GGRAsia – Duterte new online gambling remarks spook investors

Duterte new online gambling remarks spook investors

Dec 23, 2016 Newsdesk Latest News, Philippines, Top of the deck

Reports that Philippine President Rodrigo Duterte (pictured) said in a Thursday afternoon address he was “ordering the closure of all online gaming” in the country have shaken investor sentiment.

Shares of gaming parlour firm PhilWeb Corp fell 30 percent following the comments, made an hour before market close that day. Leisure and Resorts World Corp, which has several investments in land-based and online gaming, saw its stock dip 20 percent after the President’s declaration, which came in a speech at the presidential palace.

“I am ordering the closure of all online gaming. All of it. It has no use,” Mr Duterte was reported as saying. He did not go into detail regarding the topic.

PhilWeb had recently announced that it was in negotiations with the Philippine authorities for a fresh licence to run digital gaming parlours.

It said in a Friday filing to the Manila bourse: “With the [reported presidential] closure order, the apparent [sic] renewal of PhilWeb Corp’s licence to operate is in jeopardy.”

Leisure and Resorts World Corp was more guarded in its response to the reports of a presidential ban for online gambling. The firm said in a Friday filing: “Except for the television reports and online and newspaper articles relating to the pronouncement made by President Rodrigo Duterte, the company has no other information on the said pronouncement or order.”

Multiple media outlets in the Philippines further quoted on Thursday the country’s Justice Secretary, Vitaliano Aguirre, as saying the President had recently ordered him to look into the operations of what were termed “online gambling firms”.

Mr Aguirre was also cited by media sources as indicating presidential officials were drafting a presidential order to define the scope of his authority to investigate such business. The boss of the justice department reportedly said any closure of such firms would be based on the results of his probe.

‘Online’ vs ‘e-Games’

Gaming industry professionals distinguish between forms of gambling that merely use the Internet as a pipe – in order to deliver services to licensed locations such as legal casinos or authorised betting parlours – and gambling services that use the Internet’s ability to cross national boundaries, in order to deliver gaming to players based offshore. The latter form of gambling annoys some countries that wish either to prevent their citizens from engaging in it, or wish to licence and tax it themselves.

An example of the first type of Internet-based gambling service – that has been available in the Philippines on a legally-licensed basis until recently – was PhilWeb’s onshore gaming parlours mainly appealing to domestic customers.

In early August, Andrea Domingo – Mr Duterte’s appointee as new head of the country’s casino regulator the Philippine Amusement and Gaming Corp (Pagcor) – said PhilWeb’s expiring operating licence would not be renewed. Then in late August, Mr Duterte indicated that such online gambling businesses might be allowed, provided they “pay the correct taxes”.

In its Friday filing, PhilWeb stated: “PhilWeb is a software provider to Pagcor for its network of e-Games outlets. PhilWeb does not engage in online gaming. PhilWeb’s software cannot be played from homes or offices. Each e-Games outlet is owned by an individual entrepreneur whose gaming licence is issued by Pagcor directly to them. Each e-Games outlet therefore pays all taxes, as does PhilWeb itself.”

The issue of taxation has also been raised recently by Mr Duterte in relation to a second type of Internet-based gambling service – one that is casino-based and on Philippine shores, but aimed at overseas customers. An example is the proxy betting service that investment analysts said was being offered until recently by Chinese businessman Jack Lam Yin Lok.

In early December Mr Duterte said he had ordered the arrest of Mr Lam for alleged bribery and economic sabotage. The President has also ordered the seizure of all gaming assets in that country belonging to the gaming entrepreneur.

The calls followed the detention in November of 1,316 Chinese nationals at Mr Lam’s Fontana Casino at the Fontana Hot Spring Leisure Parks at Clark on the main island of Luzon.

(Updated on Dec 23, 6.40pm)