduits of illegal access to the Philippine market, but “the biggest enablers are the payment solutions”, he said.

“And that would be [Philippine-based] GCash and Maya … most of these illegals are using these,” he said. “So there are areas where the government can [do more] work.

“Probably the other area [to improve] is the regulators themselves, working together, whether it’s Philippine PAGCOR, Curaçao, Isle of Man, Gib[raltar], Malta, where [you would] report back and have them take action against their own operators.”

Pisano said the status quo is “hurting us, it’s hurting the Philippines as a country and as a community as well”.

Speaking to VIXIO GamblingCompliance on the sidelines of the summit, Pisano said that although some local operators are active in the illegal domestic market, they offer variations on traditional Filipino games rather than sports betting.

Instead, it is the “hundreds” of foreign operators, including major bookmakers, that are cashing in on the Philippines, he said.

Rodney Hall, CEO of Manila-based gaming consultancy Bromhead Holdings, told the summit that the Philippines’ once-indomitable foreign-facing online operators (POGOs) are “probably dodo-like, disappearing if not totally extinct” after years of pandemic damage, Chinese government pressure and Philippine regulatory crackdowns.

Although the number of surviving POGO licensees suggests Hall’s description is a little theatrical, there could be a push from domestic-facing operators to join or replace POGOs by catering to both domestic and foreign markets.

“Is there any good reason why [PAGCOR] shouldn’t be allowing us to operate in other markets?” he asked.

“None,” Pisano replied. “All of us here, we have robust systems, we have [anti-money laundering] controls, we have responsible gaming, we have very strong [know your customer] processes, payments … there would be no reason not to allow us to extend what we’re doing to other legal jurisdictions.”

Calling for the formation of an industry association for domestic-facing online operators, Pisano said it is time to pressure PAGCOR into opening foreign markets to domestic-facing licensees.

“We would like to lobby the regulator to allow all of us to go into other markets as well. It would bring additional income into the country. We are compliant for these aspects of regulation and we’re probably the ideal partners for the government to allow this to happen.”

Philweb Corp president Brian Ng told the summit that PAGCOR is moving in the direction of partnership with gaming operators.

He cited the appointment of chairman and CEO Alejandro Tengco, an entrepreneur and a lifelong friend of Philippine President Ferdinand Marcos Jr., as evidence of this.

“Based on what we’re seeing publicly, privately, there’s clearly a lot of effort to address, I think, some of the gaps in regulation.

“When you look at PAGCOR today, and chairman Tengco’s remarks around having to raise revenue … he is looking at trying to figure out how to expand or increase the revenue or contributions coming out of that,” Ng said.

“From my understanding today, in terms of product, nothing is off the table — except e-sabong [online cockfighting].”

Tengco told the summit on Tuesday that PAGCOR is considering requests from unnamed industry figures to allow business process outsourcing (BPO) licensees in Manila to provide services to online gambling operators in other markets.

Tengco also announced an increase in sports-betting products for domestic-facing online operators and likely approval for domestic online poker, two of several revenue-raising developments occurring in tandem with compliance and responsible gambling reforms.

Even so, PAGCOR’s focus, at least in public and at this summit, is squarely on revenue recovery through POGOs and land-based operations.

However, PAGCOR licensing and regulation general manager Daniel Cecilio told VIXIO that online poker for local gamblers is a top priority because of its expected market reach.

“We are fast-tracking that because we are seeing that it’s a big market, and it will benefit of course PAGCOR and the government as a whole," he said.

“This coming board meeting we have already submitted our recommendation so that online poker can start.”

In general, Cecilio said the domestic market is an important replacement for revenues lost to the pandemic and the decline of the POGO segment.

“The revenues from the former e-sabong and of course the [revenues] we lost from POGOs … we want to generate more revenues coming from here [local online players],” he said.

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