Tighter rules and taxes, not online gambling ban

THE government is looking to raise taxes and tighten regulations covering online gambling instead of an outright ban that could push the sector further underground, Finance Secretary Ralph Recto said.

Speaking to reporters on Wednesday, Recto acknowledged growing concerns about the proliferation of illegal online gambling operations, but said that banning the activity altogether could backfire.

“If you ban it, everything becomes illegal. The government won’t be able to collect [any revenue],” he said.

Illegal operations still dominate at around 60 percent of the industry, Recto said, representing a major loss in potential revenues with just 40 percent of the market composed of legally registered firms.

To address this, he said the Department of Finance was studying proposals aimed at increasing government revenues while improving oversight of online gaming operators.

Among the options under consideration are higher Philippine Amusement and Gaming Corp. (Pagcor) fees and franchise charges, additional taxes to be imposed by the Bureau of Internal Revenue (BIR) and broader regulation including a potential mandate requiring licensed operators to list on the Philippine Stock Exchange.

“We can force them to list so that we know who’s behind them. It becomes more transparent,” Recto said.

The Finance chief explained that Pacgor currently collects around 30 percent of gross gaming revenues from licensed online operators, with the BIR imposing an additional 5-percent franchise tax. Pagcor also collects a 3-percent auditing fee.

Recto said a 10-percent increase in taxes or fees could yield an additional P20 billion per year.

“We’re leaning toward increasing whatever Pagcor is already collecting. That will be the fastest way to do it,” he said.

Beyond raising revenues, Recto emphasized the need for better regulation of both legal and illegal platforms, including restrictions on access.

“How do you regulate brick-and-mortar casinos? The same should apply to online platforms,” he said. “For example, government employees aren’t allowed to gamble in casinos. That same rule should be enforced online.”

Recto also renewed his call to use the national ID system to verify a user’s age and identity, proposing a minimum age of 21 for online gambling.

“We have to have a system in place. Gambling is habit-forming — just like with cigarettes, there should be a warning,” he added.

He then downplayed proposals to tax individual bets rather than overall revenues, saying such a move could be difficult to implement given current technology limitations.

“Right now, it’s easier to do it by gross gaming revenue,” he said. “You don’t even know the total betting amount today. Gross gaming revenue is basically bets minus payouts.”

While the matter wasn’t raised during a recent meeting with President Ferdinand Marcos Jr., Recto said they discussed online lottery operations that were not sanctioned by the Philippine Charity Sweepstakes Office.

He added that the administration was finalizing key policy directions on gambling, and that related announcements could be made during the President’s State of the Nation Address (SONA) on July 28.

“Between now and the SONA, I’m sure there will be statements made,” Recto said.

Asked again if the upcoming pronouncements would include a total ban on online gambling operations, Recto said, “I don’t think it should be banned. I think more regulation and higher taxes are the way forward.”