Philippine President Rodrigo Duterte, while ridiculing internet gaming as a “stupid activity,” has rejected a call by the Chinese government to shut down his country’s iGaming industry.
“We decide to benefit the interest of my country. I decide that we need it,” Duterte said in a televised news conference earlier this month. Philippine Offshore Gaming Operators (POGOs) are expected to add PHP8 billion (US$153.4 million) to government coffers by the end of the year, for a total of PHP20 billion since legal iGaming launched in 2016.
Duterte recently met with Chinese President Xi Jinping to discuss cross-border gambling. Though the activity is illegal in China, and the Philippine government insists that POGOs do not serve Chinese people on the mainland, it’s generally accepted that the offshore operations, which are primarily staffed by Mandarin-speaking Chinese nationals, are used by mainland residents.
Though Duterte passed on an outright ban, PAGCOR chief Andrea Domingo said the regulator would stop accepting applications for new online gaming licenses, at least for now. At that, Chinese Foreign Ministry spokesman Geng Shuang said, “We hope the Philippines will go further and ban all online gambling.”
Another hub of online gambling, Cambodia, has also agreed not to issue any new online licenses, and added it would not renew the current ones when they expire. Radio Free Asia reports that 120,000 Chinese living in Cambodia have left since Prime Minister Hun Sen announced the ban on August 18.
“While we don’t know the exact reason for the Chinese leaving, it might be because of the ban on online gambling, which has forced those who relied on the gaming to return home or move to other countries,” Ath Bony, spokesman for the Interior Ministry’s General Department of Immigration told RFA.
A recent report by the National Police said some 250,000 Chinese nationals were living in Cambodia, including around 100,000 each in the capital of Phnom Penh and Preah Sihanouk Province, which has been virtually transformed by Chinese investment from an idyllic seaside resort beloved by ecotourists and backpackers to a crowded casino hub. Hun Sen’s ban on online gambling will force all businesses related to iGaming to shut down by the end of 2019.
H.E. Mey Vann, director general of the Ministry of Finance, said that crime and other problems related to rampant online gambling in the southern beach town had been rising by the day.
Speaking at the recent Mekong Gaming Summit in Phnom Penh, Mey was asked if the ban on online gaming licenses would derail the land-based gaming industry. Mey said the government supports land-based gaming, which he described as less “aggressive” than online gaming.
“Sihanoukville will regain its luster, it will become a beautiful resort,” Daniel Li, CEO of Cambo-Sia International assured the audience. “We will see a massive change in culture and in the people going, with fewer violent and related crimes.”
Cambodia is expected to release legislation to regulate its gaming industry in early 2020, with the bill scheduled to introduce a system of taxation based on gross gaming revenue. A draft of the legislation has been in the works since 2010, according to Asia Gaming Brief, which added that a firm regulatory framework could attract further investment into the country’s booming casino sector. Fred Gushin, managing director of Spectrum Gaming Group, said a move to a GGR-based system of taxation will send a strong signal to investors that Cambodia has put the necessary infrastructure in place to regulate the sector.
In the second quarter, the government had issued 136 casino licenses with 133 casinos in operation and more license applications moving into Q3. Of the new license applications this year, 46 percent were in the coastal town of Sihanoukville.
Ministry of Economy and Finance Secretary of State, H.E. Nguon Sokha also spoke at the Mekong summit and said the economy grew by 7.5 percent in 2018. She predicted that Cambodia will become a “middle income” country by 2030 and a “high income” country by 2050.
Back in Manila, according to the South China Morning Post, 56 POGOs are now in operation, employing a reported 138,000 Chinese nationals, up from about 95,000 in June 2018. Some estimates put the number at 250,000 or even higher.
George Siy, an economic analyst at Manila-based think tank Integrated Development Studies Institute, acknowledged that POGOs have helped to boost the economy, but said those revenues are “not a flow to be relied on.”
“We must not rely on this income, but use it as an interim-benefit stepping stone, not just economically, but build what social, people and political relations we can that can become more fundamental and lasting,” Siy said.
In an opinion piece in the South China Morning Post, Lucio Blanco Pitlo III, a lecturer on Chinese Studies at Ateneo de Manila University, said Manila hopes to “maximize gains from this industry while managing Beijing’s concerns and mitigating a domestic backlash. It may unveil regulations to target illegal or unlicensed operators, ensure compliance with immigration and labor laws, and protect migrant worker rights.
“As the frenzy may be fleeting, Manila can encourage gaming operators to diversify into areas such as hospitality, tourism and retail. Because in the end, no country wants to be known as China’s sin city,” he concluded.
