Recently, the issue of the Philippine gaming license has affected the entire industry. Today, TC-Gaming will talk to you about the development of the Philippine IGL gaming license in the past and present. The gambling industry in the Philippines has a long history, and its development can be traced back to the early20th century. The earliest forms of gambling included cockfighting (Sabong), horse racing, and small casinos, which gradually occupied an important position in the lives of the Filipino people. Gambling in the Philippines is not only a form of entertainment, but also a cultural custom. For example, there is a custom of“gambling in the funeral hall”in the Philippines, where everyone gathers together to play cards at a funeral. In this case, gambling is“legal”. Some people even derive the business of buying and selling corpses in order to open a gambling game, which is jaw-dropping.

Part I: Historical Background of the Philippine Gambling Industry and the Establishment of PAGCORPAGCOR's Establishment

2. PAGCOR's Establishment and Operation

PAGCOR's Establishment
PAGCORwas established to combat the growing number of illegal gambling activities and to increase government revenue through legalization and regulation. In1977President Ferdinand Marcos signed·presidential decree (PD1067-A) to formally establishPAGCOR. Its main tasks include regulating, operating, authorizing, and licensing card games, number games, and especially casino games in the Philippines. In addition, PAGCORis also responsible for generating revenue for the government's social livelihood and national development programs, and assisting in promoting tourism in the Philippines.

PAGCOR's Main Mission and Function
According to its charter, PAGCOR is given three main missions:
1. To regulate, operate, authorize, and license gambling activities, including card games, number games, and casino games.
2. To generate revenue for the Philippine government's social livelihood and national development plans.
3. To promote the development of the Philippine tourism industry.

PAGCOR's Operating Model
PAGCOR operates casinos directly and also grants licenses and authorizations to private enterprises for gambling activities. PAGCOR-managed casinos are spread across the Philippines' three major islands, with branches in Metro Manila, Luzon, Visayas, and Mindanao. These casinos not only attract a significant number of tourists but also create employment opportunities for the local population.

PAGCOR's Revenue Allocation
According to its charter and applicable laws, PAGCOR's revenue is distributed as follows:
1. 5% of gross revenue is remitted as franchise tax to the Bureau of Internal Revenue (BIR).
2. 50% of the remaining 95% is allocated to the National Treasury as the mandated share of the National Government.
3. Host cities of PAGCOR casinos receive a fixed amount for community development projects.
4. PAGCOR pays corporate income tax in accordance with the National Internal Revenue Code.
5. After the franchise tax and the mandated government share, 5% is allocated to the Philippine Sports Commission to support national sports development programs.
6. 1% of net income is allocated to the Board of Claims under the Department of Justice to provide compensation to victims of wrongful detention and prosecution.

Additionally, PAGCOR funds key legislative programs, such as the Early Childhood Care and Development (ECCD) program and sports incentives and benefits for athletes. Under Republic Act No. 7656, also known as the "Dividends Law," PAGCOR is required to remit at least 50% of its annual net earnings as dividends to the National Government.

3. PAGCOR's Ongoing Development

Amendments to the Legal Framework
In 2007, the Philippine Congress enacted Republic Act No. 9487, extending PAGCOR's corporate life for another 25 years and amending its charter. These amendments included allowing PAGCOR to enter into agreements with any individual, corporation, association, or organization, including joint ventures. This change enabled PAGCOR to manage and develop the gaming industry with greater flexibility.

PAGCOR's Revenue Contribution
PAGCORs the third largest revenue source for the Philippine government, after the BIR (Bureau of Internal Revenue) and the (Bureau of Customs). Its revenue mainly comes from casino operations, license issuance, and gaming taxes. PAGCOR 's revenue distribution includes providing funds to the National Treasury for community development projects, sports development programs, and other government projects.

Part II: Establishment and Development of CEZA

Establishment of CEZA
The Cagayan Economic Zone Authority (CEZA) was established in 1995 to promote economic development in the northern part of Cagayan Province. CEZA was established under Republic Act No. 7922, or the Cagayan Special Economic Zone Act. Its main objective is to attract domestic and foreign investors to invest in the Cagayan Special Economic Zone by providing a favorable investment environment.

Main functions of CEZA
1. Attract and promote investment: Attract domestic and foreign investors by providing tax incentives and other incentives.
2. Infrastructure construction: Promote the development of infrastructure in the economic zone, including ports, roads, power and communication facilities.
3. Supervision and management: Supervise and manage all corporate activities in the economic zone to ensure their compliance operations.

Issuance of iGaming licenses
In early 2000, CEZA began issuing iGaming licenses, allowing licensed operators to operate iGaming businesses within the Cagayan Economic Zone. CEZA's iGaming licenses are called "First Cagayan" licenses. These licenses allow operators to provide iGaming services to customers outside the Philippines, as long as they do not involve Filipino gamblers.

Attracting foreign investment
Due to the favorable regulatory environment and tax incentives provided by CEZA, a large number of iGaming operators have flocked to the Cagayan Economic Zone. These operators mainly target gamblers from China and other Asian countries, taking advantage of the Philippines' relaxed regulations and convenient geographical location to conduct business. This policy has not only attracted a large amount of investment but also driven local economic development and employment opportunities.

Rapid Development of the Industry
With the development of Internet technology and the popularity of iGaming, CEZA's iGaming license has quickly become popular. A large number of operators have chosen to set up bases in the Cagayan Economic Zone, which has promoted the rapid development of the local economy. However, the rapid expansion of this industry has also brought a series of problems, including illegal gambling activities, money laundering, and other criminal acts.

Changes in 2017
In 2017, CEZA lost its exclusive authority over iGaming licenses. Under the new regulations, CEZA retains the power to issue licenses, but its original master licensees, First Cagayan Leisure and Resort Corporation (FCLRC) and North Cagayan Gaming and Amusements Corp (NCGAC), no longer have exclusive rights. The move is intended to increase government revenue by bringing in more competitors to improve regulatory efficiency and transparency (the development)​​ (Legal Online Gambling)​​ (5 Star iGaming Media)​。

Status Quo
Despite losing its exclusivity, CEZA continues to issue and manage iGaming licenses and plans to further attract foreign investment and boost the local economy by developing new infrastructure projects, such as a ten-hectare online park (the development)​​ (Legal Online Gambling)​。

CEZA is still issuing iGaming licenses, but its role has changed from exclusive licensor to non-exclusive licensor. Through this adjustment, CEZA hopes to enhance market competition, compliance, and transparency in the industry while retaining regulatory and licensing powers.

Part III:POGO's rise and development

1. POGO's establishment

2016: President Duterte’s policies
2016, the year when·The PresidentRodrigo Dutertetook charge, the Philippine government established the (Philippine Offshore Gaming Operators, POGO) to attract more international gambling operators to set up bases in the Philippines and to regulate and tax them.PAGCORbecame the main agency that managed and issuedPOGOlicenses.

POGO's Issuance of Licenses
POGO's licenses is intended to regulate and manage iGaming activities, ensure that operators operate legally, and generate tax revenue for the Philippine government. This policy has attracted a large number of iGaming operators, especially those targeting gamblers from China and other Asian countries.

2. POGO's Rapid growth

The explosive growth of the industry
POGO's establishment has driven the explosive growth of the iGaming industry in the Philippines. A large number of Chinese people went to the Philippines to engage in the gambling industry, which led to the development of the local real estate market and other service industries. Many Chinese people rented or purchased a large number of properties for office and residence, pushing up local housing prices. At the same time, service industries such as catering and transportation also prospered due to the influx of a large number of foreigners.

Economic impact
POGO's industry's prosperity has brought a lot of foreign exchange income and tax revenue to the Philippines and also created a large number of jobs. However, the rapid expansion of this industry has also caused a series of controversies and regulatory issues.

3. POGO's Negative impact

Negative impact on China
POGO's industry's prosperity has brought huge negative impacts to China. A large number of iGaming platforms have taken advantage of the loose regulatory environment in the Philippines and developed a large number of iGaming customers targeting Chinese gamblers. The rise of these platforms conflicts with China's domestic policy of prohibiting online lottery sales, causing many Chinese citizens to fall into gambling debts and financial crises.

Rise in Criminal Activities
Since the establishment of POGO, criminal activities related to its operations have been on the rise in the Philippines. According to data from the Philippine National Police (PNP), from January to September 2022, there was a significant increase in POGO-related kidnapping cases, with a total of 17 reported incidents. The victims were primarily Chinese nationals, along with a smaller number of Vietnamese, Malaysian, and Taiwanese citizens. In addition to kidnappings, human trafficking, financial crimes, and even illegal collusion with law enforcement authorities have become increasingly prevalent.

Decline in social security
These criminal activities have seriously affected the sense of security in Philippine society and damaged the international reputation of the Philippines. AlthoughPOGOs once boosted the real estate market, the high housing prices after the rise have made it difficult for ordinary Filipinos to afford them, further triggering social dissatisfaction.

Part 4:POGOBan and the Arrival of the Post-POGOEra

1. POGOban

President Marcos Jr.'s Ban
On July 22, 2024, Philippine President Ferdinand Marcos Jr. (Ferdinand Marcos Jr.) announced an immediate ban on all POGO operations, directing PAGCOR to shut down and terminate all POGO activities by the end of the year. This decision was made following a Senate investigation into illegal activities associated with POGO. The ban has received support from the Department of Finance (DOF) and the National Economic and Development Authority (NEDA).

PAGCOR's Response
PAGCOR Chairman and CEO Alejandro Tengco stated that offshore gaming operators will no longer be referred to as POGO but instead as Internet Gaming Licensees (IGL). This rebranding aims to eliminate the negative "stigma" associated with POGO and promote a more transparent and regulated gaming industry under the new regulatory framework.

Part 5:IGL（Internet Gaming Licensees's Introduction and details

1.1. Announcement and Establishment

1. Announcement time: PAGCOR (Philippine Amusement and Gaming Corporation) first announced the renaming of Philippine offshore gaming operators (POGOs) to IGLs in July 2023. This move was to address various issues in the POGO industry and improve industry transparency and compliance through a new name and regulatory framework.
2. Specific changes: In August 2023, PAGCOR reviewed all existing POGO license holders and required them to reapply for licenses under the new Internet gambling licensing regulations. These regulations require higher capital requirements and introduce stricter review procedures to ensure the legality and compliance of operators.
3. First issuance of licenses:: As of May 2024, PAGCOR has issued formal IGL licenses to 40 offshore gaming operators, and 9 are still in provisional license status (Asia Gaming Brief)​​ (Asian Gaming Magazine)​​ (Asian Gaming Magazine)​​ (Philstar.com)​​ (Manila Shaker)​。

Objectives
The main objectives of introducing IGLlicenses include:
1. Improve transparency: Ensure industry transparency through stricter supervision and information disclosure.
2. Reduce illegal activities: Strengthen the supervision of licensed operators and crack down on illegal gambling activities.
3. Protect social security: Reduce social problems related to gambling through standardized management.

2. IGLliencese's issuance and conditions

New Regulations
1. Capital requirements：The new Internet gambling licensing regulations require licensed operators to have an authorized capital of at least P100 million, of which P25 million must be paid-in capital. This requirement is much higher than the previously authorized capital of P15 million and paid-in capital of P3 million  (Philstar)​。
2. License validity period：The new IGL license is valid for two years and only applies to specific locations. If the operator operates at another address, the license will be invalid (Philstar)​。
3. Transparency measures：PAGCOR has pledged to make public the list of all legal operators and the links to the websites they operate through its official website and various media channels. This measure is intended to crack down on illegal operators and ensure that the public can clearly identify legal gambling platforms (Asian Gaming Magazine)​​ (Philstar)​。

Re-application and review
All existing POGOoperators must re-apply forIGLlicenses.PAGCORconducts a rigorous review of applicants to ensure that they meet the new regulatory standards (Asian Gaming Magazine) (BusinessMirror) . This process is intended to filter out non-compliant operators and improve the overall quality of operations.

License quantity limit
PAGCORplans to issue55to65ofIGLlicenses. This limit is intended to ensure that the regulator can effectively manage each licensed operator  (Manila Shaker) :

Application Requirements
Companies applying for an IGL license must meet several conditions, including:
1. Providing detailed company information and an operational plan.
2. Ensuring that shareholders and management have no criminal records.
3. Submitting financial reports and proof of funds to demonstrate sufficient financial capability.
4. Establishing robust anti-money laundering and counter-terrorism financing measures.

Operational Requirements
Companies holding an IGL license must comply with the following operational requirements:
1. Regularly submit operational reports to PAGCOR and undergo audits.
2. Ensure all employees hold valid work visas.
3. Establish a compliance department to ensure adherence to legal regulations.
4. Implement responsible gambling measures to protect player interests.

3. Regulation and Enforcement of IGL Licenses

Regulatory Mechanism
PAGCOR has established a comprehensive regulatory framework, including:
1. Regular audits and on-site inspections to ensure operator compliance.
2. Setting up reporting channels to receive public complaints and whistleblower reports.
3. Monitoring online gambling platform operations through technological means (BusinessMirror).

Penalties
For IGL licensed operators who violate regulations, PAGCOR will impose the following penalties:
1. Fines: For minor violations.
2. Suspension or Revocation of License: For serious violations.
3. Criminal Prosecution: For actions suspected of being criminal offenses, cases will be referred to judicial authorities (Asian Gaming Magazine) (Asian Gaming Magazine).

4. Future Outlook of IGL Licenses

Industry Standardization and Transparency
With the introduction of IGL licenses and the implementation of a new regulatory framework, the offshore gambling industry in the Philippines is expected to operate more transparently and in a more standardized manner. This will help reduce illegal activities and enhance the country's international reputation (Asian Gaming Magazine) (Manila Shaker) .

Economic and Social Impact
Under the new regulatory framework, legitimate IGL operators will be able to conduct business in a fair and transparent environment, providing stable tax revenues and job opportunities for the Philippines. Additionally, PAGCOR will continue to fund social welfare projects and promote tourism development, making a positive contribution to the country’s economic and social growth (Asian Gaming Magazine) (BusinessMirror) .

5. Ban and Discussions on IGL Licenses

As of now, there are multiple discussions about the ban on IGLs:
Senate Discussion: Senate Bill 1281, pushed by Senator Joel Villanueva, proposes a total ban on all forms of iGaming, including IGLs. Villanueva pointed out that POGO and IGL operators are involved in criminal activities such as human trafficking, fraud, and kidnapping, and therefore should be completely banned  (Asian Gaming Magazine)​。

PAGCOR's Position: PAGCOR Chairman Alejandro Tengco said that a total ban on IGLs could cause legal operators to go underground, making supervision and enforcement more difficult. He believes that the disappearance of legal operators will lead to more rampant illegal activities and cost the government about 20 billion pesos in tax revenue each year (GMA Network | News and Entertainment )​​ (Philstar.com)​。

6. Verification of news sources

According to reports from GMA News, Philstar, and Daily Tribune, there are differences in the positions of PAGCOR and the Philippine government. PAGCOR prefers to control the industry through stricter regulations rather than banning IGLs outright. However, some members of Congress and the Senate are advocating for a total ban to deal with related criminal activities  (Asian Gaming Magazine)​​ (GMA Network | News and Entertainment )​​ (Daily Tribune)​。

Summary

The Philippine gambling industry has developed from traditional forms to modern iGaming and has undergone many policy adjustments and regulations. With the rapid expansion of the POGO industry, related criminal activities and social problems have also increased. In order to meet these challenges, the Philippine government decided to ban POGOs completely and introduce IGL licenses. Under the new regulatory framework, the Philippine gambling industry will move towards a more standardized and transparent direction, ensuring that legal operators can operate under clear rules. This approach is also to reduce illegal activities and protect national social security and international reputation.