Stopping e-gambling

WHEN PRESIDENT Duterte told his Cabinet during their first meeting that “online gambling must stop,” it indicated the magnitude of the problem mainly affecting the lower-income classes. The administration has given it the same priority it gives to illegal drugs, crime, and the horrendous traffic.

The President must have been told of how small-time gambling makes the life of those who can hardly make ends meet more miserable. They are lured by the promise of quick bucks dangled by online gaming outlets and bingo parlors that have mushroomed, not in gated subdivisions, but in densely populated areas.

Government data show a surge in the number of so-called cafés or parlors with computers running internet-based card, slot machine and lottery-type games during the six years of the Aquino administration. Specifically, the number of e-bingo machines rose to 12,000 from 2,160; internet gambling terminals grew to 7,000 from 4,662, and e-games outlets rose to 277 from 190.

The task of fulfilling Mr. Duterte’s directive falls squarely on the state-run Philippine Amusement and Gaming Corp (Pagcor), which has begun shutting down its licensed online gambling operations. It has announced that it would stop processing license applications for e-bingo parlors and online gaming cafés. Last week, Pagcor Chair Andrea Domingo announced that her agency had also revoked 124 e-games permits for regulatory violations, and that the licenses of 302 e-games and 324 e-bingo outlets would not be renewed.

One major casualty of the online gaming purge is Philweb Corp., whose majority owner, Roberto V. Ongpin, was identified by the President on national TV as “an oligarch” who must be “destroyed.” Ongpin, in response, has put on the auction block his controlling 53.76-percent stake in Philweb, in the hope that this would take the heat off the company. The license of publicly listed Philweb to service Pagcor’s network of e-games cafés expired last Aug. 10. In the process, the company saw its market value plunge to P6.1 billion from about P35 billion before Mr. Duterte assumed the presidency.

But online gambling does not stop with Philweb. Other firms are engaged in similar activities. There is publicly listed Leisure and Resorts World Corp., which is into bingo gaming through Bingo Bonanza Corp. It also owns First Cagayan Leisure and Resort Corp., which has an existing license agreement with the Cagayan Economic Zone Authority to develop, operate and conduct internet and gaming enterprises and facilities in the Cagayan Special Economic Zone for foreigners.

DFNN Inc. is another firm operating like Philweb. It indirectly owns 30 percent of Interactive Entertainment Solutions Technologies Inc. (IEST), through which it is allowed to operate under several gaming licenses issued by Pagcor.

One legal hurdle Pagcor faces in the case of DFNN and IEST is that these companies hold “lifetime licenses.” Domingo is baffled as to why such permits were issued in the first place. Another potential problem is the possible transfer of the e-games outlets previously serviced by Philweb to DFNN/IEST, although Domingo has categorically stated that she would not allow it.

The shutdown of online gambling is not without cost. Stopping Pagcor’s e-games operations is estimated to cost as much as P9 billion in foregone revenues. But this can easily be remedied by reviewing the licensing agreements with the big casinos, which rake in billion-peso profits.

Specifically, the government must renegotiate the licensing fees that were lowered by the previous Pagcor head to allow the casino operators to settle their obligations with the Bureau of Internal Revenue. This resulted in some P7 billion in foregone revenues for Pagcor, and the Commission on Audit has already disallowed it. Pagcor has sent a letter to the casinos—Resorts World, Solaire and City of Dreams—showing them the adverse COA finding and giving notice that Pagcor would seek higher fees.

Focus should now be on ensuring that the closed online gaming outlets will not transfer to the remaining licensed operators. Otherwise, it will appear that the Duterte administration merely targeted Ongpin. Pagcor must also clarify whether all types of online games will be banned. It should speed up the drafting of an executive order specifying that online gambling will henceforth be illegal. Like any other form of gambling, it makes life more miserable for those who already have less in life.

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