Senator Sherwin Gatchalian, a prominent advocate for the proposed ban on Philippine Offshore Gaming Operators (POGOs), recently voiced concerns about the regulatory framework governing the country’s burgeoning eGames sector. While he has pushed for expedited legislation to terminate POGO operations, Gatchalian also highlighted potential weaknesses in the regulation of eGames, which cater exclusively to domestic customers.
Growing Pains of the eGames Sector
Gatchalian’s scrutiny of the eGames sector reflects a broader concern about the regulatory environment surrounding online gambling services. eGames, which include a variety of online gambling formats such as eCasino, eBingo, sports betting, and specialty games, have become a significant part of the Philippine gaming landscape.
According to the senator, the current regulatory framework has notable vulnerabilities. One major issue is the ease with which individuals can open online gambling accounts. Gatchalian pointed out that the ability to use fictitious names when creating accounts could facilitate illicit activities, such as money laundering. This raises concerns about the effectiveness of existing controls and the potential for future complications if these weaknesses are not addressed.
Despite the senator’s concerns, the eGames sector has proven to be a lucrative source of revenue for the Philippine Amusement and Gaming Corporation (PAGCOR). The sector’s growth is evidenced by the substantial revenues reported by PAGCOR and the Bureau of Internal Revenue (BIR), highlighting the economic impact of this segment of the gaming industry.
Economic Impact and Revenue Growth
The eGames sector has shown remarkable financial performance in recent times. PAGCOR, the government agency responsible for regulating and licensing gaming activities, reported a significant increase in revenue from eGames. As of the latest figures, PAGCOR has accumulated Php22 billion (approximately USD 392 million) in revenue from eGames, while the BIR has reported almost Php12 billion (around USD 214 million) in tax revenue from this sector.
Chairman and CEO Alejandro Tengco of PAGCOR recently announced a reduction in the tax rates for online Gross Gaming Revenue (GGR) generated by integrated resort operators. The tax rate, which was as high as 50% when Tengco took office in August 2022, will be lowered to 25% by the end of the year. This move is expected to further stimulate growth in the eGames sector.
During a keynote address at the IAG Academy Summit, Tengco revealed that the eGames sector had experienced a staggering 525% year-on-year revenue growth in the second quarter of 2024. PAGCOR’s projections indicate that eGames could generate nearly Php100 billion (about USD 1.76 billion) in revenue for the entirety of 2024.
Legislative Responses and Future Outlook
The ongoing debate over online gambling regulation in the Philippines is underscored by the differing views of key legislators. In addition to Gatchalian, Senators Joel Villanueva and Alan Cayetano have also introduced bills related to the POGO ban. Both Villanueva and Cayetano have advocated for a complete ban on all forms of online gambling, including eGames.
The contrasting perspectives highlight the complex nature of the regulatory landscape. While there is a clear push to address issues related to POGOs, the rapid growth of the eGames sector and its substantial economic contribution complicate the discourse.
Senator Gatchalian’s concerns about the eGames regulatory framework underscore the need for a comprehensive review of the sector’s oversight mechanisms. As the eGames sector continues to expand and contribute significantly to government revenues, ensuring robust regulatory controls will be essential to prevent potential misuse and ensure the sector’s sustainable growth.
The evolving nature of online gambling regulation in the Philippines reflects broader global trends and challenges. Balancing economic benefits with effective oversight will be crucial as the country navigates the future of its gaming industry.