Under the Revised Penal Code of the Philippines (“Revised Penal Code”), gambling is generally described as “any other game of scheme the result of which depends wholly or chiefly upon chance or hazard; or wherein wagers consisting of money, articles of value or representative of value are made; or in the exploitation or use of any other mechanical invention or contrivance to determine by chance the loser or winner of money or any object or representative of value”.

In 2017, Executive Order No. 13 (“E.O. 13”) expanded the  definition of “illegal gambling” as “committed by any person who, in any manner, shall directly or indirectly take part in any game scheme, regardless of whether winning thereat is dependent upon skill or chance or both, wherein wagers consisting of money, articles of value or representative of value are at stake or made, when such game scheme is not authorized or licensed by the government agency duly empowered by law or its charter to license or authorize the conduct of such games, or is conducted in a manner that violates the terms and conditions duly prescribed by the said government agency.

Existing laws prohibit all forms of gambling, unless allowed by law. Persons engaged in illegal gambling activities may be held criminally liable.

Consequently, the law allows the following gambling activities, subject to regulations: horse racing, cockfighting, sweepstakes, lotteries, and gaming casinos, including online gaming when the game is accessed outside the Philippines by foreign-based players.

As a general rule, all persons primarily engaged in the business of gambling, together with their allied businesses, shall register and affiliate their business with the Philippine Amusement and Gaming Corporation (“PAGCOR”). PAGCOR generally regulates gaming activities in the Philippines and issues the license to operate a gaming activity. Thus, the legal/regulatory framework governing gambling primarily consists of rules and regulations promulgated by PAGCOR.

In the exercise of its regulatory functions, PAGCOR has issued casino regulatory manuals particular to the location of the land-based casino, such as the Casino Regulatory Manual for the integrated resorts operating in the Entertainment City complex in Manila and the Casino Regulatory Manual for the casinos located in Clark, Pampanga.

With respect to online/offshore gaming operations, PAGCOR promulgated the Internet Gaming Licensing Regulations (IGLR). The IGLR provides for the licensing, registration, or accreditation not only of internet gaming licensees (which can only offer gaming activities to offshore players) but also of service providers providing components of the online gaming process, such as gaming content providers and support providers. PAGCOR also regulates business process outsourcing facilities which offers its services to gaming operators based abroad.

However, on 22 July 2024, in his State of the Nation Address (“SONA”), the President of the Philippines declared a ban on Philippine Offshore Gaming Operators (“POGOs”) primarily targeting those that have been operating to provide illegal gambling services offshore (the “POGO Ban”). Based on the President’s SONA, the POGO Ban is intended to be implemented by 31 December 2024.

In order to implement the POGO Ban, an Executive Order (“EO”) is expected to be issued by the Office of the President (“OP”) before 31 December 2024. However, as of the date of the writing of this response, the EO has not yet been released although it is expected that the EO will cause the winding down of operations of licensees under the IGLR.

For further clarity, it appears that, based on public feedback provided by PAGCOR and certain Senators (members of the legislative department of the Philippines), the operation of Special Class of Business Process Outsourcing (“SCBPO”) will be excluded from the POGO Ban because these SCBPOs do not provide any betting services and are actually an important source of jobs being required to maintain at least a 90% Filipino workforce. Having said the foregoing, until the EO is issued, this exclusion cannot yet be determined with certainty.

Other than PAGCOR, authorities regulating certain special economic zones in the Philippines may also host and license gaming entities whose activities and gaming equipment (including computer servers) will generally be limited within such economic zone.  These authorities are the Cagayan Special Economic Zone Authority (“CEZA”), the Aurora Pacific Economic Zone and Freeport Authority (“APECO”), and the Authority of the Freeport Area of Bataan (“AFAB”).

It is recommended that any potential applicant for a license to conduct gaming and gaming-related businesses in the Philippines consult legal counsel to determine which regulatory body exercises jurisdiction over its activities.

a) What is the duration of a licence?

For land-based casinos, the gaming license is co-terminus with the franchise of PAGCOR as granted by the Philippine Congress. Thus, the license is valid until 11 July 2033.

For Internet Gaming Licensees and their Support Providers, the duration of a license/accreditation is for one (1) year and must be renewed on an annual basis. However, kindly refer to our feedback above on the POGO Ban. We await the issuance of the EO in order to further understand the scope and implementation of the POGO Ban. Pending issuance of the EO implementing the POGO Ban, we understand that PAGCOR has held off on accepting new applications under the IGLR.

PAGCOR may, in its discretion, issue provisional licenses or permits that may have different terms and conditions.

b) What types of licences are available?

In general, PAGCOR offers the following licenses:

1. Licenses for Land-Based Casinos
2. Licenses for Internet Gaming Licensees

PAGCOR also offers Accreditation to the following entities:

1. Gaming Content Providers
2. Support Providers
3. Special Class of BPOs (SCBPOs)

* Kindly refer to our feedback above on the POGO Ban. We await the issuance of the EO in order to further understand the scope and implementation of the POGO Ban. Pending issuance of the EO implementing the POGO Ban, we understand that PAGCOR has held off on accepting new applications under the IGLR.

c) Are there different types of licences for B2C and B2B operators?

Yes, under PAGCOR Rules, accreditations provided to Gaming Content Providers, Support Providers, and SCBPOs are limited to B2B operators. These entities are prohibited from handling or taking bets, thus, their services must be limited to servicing entities duly authorized to undertake gaming operations.

* Kindly refer to our feedback above on the POGO Ban. We await the issuance of the EO in order to further understand the scope and implementation of the POGO Ban. Pending issuance of the EO implementing the POGO Ban, we understand that PAGCOR has held off on accepting new applications under the IGLR.

d) Do software suppliers need to be licensed?

Yes, it is required for software suppliers to be either accredited or licensed.

* Kindly refer to our feedback above on the POGO Ban. We await the issuance of the EO in order to further understand the scope and implementation of the POGO Ban. Pending issuance of the EO implementing the POGO Ban, we understand that PAGCOR has held off on accepting new applications under the IGLR.

Yes, gambling products/activities which are not licensed and regulated by the Philippine government are prohibited. Persons found guilty of engaging in illegal gambling may be held criminally liable under the Revised Penal Code and other penal laws.

Unless authorized by law, the possession of gambling paraphernalia and the importation thereof are prohibited without a approval of PAGCOR. This includes (as provided by customs laws) roulette wheels, gambling outfits, loaded dice, marked cards, machines, apparatus or mechanical devices used in gambling or the distribution of money, cigars, cigarettes, or other goods when such distribution is dependent on chance, including jackpot and pinball machines or similar contrivances, or parts thereof.

The following are the qualifications required to apply for a PAGCOR license/authorization:

The above-mentioned entities are required to submit an Application Fee of $100,000.00 to commence the application process.

* Kindly refer to our feedback above on the POGO Ban. We await the issuance of the EO in order to further understand the scope and implementation of the POGO Ban. Pending issuance of the EO implementing the POGO Ban, we understand that PAGCOR has held off on accepting new applications under the IGLR.

There is no requirement for individuals within the business of gaming to be personally licensed or authorised to engage in the business.

However, PAGCOR requires the officers/directors of the entity engaged in gaming to undergo probity/background checks to ensure they are qualified persons of integrity who have the capability to engage in the business of gaming.

As part of the application of the regulated entity, PAGCOR may ask its officers/directors to disclose the following information:

• Personal Information (addresses, identification numbers, etc.)
• History of Directorships/Business Affiliations
• Financial Details
• Litigation/Criminal Records
• Possible Conflict of Interest/ Family or Personal Relationships with persons in government

In recent PAGCOR regulations, PAGCOR has also required certain personnel to undergo training under accredited providers and programs.

Yes, advertising of gambling is permitted.

Under PAGCOR Regulations, the mandatory elements of advertisements promoting gambling are as follows:

1. Prohibition of under 21 years old logo
2. Responsible Gaming slogan must be displayed – “Gaming for 21 years old and above only. Keep it Fun. Game Responsibly.”

The complete mechanics/details of a Marketing/Promotional Activity, including those which feature membership programs, loyalty programs, sponsorships, raffle draws or tournaments, must be submitted to PAGCOR.

There is no prohibition against PAGCOR licensees engaging the services of marketing affiliates.

Under the Internet Gaming Licensing Regulations, marketing affiliates may be  considered as Support Providers. Thus, they may be required to undergo the accreditation process as Support Providers.

Both individual gamblers/players as well as the persons or entities hosting illegal gaming within the Philippines could be held liable under current anti-illegal gaming laws.

Persons who are found guilty of violating anti-illegal gambling laws and regulations could be held liable for fines, suspension, or closure of the business, and even imprisonment, when decreed by the court.

Under the Revised Penal Code, persons found guilty of violating anti-illegal gambling laws may be sentenced to serve a prison sentence ranging from four (4) to eight (8) years per count.

For Internet Gaming Licensees, the requirements are as follows:

For Authorized Gaming Content Providers and Authorized Support Providers, the requirements are as follows:

* Kindly refer to our feedback above on the POGO Ban. We await the issuance of the EO in order to further understand the scope and implementation of the POGO Ban. Pending issuance of the EO implementing the POGO Ban, we understand that PAGCOR has held off on accepting new applications under the IGLR.

The Anti-Money Laundering Act (AMLA), as amended by Republic Act No. 10927, identifies casinos, including ship-based and Internet-based casinos, as covered institutions for the purpose of compliance with AMLA. Under the AMLA, casinos are required to automatically report to the Anti-Money Laundering Council (AMLC) the details of each casino transaction involving an amount in excess of Five million pesos (₱5,000,000.00) or its equivalent in any other currency.

In addition, offshore gaming operators/internet gaming licensees and their service providers have been designated as covered persons under AMLA, thus, they are required to comply with the same reportorial requirements.

PAGCOR implements a Responsible Gaming program in which players who are developing a problem with gaming may be excluded/barred from entering the gaming site/venue. An Exclusion Application Form may be filed by either the player with the gaming problem or his/her family.

The PAGCOR Licensee may also opt to file an exclusion form against a player who is engaged in cheating, theft, fraud, and other similar offenses.

Once processed, PAGCOR will send the Exclusion Order with the name and details of the person excluded/barred from the gaming site to all entities operated or regulated by PAGCOR. Under the exclusion policy, the player may be excluded for periods ranging from six (6) months to five (5) years.

If a change in shareholders results in a change in control, the concerned entity is required to notify PAGCOR through the filing of an Application for Change in Ownership or a Request for Amendment of Certificate of Registration.

If the concerned entity regulated by PAGCOR is a publicly listed company, any person who acquires the beneficial ownership of 5% or more of any class of equity securities of the concerned entity is required to disclose such fact to the Philippine Stock Exchange (PSE) and to the Securities and Exchange Commission (SEC). Likewise, any person who is the beneficial owner of 10% or more of any class of any security of the concerned entity, which is a publicly listed company, is required to disclose and file a statement with the SEC and the PSE.

As part of its regulatory function, PAGCOR has the power to suspend/revoke/cancel the licenses/accreditations it issues. Given that gambling in the Philippines is illegal unless duly licensed and regulated by the government, a revocation/cancellation imposed by PAGCOR will result in the operations being conducted by the concerned entity being deemed illegal.

PAGCOR may also impose monetary sanctions/fines against erring entities.

The tax framework for operators in the gaming industry varies depending on the license/accreditation carried and the business engaged in.

Land-based Casinos/Onshore gaming

Licence fees paid by the licensees of onshore gaming casinos and integrated resorts shall be an amount equivalent to the licence fee rate per gaming table, provided in the Licence, applied to the gross gaming revenue.  Then, PAGCOR imposes a 5% fee on the non-gaming revenue of the licensee, such as income derived from all food & beverage, retail, and entertainment outlets, theme parks, museums, and similar operations, within the casino/integrated resort.

Internet Gaming Licensee

Subject to revision, the following gaming taxes are imposed by PAGCOR on internet gaming licensees:

For purposes of monitoring the correct declaration and payment of gaming taxes, PAGCOR requires that Internet Gaming Licensees shall fully integrate their operations with PAGCOR’s intermediation platform and that all their wagering, financial, and administrative software shall be submitted to PAGCOR for evaluation and approval.

Authorized Gaming Content Providers/Support Providers

 Special Class of BPO

*Local government units also impose taxes and fees within their specific jurisdictions.

Tax on Winnings

Prizes won from games of chance are subject to a 20% final tax withheld by the game operator prior to the payment to the winner.  However, prizes amounting to PhP 10,000 or less shall be declared as ordinary income of the winner at the end of the tax year and subject to the regular individual income tax rates between 5% and 32%.  Winnings from sweepstakes and lotteries operated by the Philippine Charity Sweepstakes Office are tax-exempt.

We recommend consulting specifically with our tax experts in determining the tax rates for gaming operators, as different activities may have different rates and potential exemptions.

* Kindly refer to our feedback above on the POGO Ban. We await the issuance of the EO in order to further understand the scope and implementation of the POGO Ban. Pending issuance of the EO implementing the POGO Ban, we understand that PAGCOR has held off on accepting new applications under the IGLR.

On 22 July 2024, in his State of the Nation Address (“SONA”), the President of the Philippines declared a ban on Philippine Offshore Gaming Operators (“POGOs”) primarily targeting those that have been operating to provide illegal gambling services offshore (the “POGO Ban”). Based on the President’s SONA, the POGO Ban is intended to be implemented by 31 December 2024.

In order to implement the POGO Ban, an Executive Order (“EO”) is expected to be issued by the Office of the President (“OP”) before 31 December 2024. However, as of the date of the writing of this response, the EO has not yet been released although it is expected that the EO will cause the winding down of operations of licensees under the IGLR.

For further clarity, it appears that, based on public feedback provided by PAGCOR and certain Senators (members of the legislative department of the Philippines), the operation of Special Class of Business Process Outsourcing (“SCBPO”) will be excluded from the POGO Ban because these SCBPOs do not provide any betting services and are actually an important source of jobs being required to maintain at least a 90% Filipino workforce. Having said the foregoing, until the EO is issued, this exclusion cannot yet be determined with certainty.

PAGCOR has announced that it is working to privatize the forty-one (41) casinos presently being operated by PAGCOR as it aims to transition to a purely regulatory function by 2028. This means PAGCOR seeks to focus on its work as a regulator in the years ahead. This is also a business opportunity for gaming operators who may be interested in acquiring PACOR’s casinos.

While we have noted in our response above that there is a POGO Ban announced by the President of the Philippines that is expected to be implemented by 31 December 2024, our understanding is that this clean-up will actually help the growth of the gambling market in the Philippine jurisdiction. The POGO Ban, as we understand it, is primarily targeting the illegal operations that have been going on in the Philippines in relation to the provision of gambling services to markets where gambling is illegal. This has resulted in social considerations (i.e., violations of Philippine law other than gambling) through the hiring of foreign workers such that the Philippine government has decided that it should take a more active approach in weeding out the illegal operators in the country. The expectation here is that, once these illegal operators are covered by the implementation of the POGO Ban, PAGCOR will be able to focus on the licensing and regulation of legal operators within the Philippines and that has an expected knock-on effect of attracting additional licensees who are interested to operate legally within the country.

Having said the foregoing, it is also important to note that PAGCOR has consistently been the third-largest contributor to the national budget of the Philippine government (behind only the Bureau of Internal Revenue and Bureau of Customs). This indicates that the revenue from regulated gaming activities is significant to the overall development of the country. The current PAGCOR administration has also expressed its intentions to promote the Philippines as an ideal gaming jurisdiction because of a clear regulatory framework and a supportive governing body. In our firm’s experience, this administration’s strength is in its transparency and willingness to have open discussions with operators and foreign investors to understand their requirements in order to conduct business in the Philippines.

Furthermore, based on the following indicators, we do not see any imminent risks to the growth of regulated gaming in the Philippines:

1. At least six new land-based casino facilities worth roughly around $3 billion are in the pipeline for either construction, groundbreaking or opening;
2. Global gaming suppliers and service providers are setting up their offices in the Philippines, taking advantage of the impressive labor market and capitalizing on new resort developments;
3. PAGCOR announced its plans to launch its own e-gambling operations next year to grow its network of players (to include offshore gamblers);
4. Other government agencies (Department of Tourism, Department of Finance, Department of Labor) are working with PAGCOR to improve travel requirements, taxation policies and immigration of legal workers to serve the industry.

PAGCOR, for its part, also acknowledges that there is a lot to do to improve the reputation of the Philippines as an online gaming hub, which gained negative publicity due to online gaming operators allegedly being used as covers to perpetrate cybercrimes, financial fraud, and human trafficking, among other crimes. Given this reputation and to meet the public sentiment, PAGCOR has been imposing stricter regulations and additional administration fees from offshore gaming operators and their support providers. While some may consider this a risk to the growth of the offshore gaming operator industry in the Philippines, we have observed that for most of our clients who operate and are licensed abroad, this is a small price to pay in exchange for being able to do business in a regulated and compliant environment.

The Philippines would be a top choice for a gambling start-up to commence its activities due to the transparent and relatively simple process of applying for a license to conduct gaming activities in the Philippines. Our firm can also assist in evaluating the activities that the start-up would like to engage in, and will recommend securing (during its start-up period) the most basic licenses first in order to minimize initial investment costs as it tests the market. The Philippines also ranks as one of the more tax-efficient countries for gaming revenues.

Gaming companies can also benefit from our regulator’s willingness to entertain new technolog(ies) from abroad. In our opinion, the Philippines is the “sweet spot” in its regulatory framework. It is not overly restrictive or punitive such as to turn off operators and licensees and lose its competitiveness within the ASEAN region, but at the same time, it has a robust regulatory framework that gives comfort and stability for operators from other highly-regulated jurisdictions to do business in. In addition, the Philippines’ highly-skilled labor market is available to investors. In recent years, we have also seen the success and growth of service providers to foreign gaming companies