It’s time to pack up and find somewhere new to put down roots. Holders of a remote gambling licence in the Philippines – or operators looking to obtain one – need to consider an alternative licensing jurisdiction, and quickly. Below, I’ve outlined why they should consider it, where they could go, and how to go about starting the process.
During recent months, the Philippine Amusement and Gaming Corporation (PAGCOR) has been subject to an avalanche of controversial and negative press. PAGCOR is a wholly owned government corporation which was formed in 1977, which currently operates over 40 casinos across the Philippines. The controversial bit is that it simultaneously acts as the country’s gambling regulator, which has prompted concerns during 2016 about a conflict of interest, specifically regarding regulatory policies.
PAGCOR is one of the largest generators of wealth for the Philippine government; the first quarter of 2017 recorded a gross income from gaming operations of P14 billion (approx. USD 275 million). The corporation is required to pay half of its revenues back to the government, and some further funds are earmarked for charitable purposes, but the remainder is recorded as commercial profits. A surge in the number of private casino operators and other jurisdictions has put heavy pressure on the Philippine government to segregate its regulatory and commercial activity. Following this pressure, Finance Director Carlos Dominguez III has published a directive for the privatization of the commercial activity of the corporation. However, this process is lengthy and in the meantime operators argue that the lack of transparency promotes an active market for money laundering and undetected inefficiencies.
In addition to the potential breakdown of the corporation, other negative press and regulatory roadblocks have arisen which place further strain on the corporation. The corporation has recently been forced to impose a 50 licence limit on its attractive Philippine Offshore Gaming Operator licenses, despite receiving more than a hundred applications from gaming providers. PAGCOR have confirmed that they have already granted approximately 40 licences to offshore operators and have imposed the limited to prevent an oversaturated operator market. The number of pending licence applications has significantly decreased following the negative press.
With all the negative attention in recent months many operators have begun to consider whether it is now time to find a more reputable and robust alternative licensing regime, which also provides the benefits and opportunities to continue targeting Asian markets.
Where should they go?
Operators who have obtained or are considering a PAGCOR licence are looking to target markets in Asia. There is another jurisdiction that has developed an excellent reputation for targeting that market: the Isle of Man.
The number of Asian-facing companies that already call the Island home is quite impressive: it includes Dafabet, 188bet, SBOBET, Galaxy Bet, Babylon Gaming, fun88, Mafly, Mimibet, and Xela, amonst others. The Island has first class technology, telecommunications, and power infrastructure which is well ahead of that offered by most offshore jurisdictions and even many onshore ones. This network can reliably support huge levels of traffic and is well equipped and experienced in providing solutions to the complex requirements of eGaming businesses. Indeed, Gambling Insider has recently profiled just how well equipped the Isle of Man is to handle Asian gaming operators.
Additionally, many Asian operators are attracted to the Island’s robust regulatory framework which is well respected within the eGaming industry. The Isle of Man Gambling Supervision Commission (GSC) is very familiar with the Asian operator market and is a forward-thinking regulator, open to assist with specific operators’ requirements with a genuine understanding of Asian market characteristics.
Finally, it is also well known that the Isle of Man’s favourable tax regime is attractive to eGaming operators with 0% corporation tax and competitive gaming duty (based on profits), ranging from 0.1%- 1.5%. This mixture of a competitive tax base, reliable infrastructure, and highly respected regulatory and legal frameworks offer a winning combination.
There are other options, of course. However, for Asian-facing operators the Isle of Man is a world leader for a reason and it is a sensible place to start looking.
How do they start the process?
For those operators who have decided that the Isle of Man is an appropriate licensing jurisdiction, there are a few preliminary conditions and steps to be undertaken to start the process. We have outlined these below:
- Incorporate an Isle of Man company: It is a regulatory requirement that the company holding the licence is incorporated on the Island. Whether or not you intend to build a fully-staffed office on the Island, this is usually handled by a corporate services provider (such as Boston), which will assist with the company incorporation, provision of local experienced directors (a requirement of the licensing process), a money laundering reporting officer, designated officials, operation managers, and all the day to day administrative procedures once the license has been granted.
- Arrange Isle of Man data hosting: A further licensing condition is that the servers must be hosted in the Isle of Man and all player registration must take place on servers located in the Isle of Man, so a technical service provider will also need to be engaged.
- Appoint an RNG testing company: All random number generators must be certified by an Isle of Man approved testing company.
- Open a corporate bank account on the Isle of Man: This is also a regulatory requirement. The island has a number of specialist banks that work with local operators to provide international banking in line with regulatory requirements.
- Prepare and submit an application form and supporting documents: This will include elements such as a business plan, financial forecasts, and drafted policies and procedures, to name a few, and it is generally advised that you do this with the support of a knowledgeable local agent, such as Boston.
If you would like more information on the Isle of Man or other jurisdictions for licensing a remote gaming business, get in touch with our specialist eCommerce team.