Online gaming transactions have fallen by 50% following the Bangko Sentral ng Pilipinas' (BSP) order for electronic wallet platforms to cut in-app access to gambling sites, said Philippine Amusement and Gaming Corporation (Pagcor) Chairman Alejandro Tengco on Wednesday. Tengco made these remarks during a budget briefing at the House of Representatives, noting that the significant drop in transactions has been observed since Sunday.

Pagcor supports stricter regulations on online gambling. Tengco stated, "We deemed it proper these past years to have adjustments in our regulatory manuals pertaining to online gaming." He also highlighted that over 60 percent of online gaming sites are illegal, operated by foreigners targeting Filipino customers. Pagcor is coordinating with agencies such as the Department of Information and Communications Technology (DICT) and the Philippine National Police's (PNP) cybercrime department to address this issue.

Tengco argued against a total ban, suggesting it would not eradicate illegal gambling but would leave players unprotected and result in lost government revenue. Pagcor's stance is that stricter regulations should be implemented to maintain revenue from the industry while mitigating risks. He acknowledged that Pagcor is not perfect in its regulations but assured that they are doing their best to make the necessary adjustments to cope with the rapid growth of online gaming.

Market Signals

A 50% drop in online gaming transactions following the BSP directive.
Growing concerns about players migrating to unregulated platforms.
Potential negative impact on e-wallet platform earnings and delayed IPOs.

Winners & Losers

Winners: Regulators (BSP, Pagcor), Compliance Technology Providers, Illegal Gambling Sites. Losers: E-wallet Providers (GCash, Maya), Regulated Online Gaming Operators, Consumers using regulated platforms.

Action Timeline

Immediate: Significant drop in transactions, increase in usage of unregulated platforms.
Short-term: Continued regulatory scrutiny, assessment of impact on e-wallet companies.
Long-term: Revision of regulations, monitoring effectiveness of new measures against illegal sites.

Risk Assessment

Regulatory Risk: BSP's temporary suspension could become permanent or introduce stricter regulations.
Market Volatility: The shift to unregulated platforms creates a volatile environment.
Reputational Risk: Indirect association of e-wallets with gambling could pose reputational risks.

Key Indicators

The 50% decrease indicates the effectiveness of initial regulatory measures but highlights the challenge of users migrating to unsafe channels.
Monitoring the activity of illegal sites is crucial for assessing the effectiveness of existing measures.

Regional Perspective

The Philippines, through Pagcor, emphasizes the direct impact of government regulations on the online gaming sector, focusing on maintaining revenue through stricter regulation rather than an outright ban.

Immediate Implications

E-wallet companies face pressure to fully comply with the BSP order.
Opportunities arise for companies offering compliance and AML solutions in the gaming and financial services sectors.

What to Watch

BSP's finalized policy on online gambling payment services.
Progress of Senate bills on banning or regulating online gambling.
Developments in IPO plans for GCash and Maya.

Analysis

The decline in online gaming transactions in the Philippines demonstrates the immediate impact of regulatory actions on the industry. While the BSP's aim is consumer protection, the shift to unregulated platforms presents a new challenge. Pagcor favors stricter regulation to maintain revenue and provide consumer protection, suggesting a potentially balanced approach going forward.