Category: Gaming

In a groundbreaking development, the Philippines’ online gaming industry has reached a staggering $2.4 billion in annualized gross gaming revenue (GGR) by Q3 2024, eclipsing traditional land-based gaming revenues. This milestone, highlighted by investment bank Morgan Stanley, underscores the explosive growth of the digital gaming sector in the region, which now accounts for a remarkable 70% of the nation’s total gaming revenue.

The rapid expansion of online gaming in the Philippines has caught the attention of industry analysts, with data from the Philippine Amusement and Gaming Corporation (PAGCOR) showing that online gaming has become a central player in the country’s gaming landscape. As digital platforms continue to thrive, their dominance over land-based gaming has become increasingly clear, positioning online platforms as key drivers of the Philippine gaming economy.

The Growth of Online Gaming: A Shifting Landscape

The online gaming sector’s rise has been nothing short of meteoric. In Q1 2024, online gaming revenue accounted for only 40% of the country’s land-based gaming GGR. By Q2, that share grew to 60%, and now, with the latest data showing 70%, online gaming has overtaken traditional venues in both scale and importance. This sharp increase is not just a reflection of changing consumer behavior but also a result of strategic shifts by operators and government policies.

The Philippines’ online gaming market has evolved rapidly, and this expansion is primarily driven by the popularity of platforms offering eCasino, eBingo, sports betting, and specialty games. According to PAGCOR, domestic eGames have played a pivotal role in accelerating the country’s growth in this sector. This domestic focus is seen as vital for long-term sustainability, especially with the government’s decision to phase out the Philippine Offshore Gaming Operators (POGO) sector by January 2025.

A New Source of Revenue: Online Gaming’s Tax Contributions

Online gaming’s rapid expansion has not only reshaped the market but has also become a significant contributor to the country’s gaming taxes. In Q3 2024, online gaming operators generated a staggering PHP28 billion ($490 million) in tax revenue, surpassing land-based gaming tax collections. This shift is particularly notable as the tax rate for online gaming is set to change in 2025. The Philippines government will lower the current 35% tax rate to 30% for most operators, and to 25% for integrated resorts. This adjustment brings the online tax rate closer to the land-based rate, which is 25% for mass gaming and 15% for junket gaming.

The new tax structure will likely have a significant impact on the competitive landscape, with more companies entering the market or ramping up their operations. However, analysts are cautious about potential tax revenue shortfalls. PAGCOR’s tax collections have fallen short of projections in recent months, possibly due to higher setup fees for newly licensed operators, which could be deterring smaller entrants into the market. Despite this, the long-term outlook for online gaming revenue in the Philippines remains promising.

DigiPlus Dominates the Market

DigiPlus, a major online gaming operator, has been a key player in the industry’s transformation, controlling 50% of the domestic market share. With over 30 million registered users, DigiPlus has been outpacing traditional operators, including Bloomberry Resorts Corp. Since Q2 2024, DigiPlus has led both in GGR and earnings before interest, taxes, depreciation, and amortization (EBITDA), marking it as the dominant force in the online gaming sector.

Despite DigiPlus’ dominance, competition is heating up. Bloomberry Resorts Corp., which operates the Solaire brand, has plans to launch a new online gaming app in Q3 2025. This new venture, distinct from its land-based casino operations, aims to tap into a different customer demographic, signaling that the competitive rivalry in the online gaming space will only intensify in the coming years.

The Changing Competitive Landscape

The online gaming industry in the Philippines is entering a new phase. With changes in the tax rate and the expected influx of new market entrants, including Bloomberry’s new online app, the dynamics of the market will likely shift in unpredictable ways. Operators are adjusting to the new regulatory environment, which is expected to encourage further growth but also bring about more competition.

Interestingly, online gaming in the Philippines now represents a significantly larger share of the total gaming revenue compared to the United States, where online gaming accounts for only 30% of land-based gaming GGR. In comparison, the Philippines’ online gaming market is growing rapidly, driven by a combination of local demand and favorable regulatory conditions.

The Government’s Focus on Domestic Growth

The Philippines government’s stance on online gaming has shifted significantly over the past year. As part of its strategic focus, the government has phased out offshore gaming operators (POGOs), with the complete ban set to take effect by January 1, 2025. This move reflects the government’s intention to prioritize domestic growth, particularly through regulated, tax-compliant online gaming platforms. The shutdown of POGOs also aims to curb concerns related to illegal gambling and associated criminal activities, further bolstering the legitimacy of the Philippine gaming industry.

By focusing on domestic players, the Philippines is positioning itself as a leading player in the Southeast Asian gaming market, with significant revenue growth expected in the coming years. As the sector evolves, online gaming’s share of the overall market is set to continue rising, leaving traditional casinos to adapt to the changing digital landscape.