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Does Philippine Licensing Problems Offer an Opportunity to Thailand?

Philippines has for a number of years found itself in the unique position of being the only country in Asia that licenses online gambling sites

This regulatory regime has produced significant income for the country and continues to play a vital role in the Philippines economy.

Philippines has for a number of years found itself in the unique position of being the only country in Asia that licenses online gambling sites, done under the auspices of the Philippine Amusement and Gaming Corporation (PAGCOR), which also runs land-based casinos in the country, along with VIP slots clubs and bingo parlours.

This regulatory regime has produced significant income for the country and continues to play a vital role in the Philippines economy.

However, like a number of other jurisdictions around the world, such as the Gibraltar and Malta gaming authorities, licensing and regulation only extends to online casino and bingo operators offering services to players from other countries.

These are known as Philippine Offshore Gaming Operator (POGO) licenses. It remains illegal for Filipinos to gamble online at casinos licensed in the Philippines, and for Philippines-licensed operators to advertise online gambling services within the country.

At the same time, Filipinos are technically free to gamble at online sites that are not regulated by PAGCOR, but instead operate under the authority of another jurisdiction. This creates a somewhat unclear regulatory framework, but this does not seem to have inhibited the rate at which Filipinos play online.

However, it does seem to have impacted Philippines position in the industry to some degree, as other jurisdictions have come to supersede it in prominence.

Why Philippines has been attractive to offshore gaming companies

PAGCOR grants licenses to casino sites using RNGs  and which offer online casino games, including slots, card and table games, as well as online bingo. This means that sites that are regulated in Philippines need to be demonstrably fair and there is some form of redress available if necessary.

On the industry side, online casino operators have been attracted to Philippines because PAGCOR’s role as a regulator has meant that online casinos who are licensed by it are perceived by players around the world as being trustworthy sites where they can be assured of a fair gaming environment.

In addition, Philippines is a country where there is a high degree of internet penetration, usage and infrastructure, which has meant that there are skilled local staff available who foreign companies can call upon. This is coupled with good levels of education and English proficiency.

Therefore, in terms of creating an environment in which online businesses can develop and grow, Philippines has to date been a logical choice for online casino operators, especially considering the country’s geographical location and the easy access it provides to the rest of Asia.

However, PAGCOR has somewhat limited itself through not allowing locally-licensed gambling sites to accept Filipino players.

It has a monopoly when it comes to land-based gambling as it controls all of the bricks and mortar casinos in the country, but by choosing not to regulate and control online gambling within its borders (as, for instance, is the case in the UK), it has excluded itself from a potentially lucrative market.

There has also been some uncertainty as to how many new POGO licenses PAGCOR would grant, and how many existing ones would be renewed. The lack of clarity around this important issue — as well as a suspicion that operators are going to be taxed more and charged more for licenses in the future — has in recent years made PAGCOR less attractive as a licensing authority.

In the light of this, it is possible that other countries in Asia could try to take advantage of this and grab a seat at the table themselves in the future.

Potential for Thailand

Thailand, for instance, has the potential to become a leading player in the licensing and regulating of Asian online gambling sites.

Its location makes it attractive to operators looking to penetrate the Asian market, as does the country’s low corporate tax rate of 20%. The very low cost of living compared to other major centres in the region also has great appeal for offshore companies, as does the lifestyle on offer. Thailand also has high levels of mobile phone penetration and internet use, and a significant sector of the population is tech-literate, which makes it attractive for foreign investors and employers.

In addition, there has recently been a proliferation of illegal gambling sites being operated from within Thailand, mainly aimed at players in South Korea. However, this is a problem that has been shown to be largely eradicated if there is a recognised online gaming authority with proper powers in place.

Likewise, a regulatory system produces significant amounts of revenue for the state’s coffers. Data from the UK Gambling Commission and the Malta Gaming Authority, for instance, demonstrate the sort of income that can be produced by regulating online gambling.

At the moment, Thailand does not allow online gambling sites to operate within the country.

However, in order for Thailand to become a regulatory regime, it would not be necessary for its position on gambling per se to change, nor would it necessarily need to relax its stance on controlling the sort of online content that can be accessed from within the country.

This would be in line with the policies of a number of other online gambling jurisdictions, who only licence operators that offers their services to countries beyond its own borders.

If the government wanted to retain its current position in relation to gambling, both land-based and online, it could still take advantage of the country’s geographical location, a lifestyle that foreigners envy, and the low corporate tax rates currently on offer, to become a central player in the licensing and regulation of Asian online casinos.

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