LAST WORD

iGaming feels Beijing’s sting

Sharon Singleton | Managing Editor, AGB

In our January lookahead for 2019, our industry experts predicted a likely crackdown on online gambling in Asia and in light of recent events their forecasts have proved highly prescient.

The Chinese will make it increasingly difficult to move money in and out, to access the sites and to service what’s needed by pressuring various governments to not accept illegal immigration in the sector,” said Harmen Brenninkmeijer, managing partner Dynamic Partners.

While Frederic Gushin, managing director of Spectrum Gaming said: “The online gaming facilities in the Philippines and Cambodia will come under increased scrutiny by regulators and law enforcement and cryptocurrencies will become more widespread and even more controversial in 2019.”

After months of mounting pressure and attempts by Manila to bring its online sector intoline with employment and tax regulations, Beijing finally said enough was enough.

In a strongly-worded statement issued through its embassy in the Philippine capital, Beijing urged the government to protect its citizens working in the country and vowed a crackdown on any firms targeting its nationals.

Cambodia, the recipient of billions of Chinese investment into industry and infrastructure, sat up and immediately took note. It has banned the issue of any further online licenses and said it won’t renew existing ones when they expire.

In the government directive, Prime Minister Hun Sen said “foreign criminals have taken refuge in the form of this gambling to cheat and extort money from victims, domestic and abroad, which affect the security, public order and social order.”

The Philippines, which under President Rodrigo Duterte has shifted his country’s allegiance from the U.S. to China, has been more circumspect.

It has acted, though not with enthusiasm. The Philippine Amusement and Gaming Corp. (PAGCOR) said it would put a temporary halt on new licenses for Philippine Offshore Gaming Operators while it reviews regulations.

Praising Cambodia’s ban, a China Foreign Ministry spokesman in a regular briefing urged Manila to do the same.

But PAGCOR Chair Andrea Domingo was quick to add that the assessment would be completed by the end of the year and she was optimistic that the regulator could find a way forward for further expansion of the sector, which has proved such a lucrative money spinner for the Philippines.

There are 58 POGO licensees, with three applications still pending. PAGCOR estimates that they will generate PHP8 billion this year, a healthy contribution to its budget for nation building.

Despite PAGCOR’s suspension,the rumblings from Beijing have continued.

Praising Cambodia’s ban, a China Foreign Ministry spokesman in a regular briefing urged Manila to do the same.

So far it has resisted, with Victor Padilla, a senior manager of PAGCOR’s policy and licensing division, insisting there are no Chinese corporations operating in the POGO sector. His explanation was largely a technicality, that they are offshore corporations with a local unit in the Philippines. He avoided mention of the fact that hundreds of thousands of Mainland Chinese actually were working in the business.

Beijing’s periodic campaigns have a major impact on gambling across Asia. President Xi Jinping’s anticorruption drive sent Macau’s high rollers running for cover, with gross gambling revenue down sharply from a 2013 peak. But now, it’s clawing its way back up.

This time it’s the turn of the online gaming sector and it remains to be seen how long, or determined Beijing’s push will be.