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Philippines introduces stricter sanctions for offshore gambling firms

The Philippine Amusement and Gaming Corporation (PAGCOR) has introduced an updated regulatory framework for offshore licence holders, ahead of its planned launch of an online casino market next year.

New efforts to tighten regulation of offshore companies came into force in July as part of an ‘intensified inter-agency’ campaign against illegal activity linked to such firms, according to the regulator and state-backed gambling provider.

Offshore gambling operators which violate Philippine laws will now be subject to stricter sanctions, as PAGCOR has pledged to conduct ‘intensified inspection and verification’ of licence holders’ and suppliers’ compliance with regulation.

Also under the spotlight will be reports submitted to enforcement agencies, with findings verified by the agencies in question and PAGCOR. The regulator will also continue to work with other government agencies to enforce the ‘stricter implementation’ of regulations and imposition of penalties on non-compliant licensees.

PAGCOR’s Assistant Vice President for Offshore Gaming Licensing Atty. Jessa Fernandez, said: “In the present framework, all Service Providers who are accepting bets are required to apply for a licence. We will also evaluate the beneficial owners of these companies so that they will be held liable in case they are found to be involved in any illegal activity,

“Entities with findings of activities outside their granted licence or accreditation will not be granted a licence under the new framework. Likewise, licensees or service providers who shall not re-apply or were granted licence within the given period shall be endorsed for cancellation.”

All offshore licences holders – both B2C operators and B2B suppliers – have until 17 September to re-apply for permits. Until licences are renewed, these companies have been ‘declared under probationary status’.

The reforms to the Philippines’ offshore gambling regulatory framework comes ahead of proposed significant changes to the country’s casino network, including a potential sell-off of the state-owned land-based business and the opening of a new online offering next year.

In the case of the former reform, the development appears to be spearheaded from above as an initiative of President Ferdinand “Bongbong” Marcos’ regime, which has an ambition to reorganise PAGCOR by selling off its land-based casino operation but mantiang regulatory responsibilities.

The latter comes as an initiative of PAGCOR itself, as the regulator seeks to further drive market growth, offer a ‘convenient gaming experience’ to customers and encourage ‘healthy competition’ in the market.

PAGCOR hopes to launch the ‘” brand during Q1 2024, featuring virtual reality-based technology to emulate a physical casino and offer an ‘immersive gaming experience’.

“It will allow players to interact with the digital counterparts of traditional casino games,” said PAGCOR Chairman and CEO Alejandro H. Tengco.

“It will also transcend physical boundaries and will enable users from around the world to interact and participate in virtual environments.

“It can reach a global audience and can establish a presence in virtual communities of avid gamers. It will likewise offer an opportunity to tap into new markets and diversify its customer base.”

Tengco added that the online product should bring ‘several benefits and opportunities’ to the Philippine sector, including increased revenue, extended reach, market expansion, cost efficiency and improved customer engagement.

Gaming operations have played a vital role in PAGCOR’s financial performance for the first half of 2023, with total revenue from the sector reaching PHP 34.125bn (€554.8m).

PAGCOR expects its revenue to reach pre-pandemic levels by the close of the year as a result of gambling contributions, but is also planning a ‘modernisation’ of its slots offering to maintain momentum ahead of next year’s intended online casino launch.

Central to these ambitions is a replacement of PAGCOR’s current range of slot machines with 3,500 new electronic gaming machines, and the firm is currently in negotiations with manufacturers.

Tengco remarked: “This will play a pivotal role in improving PAGCOR’s casinos in terms of operational efficiency, enhancing customer experience, facilitating real-time reporting and analytics, ensuring security and fraud prevention, optimising financial management and streamlining compliance requirements.”

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