The key to understanding the legal landscape of online gaming in the Philippines is to draw a clear dividing line between the country as a whole and the Cagayan Special Economic Zone.
The Cagayan Special Economic Zone and Freeport, also known as Cagayan Freeport, is supervised and managed by the Cagayan Economic Zone Authority (CEZA). Internet gaming licenses are available directly from Cagayan Freeport, and CEZA has the legal authority to approve online gambling applicants without prior acceptance from any national government agency.
The actual country of the Philippines has a very different approach to online gaming.
The state-owned and controlled Philippines Amusement and Gaming Corporation (PAGCOR) is the sole authorized gambling operator in the Philippines. The company operates casinos, bingo, sports betting, and betting exchanges online and through brick-and-mortar establishments.
In 2000, PAGCOR authorized the Sports and Games Entertainment Corp. as the exclusive operator of the Philippines' only online casino. In 2002, the government allowed Philweb Corporation, in cooperation with PAGCOR, to regulate and tax online gaming sites based in the Philippines.
To facilitate online gaming, Philweb launched Modular PAGCOR e-Games Cafes (MPEGs). MPEGs are large mobile shipping containers and can be easily moved from one location to another if a particular area is not generating sufficient business. The containers come complete with computer terminals and cashier facilities. Philweb does not have competitors in the online gaming sector within the Philippines. The most popular online game in the Philippines is baccarat, which accounts for 30% to 40% of the gaming volume.
PAGCOR also offers franchised e-Games Cafés. Operators may choose between a rented space and a modular cafe. An e-Games Cafe may be owned and operated with a start-up cost between PhP 1.2M to Ph P1.5M. There are no franchise fees, only a processing fee, and monthly revenue is 28% of casino winnings. The typical payback period is 12 months. An e-Games Cafe must be at least 200 meters away from educational institutions or places of worship and religious centers and at least 1 km away from existing PAGCOR e-Games Cafés.
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