Jurisdiction Brief

Introduction

In 1975, then President Ferdinand Marcos issued Decree No. 1067-a, which defined legal gambling and created PAGCOR for licensing and regulation of the gambling industry, which is directly subordinate to the government of the Philippines.

PAGCOR is a government agency set up to oversee the gambling industry in order to promote tourism and finance infrastructure construction. In addition, PAGCOR owns at least 46 casinos on the islands.

The gambling sector in the Philippines is the second largest source of income after taxing citizens. Traditionally, the gambling business, both in the casino and in the online gambling sector, is controlled by the regulator and the operator in one person – PAGCOR (Philippines Amusement and Gaming Corporation).

As a regulator and operator of the business, PAGCOR operates both casinos and online gaming sites. Philippines online casino license holders are allowed to provide all games except:

Regulatory authorities

In this article, we will deal in detail only with PAGCOR, its structure, and powers, as well as the licenses it issues.

While PAGCOR has the power and authority to authorize, license, and regulate gambling, card, and number games, those powers do not extend to games authorized, licensed, or regulated by other regulatory bodies, special laws such as Republic Act No. 7922, or local governments.

Those online gambling establishments operated and licensed by PAGCOR are legal under Philippine law, but owners, operators, and staff may be subject to prosecution in other jurisdictions (China).

 PAGCOR is authorized to issue two main types of licenses:

• national – licenses allowing to operate exclusively in the territory of the Philippines (both land-based and online)
• offshore – permitting to operate everywhere, with the exception of the Philippines themselves (a kind of analogy of the Curacao license)

Offshore online gambling license

Philippine offshore gambling operators, commonly referred to as POGOs, must be registered and licensed by PAGCOR.

Gambling offered by POGO is not available to customers located in the Philippines and the websites of such operators are blocked.

Registered POGOs in the Philippines grew rapidly by attracting Chinese customers and hiring Chinese staff.

The first POGO was licensed to operate in the Philippines in 2016, coinciding with a period of tightening casino regulations in the Macau Special Autonomous Region.

It is important to clarify that, unlike in Curacao, an operator wishing to obtain a license from PAGCOR does not need to have a local company. Both registered local companies and foreign companies located in any jurisdiction can apply, but this will require a local “guarantor” in the person of a registered Philippine company. Such surety services are often more expensive, and in some cases even more expensive than the incorporation of one’s own company.

An applicant for a gambling license in the Philippines can carry out its operating activities both in the territory of the Philippines and outside the state; there is no criterion for mandatory substance.

Procedure and Criteria for Obtaining an Offshore License in the Philippines

Philippines online casino licenses are issued after a thorough review of the business and financial background of the applicants.

There are two types of online gambling licenses in the Philippines.

• e-Gaming license
• Betting license 

The difference between these two licenses is the application and the license fee, which we will describe below.

The application must be submitted to the regulatory body with the following information/documents:

• A “Personal Due Diligence Form” containing the name and details of the applicant and all key officers, including directors, CEO, and company secretary;
• The form “On the trustworthiness of the company”, contains data about the company;
• Confirmation of the physical location of the company in a particular territory;
• Business plan enterprises;
• A signed copy of the Code of Industry Practice.

In addition to the above documents, additional documents will be required, such as birth certificates, copies of passports, police clearance certificates, and letters of recommendation.

To obtain an online casino license in the Philippines, the fee depends on the type of license.

To obtain a gambling license, you must pay the following fees:

*Bank guarantee must be paid in cash. Regarding its correct execution and the possibility of an alternative contribution, it is necessary to consult with local banks.

Also, to operators with an offshore license, a single tax rate is applied (for both gambling and betting):  5% of GGR.

Sanctions for the illegal organization of gambling

Illegal gambling is a criminal offense in the Philippines. REPUBLIC ACT No. 9287 imposes the following penalties on different categories of participants. It is important to clarify that these sanctions apply to people directly located in the territory of the Philippines.

Market competition and summing up

There are not so many licensed offshore operators in the Philippines – only 33. A complete list of them, relevant for 2023, can be found via the link here.

After analyzing the registered POGOs, we came to the conclusion that the majority of the operators are aimed at the Chinese market and nearby Asian countries.

As mentioned above, since 2016, gambling has been banned in the administrative district of Macau and in China itself, which is why Philippine operators are mainly trying to enter this market and are in demand in the Far East.

Today, the gambling industry is used in the Philippines to boost tourism to the country, offering a variety of legal gambling activities, many gambling establishments, and tourist areas similar to those found in Las Vegas.

One of the main attractions created by PAGCOR is the Entertainment City E-City (Entertainment City). E-City is an 8-kilometer block of casinos and resorts placed together to attract the maximum number of tourists to the heart of Manila.

Want to enter the Philippine gambling market? Leave your application, and we will be happy to advise you and offer you a legal support package that suits you.