The Philippines’ online gaming industry has emerged as the country’s top gaming tax contributor, surpassing traditional land-based casinos in revenue generation. Data from PAGCOR and Morgan Stanley reveals that in Q3 2024, online gaming achieved an annualized gross gaming revenue (GGR) of $2.4 billion, accounting for 70% of the GGR from land-based operations.

Online gaming’s rapid growth:

The growth trajectory for the Philippine online gaming industry has been remarkable. As Asia Gaming Brief reports, beginning the year with online gaming accounting for just 40% of land-based GGR in the first quarter, the figure rose to 60% by the second quarter and hit 70% in the third quarter. This increase is attributed to both market expansion and the sector’s higher tax rates compared to land-based casinos.

Currently, online gaming operators are subject to a 35% tax on their GGR, which has been gradually reduced from a previous high of 50%. Despite the decrease, online gaming taxes collected in the third quarter reached PHP 28 billion ($490 million), significantly higher than land-based collections due to the disparity in tax rates.

DigiPlus, a leading B2C online gaming operator, has emerged as the dominant player in the Philippine online gaming market. Holding 50% market share, DigiPlus has surpassed Solaire operator Bloomberry Resorts Corporation in both GGR and EBITDA. With 30 million registered users, the company’s performance highlights the immense potential of the domestic online gaming market, which caters to an adult population of approximately 70 million.

Morgan Stanley analysts noted that Bloomberry is gearing up to re-enter the online gaming space with a new app set to launch in the third quarter of 2025. Unlike its current Solaire-branded platform, this app will target a distinct audience, offering increased competition in an already dynamic market.

Tax reforms and future prospects:

The Philippine gaming regulator, PAGCOR, is also preparing for significant changes in tax policies to further stimulate growth. Beginning January 1, 2025, the tax rate for integrated resorts operating online platforms will drop to 25%, while other land-based operators running online gaming services will see their tax rates decrease to 30%. These adjustments will align online gaming tax rates more closely with those of land-based casinos, which are taxed at 25% for mass gaming and 15% for junket operations.

However, the rapid growth of online gaming has drawn comparisons to other markets. In the United States, for instance, online gaming represents only 30% of the $23 billion land-based gaming revenue. The higher share in the Philippines underscores the local industry’s accelerated adoption of online platforms.

Diverging futures for online and offshore gaming:

While domestic online gaming is thriving, the Philippine Offshore Gaming Operators (POGO) industry is facing a markedly different reality. The government has been actively winding down POGO operations in recent months, with a full ban set to take effect on January 1, 2025. This contrasts sharply with PAGCOR’s promotion of e-Games, which include eCasino, eBingo, sports betting, and specialty games.

The dual focus—supporting domestic online gaming while phasing out offshore operations—highlights a strategic pivot aimed at maximizing tax revenues and minimizing regulatory complications.