Why the Philippines Should Consider Suspending Gambling

Things are now beginning to turn sour for the online gambling space in Manila, and lawmakers are beginning to turn their ire to the online gambling space in particular.
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Manila, the capital of the Philippines, is one of the most popular cities in the world. A budding tourist destination with a population of almost 2 million, the area is fast becoming a significant cash cow for the Filipino government.

Like every capital city in the world, any business looking to set itself up in the Philippines will be working on establishing its presence in Manila. That rhetoric goes for gambling companies as well- especially those who have focused on the online space.

To understand how Manila has become so prominent in online gambling, it’s worth getting a glimpse of its role in the Philippines’ larger plan. The Southeast Asian country has been on a campaign to lure Chinese gamblers looking to have a good time.

Currently, the only form of gambling allowed in China is the Welfare Lottery and the Sports Lottery. Both were set up by the government in 1987 and 1994, respectively. With no means of betting on their favorite games, citizens of mainland China have looked overseas, and while Macau has been a top destination, the Philippines has catered to millions of Chinese gamblers.

In that time, an estimated 100,000 people have moved to the Philippines to work as digital marketing agents, tech support specialists, and engineers for gambling companies.

Gambling revenues are also rising for the government. Revenues from online and traditional casinos are forecasted to cross the $4.1 billion thresholds in 2019, up from about $1 billion in 2016.

Annual licensing fees for gambling companies in the country also stood at $140 million in 2018- over 11 times what they were in 2016. Also, licensing fees make up the third-largest source of revenue for the Filipino government- behind just everyday taxes and customs duties.

Money Laundering and Kidnapping on the Rise

However, things are now beginning to turn sour for the online gambling space in Manila, and lawmakers are beginning to turn their ire to the online gambling space in particular.

Earlier this month, Joel Villanueva, the Chairman of the Labor Committee of the Filipino Senate, called for the suspension of offshore gambling operators in the country, citing the increased risk of money laundering and the fact that the government doesn’t seem to be providing enough oversight on the industry.

Villanueva’s calls will undoubtedly send chills across the gambling industry in the Philippines, and debates have already started to run concerning whether or not his calls are rational or not. So, it begs the question of how gambling has fuelled crime in the country.

Considering how much gambling does for the Philippines, it’s tempting to avoid the red flags. However, if you look deep enough, you will find some concerning traits nonetheless. In December 2019, the Philippine National Police Anti-Kidnapping Group confirmed that they had recorded 42 kidnappings that occurred either at a land-based casino or an offshore gambling operator.

Thirty-six of those abductions had occurred in connection to land-based casinos, and the victims were most especially people who owed money to loan sharks, Casino.org reports. The police further accused these loan sharks as being connected to Chinese nationals, essentially pointing out that while the Chinese gambling money has been great, there have also been many downsides.

Gambling Addiction is Rising

The loan sharks themselves have had a pretty thriving market in the Philippines, as gambling addiction itself is beginning to rise significantly. As of June 2017, 699 gambling addicts were banned from casinos in the Philippines between 2013 and Q1 2017, and 398 were still part of the exclusion program.

The medium also confirmed that most casinos in the country exhibit the minimum safety standards provided by the Philippine Amusement and Gaming Corporation (Pagcor), the country’s gaming regulator.

Rising problem gambling along with the complaint from Villanueva are two reasons why the Philippines might not be ready for the type of boom gambling brings.

In his complaint, Villanueva pointed out that the country’s gambling regulator hadn’t provided enough information to show that it was effectively regulating the industry. It’s also worth noting that there are still no official figures of the total number of players included in PAGCOR’s self-exclusion program. Any regulator that can’t provide detailed metrics concerning its sector is ill-equipped to solve any problem that arises in that industry.

Villanueva’s call to ban gambling might have sounded a bit outlandish at first, but when you look at the numbers, an outright ban doesn’t seem like such an extreme idea.

Sadly, the problem is that banning gambling might not be in the country’s best interest. Economic growth is one of the most important aspects of a country’s life, and as we’ve established, gambling does generate billions to the Philippines. And with the coronavirus outbreak in China, land-based casinos in Macau have all been shut down, opening Manila up to a new market of online gamers.

For the government, however, it needs to decide if the revenue is worth the problems being created daily.

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works. Contact him at Jimmy@beanstalk.io

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