The Philippine Amusement and Gaming Corp (PAGCOR) has recently issued new guidelines affecting electronic gaming operators, particularly concerning number games such as lotteries. This move comes in the wake of a nationwide ban on Philippine Offshore Gaming Operators (POGOs), prompting a reassessment of the status of various electronic gaming services.
Permissibility of Number Games
PAGCOR’s memorandum has confirmed that electronic gaming operators are permitted to offer number games, including lottery games, to their customers. This decision follows the nationwide ban on POGOs, which has significantly impacted various sectors within the gaming industry. The memorandum aims to clarify the regulatory environment for these operators.
Restrictions on Drawing Devices and Equipment
The new regulations stipulate that number games cannot use the same drawing devices, tools, or equipment currently utilized by the Philippine Charity Sweepstakes Office (PCSO) for its lottery draws. This measure is designed to maintain the distinctiveness of the lottery operations overseen by PCSO and to prevent any overlap between different gaming systems.
Betting Minimums
Operators are required to set a minimum bet amount of PHP5 (approximately US$0.08) for number games. This regulation ensures that bets are kept within a specific range, potentially mitigating the risk of excessive gambling.
Revenue Share with PAGCOR
From July to December 2024, gaming operators will be required to share a percentage of their gross gaming revenue with PAGCOR:
Live-Streamed Games: 15% of gross gaming revenue.
Random Number Generator (RNG)-Based Games: An initial share rate of 35%.
Starting January 2025, the share rate for RNG-based games will decrease to 30%. This adjustment reflects PAGCOR’s ongoing efforts to balance the interests of the government and the gaming operators.
Industry Perspectives and Concerns
The new regulations have sparked discussions among industry stakeholders. Capstone-Intel Corp. CEO Nicasio Conti has voiced concerns about the expansion of gaming beyond integrated resort casinos and hotels. He advocates for limiting gaming activities to establishments catering primarily to foreign tourists, with minimal engagement of local tourists. Conti also emphasizes the importance of protecting young Filipinos, particularly children, from excessive online gaming exposure.
Implications for the Gaming Sector
The PAGCOR memorandum introduces several significant changes and considerations for electronic gaming operators:
Regulatory Compliance
Operators must ensure that their number game offerings comply with the new restrictions on drawing devices and equipment. Adhering to these guidelines will be crucial in avoiding regulatory conflicts and potential penalties.
Financial Planning
The financial requirements for licensing and deposits represent a substantial investment for operators. Careful financial planning and budgeting will be necessary to accommodate these costs and maintain profitability.
Revenue Sharing Adjustments
The tiered revenue sharing structure requires operators to adjust their financial strategies to accommodate the varying percentages of gross gaming revenue allocated to PAGCOR. The upcoming reduction in the share rate for RNG-based games may impact operators’ financial forecasts and profitability.
Industry Impact
The restriction on online gaming and the emphasis on integrated resorts may lead to a shift in the industry’s focus. Operators may need to adapt their business models to align with PAGCOR’s vision of minimizing local online gaming while maximizing the appeal of physical gaming venues.
PAGCOR’s recent memorandum represents a significant regulatory shift for the Philippine gaming industry, particularly concerning electronic number games. The introduction of new restrictions, financial requirements, and revenue sharing adjustments highlights the evolving landscape of gaming regulation in the Philippines. As operators navigate these changes, they must balance compliance with strategic adjustments to ensure continued success and adherence to PAGCOR’s guidelines.