PAGCOR shows some flexibility amid threat of gambling ban

PAGCOR shows some flexibility amid threat of gambling ban

Tuesday, July 12, 2016 Posted by Andy McCarron
PhilWeb Corp has received a month's extension from PAGCOR

The future of online gaming and egaming cafes in the Philippines is still uncertain, although the regulator Philippine Amusement and Gaming Corp. (PAGCOR) is still able to show some common sense, it seems.

The Philippines’ newly-elected president Rodrigo Duterte threw the cat among the pigeons in the past week by declaring a ban on online gambling, with PAGCOR temporarily suspending all new online gambling licences in response. Duterte’s missive sent the value of the country’s gambling operators like PhilWeb Corp, which operates a few hundred egaming cafes in the country, tumbling as the markets adapted to the new leader.

However yesterday PhilWeb Corp confirmed it had secured the necessary approval from PAGCOR to operate for at least a month more. The letter, dated 8 July, from Acting PAGCOR chair Andrea Domingo said that the gaming company had been granted an extension of its intellectual property license agreement (IPLMA).

It reportedly said: “In the exigency of the service and in order to prevent loss of revenue to the government, please be informed that the request for extension of the PhilWeb IPLMA Contract due to expire on July 11 is granted and hereby extended from 11 July until 10 August.”

The problem the market has is that President Duterte is an impulsive politician, which makes his various pronouncements hard to predict. The water has also been muddied somewhat by the revelation that PAGCOR owes the government P15.4bn (£250m) of income as a result of under-remittances from 2011 to 2015, the Commission on Audit (COA) said in its latest report.

The commission blamed PAGCOR’s wrong interpretation of the law for the under-remittance, highlighting Section 12 of Presidential Decree 1869 provides that after deducting the 5-percent franchise tax, the government must have a 50 percent share of PAGCOR’s ‘aggregate gross earnings’ to fund infrastructure and socio-economic projects within Manila. But PAGCOR computed the government’s 50-percent share based on its income from gaming operations only and not on the corporation’s total earnings.

Totally Gaming Says: “With PAGCOR suspending any more licences without further details from President Duterte as to what he actually wants, PhilWeb Corp has done well to secure a month’s extension to continue in operation. Whether PAGCOR’s arrears with the government will reduce its negotiating position with the new leader, or highlight the financial support the industry brings, will rely on the stance of a rather unpredictable politician.”

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