Philippine Taxman Targets Surging Online Cockfighting Revenue

March 14, 2022
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Aggressive growth of e-sabong (online cockfighting) revenue in pandemic-stricken Philippines has drawn a lengthy demand from the Bureau of Internal Revenue for operators to pay their dues.

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Aggressive growth of e-sabong (online cockfighting) revenue in pandemic-stricken Philippines has drawn a lengthy demand from the Bureau of Internal Revenue (BIR) for operators to pay their dues.

In a memorandum issued on Friday (March 11), internal revenue commissioner Caesar Dulay said the COVID-19 pandemic and “prolonged mobility restrictions” had shut down cockpits nationwide, triggering “phenomenal” customer migration to newly regulated e-sabong.

Strongly supported by gambling regulator PAGCOR, which is struggling to secure revenue amid casino and junket closures and a halving of online casino licensees, e-sabong is generating billions of pesos (tens of millions of dollars) in revenue and is the new growth success story for the Philippine market.

In line with stricter oversight of foreign-facing online gambling companies, the BIR has rushed to remind e-sabong operators that PAGCOR-linked tax exemptions do not apply to cockfighting.

The memo notes that PAGCOR-licensed e-sabong operators must pay a 5 percent franchise tax on gaming income directly to the BIR, separately to any services arrangement with PAGCOR.

Other operator income shall be subjected to a value-added tax and any other applicable taxes, it says.

The memo also confirms that commission income for e-sabong agents shall also be subject to the full battery of applicable taxes and penalties and not enjoy PAGCOR exemptions.

The BIR’s instructions coincide with growing disenchantment among some politicians and civic groups over the rapid rise of online cockfighting.

Traditional concerns over gambling and animal cruelty have been super-charged in recent weeks by the disappearance of 31 e-sabong gamblers from various locations in the Philippines.

The disappearances have prompted a Senate committee probe into the matter, with an overwhelming number of senators supporting suspension of the sector while police investigate.

The Presidential Office has not agreed to a suspension, but executive secretary Salvador Medialdea last Tuesday (March 8) ordered PAGCOR to audit e-sabong licensees to ensure appropriate security mechanisms are in place on site, among other compliance matters.

In the meantime, at least one integrated resort in Manila’s Entertainment City — Genting-linked Resorts World Manila — provides e-sabong betting services on site, and other major resorts will follow, Bloomberg reported on Friday.

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