September 11, 2019
The Chinese government, through a spokesperson from its foreign ministry, has formally petitioned the Philippines to ban online gambling. Gambling is illegal in China, and this move is part of a continuing effort to limit the availability of online gambling services to Chinese citizens.
China and the Philippines are very closely linked through strong diplomatic and economic ties, which the Chinese government is leveraging to ensure compliance. Already, the Philippines has temporarily halted the process of approving new offshore gambling licenses, but there are 58 licensed foreign gambling operators legally operating in the country.
Beijing’s request has been prompted by the popularity of proxy betting and the issuance of POGO (Philippines Offshore Gaming Operator) licenses. Proxy betting allows someone to gamble at a casino by remotely giving a hired agent instructions. This has seen Chinese citizens bypass the gambling ban, using phones and online streaming services.
POGO licenses allow online gambling services registered in the Philippines to allow international players. While they are not exclusively targeting Chinese players, their availability has made it difficult for China to enforce its gambling ban. Many operators offer in-house streaming at casinos to offer proxy betting, which has seen them gaining popularity within mainland China.
It is vital to recognize China's role in facilitating the growth of the Philippine's online gambling industry. The Chinese government cracked down on proxy betting in Macau, by banning cell phones and online streaming from casino tables. This led to operators moving to other nations within Southeast Asia.
In the six months between January and June 2019, the Philippines collected $51.5 million in tax revenue from online gambling operators with POGO licenses. This accounted for 7% of the income earned by the country’s gambling regulator. Apart from the tax revenue, the industry has also created hundreds of employment opportunities.
China was keen to highlight, and commend, Cambodia’s decision to effectively ban online gambling. Cambodia announced that not only would it stop issuing new online gambling licenses, but current licenses also will not be renewed upon expiry. China’s statement pointed out that this should lead to closer cooperation between Beijing and Cambodia.
The Philippines will have to weigh up the benefits of ‘strengthening’ their relationship with Beijing, against the current tax revenues from online gambling, when considering China’s request. This will likely be determined by how China chooses to reward Cambodia’s decision to comply. The Philippines has shown willingness to comply by suspending the issuance of new POGO licenses.
All players need to know about China's petition for the Philippines to ban its online gambling industry, and it's economic and geopolitical effects.
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