Gaming Law 2023 Comparisons

PAGCOR Intends to Cease Its Operator Role

The Philippine Amusement and Gaming Corporation (PAGCOR) is a government owned and controlled corporation created pursuant to its charter (“PAGCOR Charter”) to enable the Philippine government to regulate and centralise all games of chance authorised by law. The PAGCOR Charter includes the grant of a franchise to PAGCOR to operate and maintain casinos, clubs and other amusement places. This means PAGCOR is both the country’s primary gaming regulator as well as an operator of casinos.

Recently, there has been a renewed push from some sectors of government asking PAGCOR to focus on its regulatory functions and give up its gaming operations. While previous PAGCOR administrations have resisted this, the current Chairman, Alejandro Tengco, has declared that he is supportive of this move and says he intends to conclude a potential sale or divestment of its operations and relevant assets prior to 2028. The Department of Finance is backing up this plan as it would allow the government to raise additional funds.

Focus on Regulation and Enforcement

It is expected that after ceasing its role as an operator, PAGCOR will focus on improving its regulations and gaming oversight. Since July 2023, PAGCOR has revamped the regulatory framework related to offshore gaming operators. New and/or amended rules were also issued by PAGCOR in furtherance of additional regulations relating to remote gaming operators, service providers and affiliated entities. PAGCOR has also announced that they will issue new/revised rules for slot machine providers requiring stricter accountability and compliance with global standards for gaming machines. In recent PAGCOR regulations, PAGCOR has also required certain personnel to undergo training under accredited providers and programmes.

New Regulations for Offshore Internet Gaming Licensees (Formerly POGOs)

In June this year, PAGCOR issued the Internet Gaming Licensing Regulations (IGLR), a new regulatory framework to govern the application and operation of internet gaming licensees (IGL), previously called POGOs (Philippine Offshore Gaming Operators. The IGLR provides for the licensing, registration, or accreditation of IGLs (including their service providers). The issuance of the new IGLR is part of the intensified efforts of PAGCOR and other government agencies to address the illegal activities being linked to offshore gaming operators. Upon its issuance, all POGOs and service providers were put on probationary status and were directed to re-apply until 17 September 2023. The main focus of the reapplication process was to evaluate the beneficial owners of the applicants and to check whether these entities (or their owners) have engaged in activities that were not authorised under their licences.

The new regulations include higher capitalisation and office/site requirements, disclosures of beneficial ownership, more stringent inspection procedures and surveillance requirements, additional penalties for violations and a focus on probity and integrity of persons connected to the applicant-licensee, specifically its officers and directors. In addition to suspending or revoking licences of illegal operators, PAGCOR has been issuing show-cause orders and issuing monetary penalties to erring IGLs to ensure their compliance with the rules.

Stringent Anti-money Laundering Enforcement and Supervision Measures

Starting in 2017, casinos, including internet and ship-based casinos, with respect to their casino cash transactions related to their gaming operations, were designated as covered persons under the Philippines’ Anti-money Laundering Act (AMLA). In October 2023, the Office of the President of the Philippines issued a Memorandum Circular directing relevant government agencies, including PAGCOR, to “review and assess” their requirements and take all necessary actions to ensure the Philippines exits a “grey list” of nations deemed to have deficient AML and Counter-Terrorism Financing (CFT – “combating the financing of terrorism”) controls by the Financial Action Task Force (FATF). A sector specifically highlighted by the FATF is casino junket operations. While significant steps have already been taken by the Philippine government and PAGCOR since 2017, it is expected that PAGCOR will be more vigilant in enforcing these rules. Under current rules, casino operators are the entities required to accredit and supervise junket operators.

Part of these measures include requiring more transparency and additional due diligence on the beneficial ownership of PAGCOR licensees. The Philippine Securities and Exchange Commission (SEC) partnered with the Philippine National Police (PNP), PAGCOR and the Bureau of Internal Revenue (BIR) and committed to share information on beneficial owners of registered companies and other PAGCOR-regulated entities. Under the partnership, the SEC will provide these agencies with access to accurate and adequate beneficial ownership information in line with the recommendations of the FATF.

New Land-Based Casinos Around the Country After Lifting of Moratorium

In 2021, PAGCOR finally lifted a moratorium on the establishment of new online and land-based casinos, as previously imposed by then President Rodrigo Duterte in 2018. The Philippine government recognised the need for additional sources of revenue for its pandemic response. Since then, a number of land-based casinos have opened, broken ground or have been granted provisional licences to open and operate casinos, a number of them outside the Entertainment City in Manila (Manila’s Las Vegas-like gaming and entertainment complex).

Focus on Gaming Venues for Onshore Remote Gaming

Previously, online or offsite betting and gaming were only allowed to be accessed by foreign (non-Philippine located) players through the Philippine Offshore Gaming framework. However, during the COVID-19 pandemic, PAGCOR allowed certain land-based casino operators to offer online gaming to domestic players via their premises using their existing licences, but with an ability to offer remote gaming to VIP players that were/are already in the casino operator’s databases and are Philippine residents.

Recently, PAGCOR issued the “Regulatory Framework for the Issuance of Gaming Licences for the Establishment of Gaming Venues”. These rules provide for a “hybrid” type of gaming operations which still requires a land-based or bricks-and-mortar venue but allows for remote gaming or online access by customers who are registered by the remote gaming operators. It is expected that this development will allow electronic games and online gaming platforms to be available to the domestic market.

Activities that fall under the definition of “gambling” are illegal, unless there is a law specifically allowing them.

Under the Revised Penal Code of the Philippines and special laws, gambling is defined as “any other game or scheme the result of which depends wholly or chiefly upon chance or hazard; or wherein wagers consisting of money, [or] 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 (“EO 13”), issued by then President Rodrigo Duterte, 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, [or] articles of value or representative of value are at stake or made, when such game scheme is not authorised or licensed by the government agency duly empowered by law or its charter to licence or authorise the conduct of such games, or is conducted in a manner that violates the terms and conditions duly prescribed by the said government agency.”

By virtue of these definitions, any activity that has the elements of gambling and is not authorised by the relevant regulatory body is prohibited, and persons engaged in illegal gambling activities may be held criminally liable. Therefore, all persons and entities engaged in the business of gambling, together with their allied businesses, are required to be licensed or accredited (depending on their activities) with PAGCOR or, if they are located within an economic zone with special laws giving such economic zone licensing powers over gaming activities, such special economic zone.

For licences and authorisations issued by special economic zones such as the Cagayan Export Zone Authority (CEZA) and Aurora Pacific Economic Zone (APECO), licensees are allowed to conduct gambling activities only within the territorial jurisdiction of the relevant economic zone.

Social gaming is generally allowed, as long as such games do not fall under the definition of “gambling”.

Criminal laws require that all elements of a crime be present, so theoretically, all the elements of illegal gambling will need to be proven before a person is convicted of such violation. The conduct of social games are allowed provided that these are played merely as parlor games or for home entertainment, are not held in places habitually used for gambling and do not have betting disguised to defeat the intent of the law. Similarly, contests and games that do not involve any wagering or betting are not considered as gambling, but depending on how these are conducted (and whether consumer rights are involved), these games and contests may be required to be registered with the Department of Trade and Industry.

Land-Based Casinos

A land-based casino licence is issued by PAGCOR to operators of casinos or casino premises. A licence can either be a Provisional Licence or a Gaming Licence, and all gaming activities that the licensee intends to conduct and provide should be covered under such licence.

For table games, the licensee is authorised to operate only the following games of chance commonly played in casinos and any variations and derivatives thereof that are approved by PAGCOR, such as:

• Baccarat;
• Blackjack;
• Roulette;
• Pontoon;
• Casino War;
• Craps;
• Stud Poker;
• Big and Small;
• Money Wheel;
• Pai-Gow;
• Pula at Puti; and
• Poker.

A land-based casino licensee may propose other games subject to PAGCOR’s written approval prior to their implementation. Rules, table lay-outs and other aspects of such games will need PAGCOR approval. Licensees should refer to and follow the relevant Casino Regulatory Manuals and any other amendments to such manuals issued by PAGCOR (“Casino Regulatory Manual”), which vary depending on the location or category of land-based casinos (casinos in the Entertainment City, in economic zones or in greenfield areas).

Electronic Games in Land-Based Casinos

PAGCOR regulates the importation, possession and operation of electronic gaming machines and games located in land-based casinos. Licensees must ensure that the gaming machines deployed on their casino floor comply with technical standards as issued by PAGCOR.

Gaming Venues and Remote Gaming: A Hybrid Casino

In October 2023, PAGCOR issued the “Regulatory Framework for the Issuance of Gaming Licences for the Establishment of Gaming Venues”. These rules provide for a “hybrid” type of gaming operations which still requires a land-based or brick-and-mortar venue but allows for remote gaming or online access by customers.

A “Gaming Venue” is defined under the rules as a duly authorised establishment or facility that offers to the public the appropriate access to the PAGCOR-approved game offerings. Usually, the games offered in these Gaming Venues are traditional bingo games, electronic bingo (eBingo), electronic casino (eCasino) games, sports betting, specialty games, or any other games that may be allowed by PAGCOR in the future. These venues could be in malls, hotels or commercial establishments or those on a stand-alone basis. Although land-based casino licensees may have Gaming Venues inside its premises, there is a separate licence or authority issued to operators of Gaming Venues that are not inside land-based casinos or covered by land-based casino licences.

Under the licensing framework of Gaming Venues, remote gaming is allowed. “Remote Gaming” is defined under PAGCOR Rules as the conduct of electronic gaming at PAGCOR-licensed gaming venues outside the gaming area of a land-based casino or Gaming Venue. This includes offering of online gaming/wagering via remote gaming platform for the registered players of a specific Gaming Venue. Unlike the rules for offshore gaming licensees, bettors or customers based in the Philippines or Filipino players are allowed to bet through these Gaming Venues as long as they comply with the registration requirements provided by PAGCOR for these Gaming Venues.

PAGCOR Charter and Executive Orders

As a rule, all forms of gambling are illegal. The only forms of gambling allowed are those authorised by law. The PAGCOR Charter gives PAGCOR its franchise to maintain and operate gambling casinos. All persons primarily engaged in the business of gambling, together with their allied businesses, shall register with and secure approval from PAGCOR. The conduct of gambling activities outside of the authority granted by PAGCOR is punishable under the Philippines’ Revised Penal Code and other criminal statutes.

Executive Order 13/EO 13 entitled “Strengthening the Fight Against Illegal Gambling and Clarifying the Jurisdiction and Authority of Concerned Agencies in the Regulation and Licensing of Gambling and Online Gambling Facilities…” was issued in accordance with the police power of the President to exercise control over all executive departments and ensure compliance of all laws. EO 13 further clarified PAGCOR’s jurisdiction, as well as the jurisdiction of certain special economic zones that are granted authority to license gaming within their territorial jurisdiction.

It should be noted that the President, in the exercise of his/her powers, has the authority to issue orders in relation to the enforcement of laws and regulations, similar to EO 13. For instance, there is an existing ban on e-sabong (online cockfighting) issued by former President Rodrigo Duterte, and further continued by President Ferdinand Marcos Jr.

PAGCOR Rules

The legal/regulatory framework governing gambling primarily consists of rules and regulations promulgated by PAGCOR (“PAGCOR Rules”). We note that PAGCOR has the authority to change and amend these PAGCOR Rules in the exercise of its powers.

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 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.

In our experience, PAGCOR issues regular updates, amendments and clarifications to the PAGCOR Rules, and these issuances can be located in their website.

Special Economic Zones

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 CEZA, the APECO, and the Authority of the Freeport Area of Bataan (AFAB).

Philippine Charity Sweepstakes Office

Republic Act No 1169 established the Philippine Charity Sweepstakes Office (PCSO) and authorised it to hold and conduct lotteries and other similar activities as determined by its Board of Directors and with the approval of the President of the Philippines. PCSO also conducts small-town-lottery.

Local Government Units

On a local level, the Philippines is divided into local government units, with each local government unit having an elected set of chief executive and members of a legislative body authorised to govern their constituents. In establishing land-based casinos, Gaming Venues or even office premises of IGLs and affiliated businesses, local governments may issue their own rules and requirements for securing business permits and no-objection letters. Potential operators and licensees are advised to look into the rules and ordinances of the local government unit in which they intend to do business in to see if their rules allow their operations.

Anti-money Laundering Act and Its Implementing Rules and Regulations

Casinos, including internet and ship-based casinos, with respect to their casino cash transactions related to their gaming operations, were designated as covered persons under the AMLA and its implementing rules and regulations.

Gambling is generally described under penal laws 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”.

EO 13 expanded the definition of “illegal gambling” with respect to online 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 authorised or licensed by the government agency duly empowered by law or its charter to license or authorise the conduct of such games, or is conducted in a manner that violates the terms and conditions duly prescribed by the said government agency.”

Philippine statutes do not specifically define “land-based gambling”. However, in general, a casino is considered land-based (and requires a casino or operator’s licence) if gambling activities or games regulated as gambling are played in such physical premises. Land-based casinos are issued a Provisional Licence or regular Gaming Licence issued by PAGCOR.

PAGCOR’s IGLR (which is the set of rules that governs offshore gaming) defines “Gaming” as an activity consisting in participating in an internet game, offering an internet gaming service, or providing internet gaming content or support. This means that PAGCOR regulates even the provision of support or other services related to gaming, even if these support or service providers do not conduct gambling activities per se.

Penalties for Those Engaged in “Illegal Gambling”

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 to eight years per count.

The enforcement of anti-illegal gambling laws falls under the jurisdiction of the executive department and law enforcement agencies such as the National Bureau of Investigation and the PNP who are authorised to conduct raids, issue warrants of arrest and file cases before criminal courts.

Penalties for Violations Committed by Licensed Gaming Entities

PAGCOR, in the exercise of its regulatory powers, imposes fines and monetary penalties on erring licensees and accredited entities. PAGCOR can revoke licences or authorisations granted and can order the closure of their operations. PAGCOR can also file and recommend criminal charges if the violations of their licensees and the persons responsible fall under the crimes penalised under the Revised Penal Code or any other criminal statutes.

See 3.5 Key Offences.

Recently, there has been a focus on the enforcement powers of the AMLC against violators of the AMLA. Under the implementing rules and regulations of the amended AMLA (specifically, “An Act Designating Casinos as Covered Persons under Republic Act No 9160”), casinos, including internet and ship-based casinos, with respect to their casino cash transactions related to their gaming operations, were designated as covered persons. Under the same rules, the AMLC is authorised to do the following:

• to require and receive covered or suspicious transaction reports from casinos;
• to issue orders addressed to the authorised government agency or a casino to determine the true identity of the owner of any account subject of a covered or suspicious transaction report, or request for assistance from a foreign state, or believed by the AMLC, on the basis of substantial evidence, to be, in whole or in part, wherever located, representing, involving, or related to, directly or indirectly, in any manner or by any means, the proceeds of any unlawful activity;
• to institute civil forfeiture proceedings and all other remedial proceedings through the Office of the Solicitor General;
• to file complaints with the Department of Justice or the Office of the Ombudsman for the prosecution of money laundering offences and other violations under the AMLA;
• to investigate suspicious transactions and covered transactions deemed suspicious after investigation by the AMLC, money laundering activities and other violations of the AMLA;
• to file with the Court of Appeals, ex parte, through the Office of the Solicitor General, petitions to freeze assets or properties, examine accounts and deposits in banks and financial institutions; and
• to impose administrative sanctions for the violations of laws, rules and regulations issued pursuant to the AMLA.

While the AMLC is the implementing body of the AML and its rules, PAGCOR, as the regulatory body over casinos, regularly issues orders and memoranda providing clarifications and specific guidance on the obligations of its licensees with respect to AML laws and regulations.

The key regulatory authorities that apply to the Philippine gambling sector are the following.

• PAGCOR – regulator of gambling activities within the Philippines.
• PCSO – regulatory body for lotteries, numbers games and small-town lotteries.
• Special Economic Zone Authorities – 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, the Aurora Pacific Economic Zone and Freeport Authority (APECO), and the Authority of the Freeport Area of Bataan (AFAB).
• Games and Amusements Board (GAB) – regulates and supervises professional sports and allied activities to combat and prevent the existence and proliferation of illegal bookie joints and other forms of organised illegal gambling connected with all play-for-pay sports and amusement games. The GAB oversees the betting aspect of horse racing.
• Anti-money Laundering Council (AMLC) – refers to the financial intelligence unit of the Republic of the Philippines which is the government agency tasked to implement the AMLA, as amended. In 2017, casinos were included as covered persons under the AMLA.
• Local governments – Local government units have their own set of regulations and may issue business permits for gaming entities operating within their jurisdiction.

The Philippines’ approach to gaming and gambling regulation is a combination of prescriptive and management-based systems. The legal framework around regulating gambling activities emanates from the premise that, unless authorised by law, all types of gambling activities are illegal. PAGCOR Rules then provide for specific requirements and procedures under which licences may be given to applicants. Non-compliance will result in penalties, including the revocation of any licence or approval given by PAGCOR. It is made clear to licensees that any licence given to an applicant is not a right, but a privilege that can be cancelled by the state at any time.

However, we have seen in the past years that in the regulation and supervision of B2B providers (ie, suppliers, service providers, junket operators, etc), PAGCOR has imposed a management-based approach, by placing the responsibility of accreditation and supervision of these providers on the casino licensees that deal and contract with them. Land-based and online casino licensees and IGLs are required to perform their due diligence on these providers and at times, are subject to penalties themselves if the B2B providers are found to be non-compliant.

There are no changes expected at present in this jurisdiction.

In general, PAGCOR offers the following licences.

• Licences for Land-Based Casinos.
• Licences for Internet Gaming Licensees.

PAGCOR also offers accreditation to the following entities.

• Gaming Content Providers.
• Support Providers.
• Special Class of BPOs (SCBPOs).

The above are licences specific to gaming activities. Entities that do business in the Philippines are also required to secure a licence to do business from the SEC and business or local government permits from the relevant local government unit where they choose to hold business in.

The Philippine government has lifted the moratorium on land-based and offshore gaming licensees. We recommend, however, that before submitting its formal application and the required documents, that applicants consult counsel in order to determine the type of licence(s) that are applicable to their gaming or gaming-related activities, and whether there have been recent changes or developments to the category of licence relevant to their operations. PAGCOR has historically been helpful and transparent when applicants and potential licensees consult them on the application process.

Land-based casinos are typically issued a provisional licence at the beginning of their operations, and later on converted to a more permanent gaming licence once PAGCOR is satisfied with all the conditions under its PAGCOR Rules. The duration of land-based casino licences will depend on the terms agreed upon by the licensee and the regulator, which can be as long as 20 years, subject to renewal.

Licenses issued to IGLs for offshore gaming shall only be valid for two years and are site specific. Licensees may be renewed prior to expiration.

Initial Application Process

An application starts with a letter of intent addressed to PAGCOR. A complete list of requirements (depending on the licence or accreditation required), including the application forms can be found on the PAGCOR website.

Basic requirements that will accompany the initial submission are the following:

• charter documents showing the establishment of an entity in the Philippines with the required ownership and capitalisation;
• company overview and profile, including an organisational chart and business plan;
• requirements under the Anti-money Laundering Act;
• proof of passing the results of probity evaluation; and
• other requirements to be determined by PAGCOR.

PAGCOR may require additional documents. PAGCOR will then conduct a rigorous background check and perform due diligence on the applicant, which may include site visits, interviews and probity checks on the shareholders, directors and officers of the applicant, prior to the grant of a licence.

For gaming machines, PAGCOR requires certifications from independent and accredited testing laboratories (depending on activities).

PAGCOR usually grants a provisional licence initially, which may then be converted to a permanent licence once all of its conditions are fulfilled.

Requirements for Officers, Directors and Personnel

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, 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; and
• 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 programmes.

In all types of applications, we have found it helpful to conduct preliminary consultations with the relevant PAGCOR department at least six months prior to intended operations (except for land-based/integrated resorts which will require longer timeframes depending on size of project, location, construction requirements, etc).

Most PAGCOR applications can be completed within two to three months from completion of submission, and may vary depending on additional requirements, site visits to be conducted, product testings, etc.

For applicants that require a presence in the Philippines, it is recommended that they allocate another four to six weeks for their SEC registration and issuance of licence to do business in the Philippines.

It is recommended that the applicant consult PAGCOR or a legal professional to determine the costs and fees associate with licence applications as these vary depending on the activities that the applicant will engage in. In determining the total costs for an application, the applicant should consider the following.

• Set-up or establishment costs if it is required to have a local entity or permanent establishment in the Philippines, including SEC fees, local government permits, employee benefits, etc.
• Capitalisation requirements (ie, paid-up capital required upon application).
• Cash bond (if required).
• Application fees to be paid to PAGCOR.
• Registration fees for individual games or platforms.
• Employee training fees.
• Customs fees and duties for equipment (if not covered under exemptions).

It is recommended that the applicant consult PAGCOR or a legal professional to determine annual fees that will be paid by the licensee or accredited provider. In determining the relevant annual fees, the licensee should consider the following.

• Yearly registration fees for games or platforms.
• Any revenue-sharing or minimum fees based on GGR or winnings (these tend to change depending on the year of operation).
• Annual licence fees.
• National and local taxes.

A land-based casino or a physical gaming venue must be located or situated in an area or vicinity where gambling activities are not prohibited. Applicants must consult PAGCOR Rules for the most updated restrictions for gaming locations. In general, gaming venues should not be located near schools, places of worship, etc, unless they fall under the exemptions provided in the PAGCOR Rules.

The venue or location of an applicant or potential licensee determines the primary legal and regulatory framework that will govern the licensing of its premises or operations. There are different/unique Casino Regulatory Manuals that govern different venues (ie, if the location is greenfield, in an ecozone or in the Entertainment City).

The CRMs and PAGCOR Rules also provide for requirements for casino lay-outs, minimum hotel room to gaming floor ratios for integrated resorts and other location-based requirements prior to approving the issuance of licences to these land-based casinos.

Applicants should also be aware of local government requirements and limitations when looking at premises for operations. Most local governments have their own set of rules that govern the conduct of gaming operations, with some local governments implementing a total ban on any gaming activities within their jurisdiction.

Recently, land-based casinos have been allowed to conduct remote gaming through remote Gaming Venues.

This does not apply in the Philippines.

In addition to regulating and licensing casinos and gaming operators, PAGCOR also requires that entities “indirectly” engaged in gambling activities be licensed or accredited by PAGCOR. We recommend that companies who intend to enter into commercial agreements to provide services or supply products to PAGCOR and PAGCOR licensees consult legal counsel to determine whether any accreditation or approval is required prior to dealing with PAGCOR licensees.

• Accreditation of Equipment and Software Suppliers – a supplier of equipment and/or software must enroll first with PAGCOR before doing business with a casino operator. Enrolment procedures are prescribed in PAGCOR’s Suppliers’ Regulatory Manual.
• Accreditation of Service Providers – under PAGCOR Rules, PAGCOR Licensees may only avail of services of a service provider that is in the list of accredited suppliers of PAGCOR. This includes (but is not limited to) 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.
• Special Class of BPOs (SCBPOs) – refers to entities that are servicing legitimately licensed gaming operators abroad and do not in any way handle betting but purely product marketing and customer relations and are not servicing any of PAGCOR IGLs and have at least ninety (90%) percent Filipino workforce.

Junket Operators

PAGCOR Rules allow a PAGCOR land-based casino licensee to enter into agreements with third-party junket operators. While junket operators are required to register with PAGCOR, the ultimate responsibility of reporting and compliance of PAGCOR’s rules and regulations shall be with the PAGCOR licensee. The Casino Regulatory Manual also requires PAGCOR Licensees to conduct due diligence and “fit and proper” assessments on such operators, including their players and customers.

This is not applicable in the Philippines.

Re-application of POGOs, Classification Into Internet Gaming Licensees

In June 2023, as a response to criticism from various government bodies on the alleged illegal activities linked to offshore gaming activities and in an effort to clean up the space, PAGCOR suspended all current POGO licensees and required them to re-apply under the new regulations, the IGLT. PAGCOR issued the IGLT, a new regulatory framework to govern the application and operation of internet gaming licensees, the new term for POGOs. The IGLR provides for the licensing, registration, or accreditation of IGLs (including their service providers). The issuance of the new IGLR is part of the intensified efforts of PAGCOR and other government agencies to address the illegal activities being linked to offshore gaming operators. Upon its issuance, all then POGOs and service providers were put on probationary status and were directed to re-apply until 17 September 2023. The main focus of the reapplication process was to evaluate the beneficial owners of the applicants and to check whether these entities (or their owners) have engaged in activities they were not authorised under their licences.

The new regulations include (among other items) higher capitalisation and office/site requirements, disclosures of beneficial ownership, more stringent inspection procedures and surveillance requirements, additional penalties for violations and a focus on probity and integrity of persons connected to the applicant-licensee, specifically its officers and directors. In addition to suspending or revoking licences of illegal operators, PAGCOR has been issuing show cause orders and issuing monetary penalties to erring IGLs to ensure their compliance with the rules.

The new regulations also crack down on the previous practice of “sublicensing” by POGOs, which allowed unlicensed entities to “use” another POGO licence to conduct business.

In relation to the stricter regulations under the IGLR, PAGCOR has also issued various memoranda to IGLs on additional surveillance and oversight, including installation of CCTV and surveillance equipment (accessible by PAGCOR), and penalties for preventing PAGCOR or law enforcement officials from conducting surprise visits and inspections.

Domestic Players Allowed to Bet Online

Prior to 2021, online betting was limited to offshore betting, meaning only foreign-based players were allowed to make bets using the offshore betting platforms approved by PAGCOR. During the pandemic, PAGCOR allowed domestic players to bet online through a limited licensing regime extended to existing land-based casinos as an online component to their current land-based licence. This allowed domestic online betting for sports betting, electronic gaming and bingo.

Recently, PAGCOR issued the “Regulatory Framework for the Issuance of Gaming Licences for the Establishment of Gaming Venues”. These rules provide for a “hybrid” type of gaming operations which still requires a land-based or brick-and-mortar venue but allows for remote gaming or online access by customers who are registered by the remote gaming operators. It is expected that this development will allow electronic games and online gaming platforms to be available to the domestic market.

PAGCOR is Looking Into Launching Online Gaming Operations

PAGCOR, through interviews with media, has recently indicated that it intends to launch its own electronic or online gaming operations by 2024. It is not yet known whether PAGCOR will tap local or offshore players.

IGLs are required to ensure that their IP addresses used for offshore gaming operations are not accessible within the jurisdiction of the Philippines. IGLs are offshore gaming operators who are not allowed to take bets from Filipinos or those residing in the Philippines.

Data/content streaming providers that provide real-live streaming of casino games to the gaming terminals of PAGCOR-licensed electronic gaming sites must have IP blocking functions on all Philippine IP addresses except the IP address designated by the service provider for the specific gaming terminal.

Player Exclusion Programme

PAGCOR implements a Responsible Gaming (RG) programme 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 casino operator may also opt to file an exclusion form against a player who is engaged in cheating, theft, fraud, and other similar offences.

In addition to those in the list of excluded individuals, the following persons are not allowed to play in any casino in the country:

• persons under 21 years old;
• officials or employees of the government or any of its agencies;
• members of the armed forces of the Philippines including the Army, the Navy, the Air Force, and the National Police;
• employees of casinos (licensees); and
• loan sharks.

PAGCOR Code of Practice for Responsible Gaming

PAGCOR issued a Code of Practice for Responsible Gaming to set out rules and guidelines on RG that should be adopted by all PAGCOR-registered and licensed entities. The principles lay down the minimum standards for all gaming entities, but licensees should also look at their specific Casino Regulatory Manual applicable to their specific licence for the unique implementing guidelines.

The Code of Practice for Responsible Gaming discusses rules on the following aspects of RG:

• game fairness and awareness programmes;
• communications;
• advertisements;
• facilities within casinos;
• training of management and staff;
• support facilities (such as hotlines and emails for those that require help on gambling concerns);
• implementation of exclusionary programme; and
• penalties for erring licensees.

Responsible Gaming Guidelines (Specific for Remote Gaming Platforms)

Remote Gaming Platforms are required to provide the following measures in the conduct of its games.

• Upon logging-in, the remote gaming platform must show a short infographics or video clip which shall discuss the responsible gaming reminders of PAGCOR including the prohibition to play in open and public places.
• In every log-in, the player must ask players to read and accept the Terms of Use (TOU) of the service before landing him/her to the gaming or betting interface lobby. The copy of the latest TOU of the platform must be submitted to PAGCOR prior to implementation in the platform.
• A player’s violation of any provisions of the TOU shall be a ground for the cancellation or suspension of his/her remote gaming platform account, and/or the forfeiture of funds thereof, as the case may be. Forfeited funds shall be part of the Gross Gaming Revenue.

There are no forthcoming changes in this jurisdiction.

There are no gambling management tools in this jurisdiction.

The AMLA identifies casinos, including ship-based and internet-based casinos, as covered institutions for the purpose of compliance with the AMLA and related laws and regulations. Under the AMLA, casinos are required to automatically report to the AMLC the details of each casino transaction involving an amount in excess of PHP5 million 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.

To implement the inclusion of casinos under the coverage of the AMLA, the AMLC, PAGCOR, CEZA and APECO the jointly promulgated the casino implementing rules and regulations (CIRR) of RA No 10927 which took effect on 4 November 2017. The IRR mandates casinos to apply the following principles throughout their businesses: good corporate governance, know your customer rules and procedures, appropriate risk-management system and employee training. To comply with KYC obligations, casinos are also required to establish and record the true identity of their customers based on identification documents submitted upon opening of an account or redemption of casino chips or tokens or gaming instruments. For this purpose, appropriate systems and methods, and adequate internal controls shall be established for verifying and recording the true and full identity of customers. The IRR further provides that casinos shall conduct customer due diligence to ensure that they know their customers including the intermediary and the person or entity on whose behalf the transaction is being conducted. Thus, the CIRR prohibits the opening of anonymous accounts and accounts under fictitious names, and the processing of withdrawal or transfer of funds from the account of the customer without conducting a face-to-face contact.

While the AMLA and the IRR provide for the legal framework for compliance by covered persons, PAGCOR, from time to time, and in the exercise of their functions as the gaming regulator, issues guidelines, clarifications and orders on how its licensees should comply with the AMLA. The department within PAGCOR responsible for the issuance and monitoring of compliance with these issuances is called the PAGCOR Anti-money Laundering Supervision and Enforcement Department (PASED).

PASED’s issuances can be viewed here. Licensees should keep themselves regularly informed of any updates and new orders as PASED issues them from time to time.

PASED’s recent regulatory issuances and orders mostly pertain to the responsibilities and obligations of land-based casinos in complying with the AMLA. While junket operators are not considered “covered persons” under the AMLA, PASED places the burden in overseeing and supervising junket activities on casino operators or licensees. In PASED’s most recent issuance last August, 2023, it issued supplementary guidelines on the conduct of junket operations of land-based casino, and provides rules for customer due diligence, transaction monitoring and record keeping (in junket operations).

With the inclusion of casinos as “covered persons” under the AMLA, casinos are required to comply with the requirements and are subject to the penalties prescribed under the AMLA, and the CIRR. The AMLC, other regulatory bodies and PAGCOR also issue regular orders, guidelines and supplemental rules relating to AML compliance. Therefore, this summary does not purport to provide a comprehensive list of requirements, but rather the general principles that should be present in a casino licensee and its operations. It is recommended that the licensee or potential licensee consult a legal professional for guidance.

Casinos shall therefore apply the following principles based on the CIRR throughout their businesses.

• Conform with high ethical standards and observe good corporate governance consistent with the guidelines issued by the appropriate gaming agency (AGA) in order to protect the integrity of their operations and that of the gaming industry.
• Know sufficiently their customer to prevent suspicious individuals or entities from transacting with, or establishing or maintaining relationship with casinos.
• Adopt and effectively implement an appropriate anti-money laundering and countering the financing of terrorism risk management system that identifies, assesses, monitors, and controls risks associated with money laundering and terrorist financing.
• Ensure that officers and employees are aware of their respective responsibilities under this CIRR and carry them out in accordance with its Money Laundering Prevention Programme.
• Co-operate with the AMLC and the AGA for the effective implementation of the AMLA and the CIRR, and other applicable issuances.

In general (and at a minimum), all customer due diligence records and casino transactions of customers must be maintained and safely stored for at least five years. Casinos are required to report to the AMLC all covered transactions and suspicious transactions within five working days, unless the AMLC prescribes a different period which shall not exceed 15 working days from the occurrence of the transaction. Thus, all casinos shall register with the AMLC’s electronic reporting system.

Significantly, casinos are prohibited from engaging in any transaction involving the conversion of cash from one form to another without being used in gaming, and results therefrom, made through:

• the receipt of cash for transmittal of all or part thereof through wire or telegraphic transfer for or on behalf of a customer;
• payments in cash of funds received through wire or telegraphic transfer; and
• the cashing of checks or other negotiable instruments.

Casinos are also prohibited from receiving cash if its purpose or ownership cannot be ascertained within a period of at least seven days from the date of receipt, and from allowing the use of casino chips in the premises other than the issuing casino, including betting and exchanging into cash or other forms of casino chips.

PAGCOR regulates and supervises advertising and marketing activities that relate to gaming, gambling and the promotion of these activities. In the exercise of these powers, PAGCOR issued the Code of Conduct for Responsible Gaming which provide for guidelines and the minimum standards and requirements for licensees.

The Consumer Act of the Philippines (as implemented by the Department of Trade and Industry) (“Consumer Act”) can also supplement PAGCOR Rules to the extent that the Consumer Act protects gaming customers as consumers.

A “Marketing/Promotional Activity” is any activity, programme, or incentive, or any combination thereof, which gives publicity to, or otherwise entice the people to register and play. PAGCOR should approve these activities and the materials to be used, prior to dissemination to the public. In general, these are:

• membership or loyalty programmes;
• sponsorships;
• any contest, lucky or raffle draw or tournament; and
• announcements and/or advertisements.

The Consumer Act defines “advertisement” as prepared and through any form of mass medium, subsequently applied, disseminated or circulated advertising matter. “Advertising” means the business of conceptualising, presenting or making available to the public, through any form of mass media, fact, data or information about the attributes, features, quality or availability of consumer products, services or credit.

PAGCOR Rules also include “Marketing and Promotional Activities” as under its regulatory powers, and these include print, TV and cable, radio, the internet (websites, blogs, social media sites, electronic mail, etc) telephone marketing (SMS, MMS, calls), promotional posters, streamers, fliers, signages, billboards as forms of media.

Under PAGCOR Rules, the mandatory elements of advertisements promoting gambling are as follows.

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

There are also specific rules depending on the type of gaming activity. For remote gaming platforms for instance, in general, the complete mechanics/details of a marketing or promotional activity, including those which feature membership programmes, loyalty programmes, sponsorships, raffle draws or tournaments, must be submitted to PAGCOR. PAGCOR has rules governing certain announcements and advertisements and licensees and operators should consult counsel or PAGCOR on whether their announcements and advertisements are considered general or specific and if they require the submission of forms and/or specific review and approval.

In general, the advertising or promotional message related to gambling content shall not:

• be directed to persons below 21 years old, and it must neither catch the attention nor give interest to the viewing minors;
• imply that a player’s skill can influence the outcome of a gambling activity – it must not encourage the thought that skill and talent can change the result of the game or can assure a win;
• give an impression that gambling is an accepted way to make money – it must promote that gambling is more on entertainment, fun and leisure and not a money-making activity and must not imply that gambling solves financial problems; and
• include misleading statements about odds and prizes – it must be truthful, eg, does not imply of sure winning of prizes if not actually guaranteed.

A licensee or operator that violated PAGCOR’s Rules on the provisions of advertising and promotional activities shall be subject to monetary penalties and fines by PAGCOR.

There are currently no upcoming changes expected in the Philippines.

In general, PAGCOR licensees should update their corporate and shareholder information whenever they renew their licences. We also encourage clients to notify PAGCOR of such changes on a periodic basis even in between these periods in order to maintain transparency with the regulator.

If a change in shareholders results in a change in control of the PAGCOR licensee (defined as more than 50% ownership and/or voting 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 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.

See 10.1 Disclosure Requirements.

The requirements are applicable with respect to passive investors or those who hold shares in the PAGCOR licensee but do not participate in the operations of the gaming company. It should be noted that the obligation to disclose or report changes in control to PAGCOR is with the PAGCOR licensee, and not with the shareholder.

We distinguish between enforcement of the law against players (of illegal gambling activities) or those not sanctioned by PAGCOR, and the enforcement against operators (whether operating legally or illegally).

• Revised Penal Code and other Penal Laws (“Penal Laws”) – for players in illegal gambling activities, those convicted will be punished as “bettors” under the Penal Laws (and its amendments). Personnel or staff, collectors, agents, owners or persons who allow the use of their properties for illegal gambling operations, operators of such activities, financiers and protectors, and those possessing gambling paraphernalia or materials not approved by the regulatory bodies. A criminal case would need to be filed against the violators. Penalties include both imprisonment and fines.
• EO 13 – in 2017, by Presidential Order, it was declared that gambling activities – including any services directly or indirectly linked with those activities – are illegal if they are conducted beyond the territorial jurisdiction of the government authority that issued the licence for the activities. Section 3 of EO 13 clarifies that no duly licensed online gambling operator, or provider of activities and services supporting online gambling activities, may directly or indirectly allow persons who are physically located outside the territorial jurisdiction of the licensing authority to place bets, or in any way participate, in the games conducted by that operator. This also applies to participation through an online portal or similar means.
• Rules and Regulations Issued by PAGCOR or the relevant AGA – these consist of fines and penalties directed towards licensed PAGCOR entities. PAGCOR, in the exercise of its regulatory powers, can impose monetary fees, fines, as well as issue notices to explain, cease-and-desist orders (against unauthorised activities), and can revoke licences issued to its regulated entities.

See 11.1 Powers.

PAGCOR issues a list of fines and penalties for prohibited and unauthorised activities. Fines and financial penalties usually increase based on the frequency of the commission of the violation, with the final penalty including a revocation of the licence.

Certain violations can be imposed on erring persons or individuals.

The tax treatment on casinos and licensees differ with respect to the source of income or activities. Due to the different activities and various tax regimes (including potential tax incentives available), we recommend consulting tax experts for legal and tax advice and structuring.

In general, income from the operation of casinos are exempt from corporate income tax, and are instead required to pay 5% franchise tax. Income from “other related operations/services” are subject to corporate income taxes. These include non-gaming operations services such as sale of goods and/or services. Licensees are also subject to the payment of Value Added Taxes. However, if licensees directly contract with PAGCOR in connection with the latter’s gaming operations, then the sale of goods and/or services performed with PAGCOR in relation to such gaming operations is subject to 0% VAT.

For licensees that are located in ecozones/freeports, their income realised from services/operations that are duly registered with their concerned Investment Promotion Agency (IPA) shall be subject to either 5% gross income tax (GIT) or income tax holiday (ITH), whichever is applicable. Under the 5% GIT, PAGCOR licensees are exempt from regular corporate income tax and VAT. On the other hand, under ITH, they are exempt from regular corporate income tax, but subject to VAT. Income from non-gaming operations and those not registered with the relevant IPA are subject to regular corporate income taxes, VAT and other applicable taxed under the Philippine Tax Code.

The 5% franchise tax (and corporate income taxes if applicable) are payable directly to the BIR, specifically to the concerned Revenue District Office (RDO) where the licensee is registered. In addition to national taxes, PAGCOR itself also imposes licence and regulatory fees to its licensees. We advise clients to consult counsel as these fees are subject to changes depending on the specific activity or gaming product, and the platform where games are offered.

There is no expected reform in this jurisdiction.