Online Gambling

A Research Paper on Online Gambling as a Lucrative Industry in the Philippines

Submitted in Partial Fulfillment of the Requirements for BA 180.1

Topic: Online Gambling

Thesis Statement: With online gambling as a lucrative industry in the Philippines, government regulation and change in legislation are necessary to harness and maximize the potential benefits of online gambling in the Philippines.

Abstract

The influence of technology in the gambling industry is continuously is exponentially increasing. After a brief overview of the state of online gambling in the Philippines setting, this paper examines the impact of technology by emphasizing on the factors contributing to the success and issues brought about by the developments and methods of online gambling in the country. It also examines the general history of gambling and the specifics of online gambling in connection to its entry into the Philippine setting. Also, it discusses the prevalence of online gambling, analyzing its functions and applications in today’s society. The relevance of online gambling is tackled in the light of the issues related to it. This includes both ethical and business-oriented issues plus, legal concerns and others.

This paper aims to arrive at an informed analysis on the strengths and weaknesses of online gambling to adequately evaluate its role in the modern Filipino society. Online gambling, being the second strongest source of government funding in our country, promises to be a potential tool for economic growth and development. However, threats to online gambling continue to exist in the form of movements for legislations that push for it ban in relation to ethical issues and more. Even with the establishment of government gambling agents like PAGCOR and PCSO, issues and claims on the supposed legality of online gambling are ongoing and therefore, continue to be a pressing issue in the present society. In addition to this, it is also necessary to consider the opportunities that come along with the rise of online gambling in the country. Online gambling as a growing local industry brings forth numerous aspects that when thoroughly studied, employed and maximized, could reap rewarding economic fruits.

Introduction

Definition of Online Gambling

Gambling can be defined as risking money or anything of material value for unsure results. The initial intent is to win additional money or material goods. Online gambling, more commonly known as Internet gambling, is typically betting on casino or sports type games over the Internet. The temperament of gambling may vary from sports bets to casino style games. Some examples are roulette, poker, slots, lotteries, bingo and keno. It can also be called Online Betting, Internet Gambling, Online Lotteries, Gambling Services, and Electronic Gambling.

Entry into the Philippine Setting

Online gambling has undergone a very extensive evolution over the past nine years. The beginning of online gambling in the Philippines was marked by the formal establishment of PhilWeb Corporation on November 5, 2002. A few weeks after, PhilWeb officially partnered with PAGCOR for the initial purpose of internet sports betting. On May 2003, a stockholders’ resolution incorporated gaming into their primary business. By 2007, the prevalence and success of PhilWeb Corporation in the development of the local online gambling industry was reflected in its whopping year-end net income of P116 million. Finally, in February 2008, PAGCOR officially rebranded its land based Casino Filipinos to “PAGCOR”, and in line with this, rebranded all e-Casino Filipino Internet Casino Stations (ICS) to “PAGCOR e-Games Cafés.”

The attractiveness of online gambling has extended to different parts of the world. The Philippines is the most receptive Asian country it had reached. Because our country’s institution is highly amenable towards foreign activities, we have accepted the culture of gambling into our main bloodstream. Throughout the years, we have acquired a varied combination of culture and we have applied this even in gambling. The most famous gambling activities that have been integrated into the Filipino way of life are bingo and lottery, which are both from the United States and mahjong, which was brought to us by the Chinese. Now, with the integration of the cyberspace and gambling, the Philippines has officially joined the bandwagon of the online gambling trend.

Prevalence of Online Gambling in the Philippines

Ever since the emergence of online gambling, gambling sites instantaneously became one of the most frequented websites on the Internet. The easy and accessible characteristic of online gambling paved the way to its vast proliferation. Gamblers can easily log on to their favorite gambling sites at the comfort of their own homes instead of traveling to gambling establishments. Most people would rather choose convenience especially when both options offer basically the same level of fun and entertainment.

Despite the numerous apprehensions that threaten the industry of online gambling, it continues to rise and overcome these trepidations through the development of better technology. In addition, such issues give online gambling more space for improvement. The early 1990’s became a critical point for this industry as it was only starting out. It was not until the year 2000 when the legitimacy of online casinos was recognized. As of the present, there are about 2000 regulated online casinos set up.

The prevalence of this industry can as well be measured by the amount of revenues it generates. According to piotsource.com, the total Internet Casino revenue in the Philippines averages at Php50 Million a month or Php1.896 Billion a year. With this enormous figure, we can see that truly, online gambling has a vast number of avid users.

The influence of the improvement of technology is in the promulgation of the integration between the internet and gambling. The convenience of this breakthrough allowed a rapid growth of its consumers thus, making it a fast growing industry in the country. The Asia-Pacific region, with its growing population and its generally limited exposure to Internet gaming resources, is identified as a profitable market for online gambling providers. This potential can be maximized through a change in legislation. In relation to this, the Philippines, has already exhibited signs of liberalization in the issue of online gambling by organizing a state lottery in the form of PCSO. The wide and powerful reach of the Internet allowed the growth of the local gambling industry by enabling the spread and entry of online gambling in common Filipino households.

Body

Description of Online Gambling

Since online gambling pertains to a whole gamut of gambling over the Internet, online gambling is not only limited to playing card games online. In fact, online gambling is a broad term used to describe anything and everything that requires the placing of bets. That includes online casino, online sports betting, online bingo and mobile gambling.

How does online gambling work? There are two options for a gambler. One is to download the casino software onto the computer or one could try a real time applet running on the Internet. He/she can generally choose to play for free or for real money. If one decides to play for real money, one has to make a deposit into one’s account using one’s credit card or by some other form of cash transfer means. If one gambles, wins and wants to withdraw the winnings, one has to go to the website’s bank or cashier and request for cash-out. The bank or cashier will then send the check with one’s winnings through wire transfer or check or whichever manner one prefers.

PAGCOR ventured into the Internet Casino business not only to widen the gambling market of casino games like poker, and baccarat, but also to increase revenue. This was done by introducing Internet based gambling e-games which were developed by Philweb Corporation and regulated by the PAGCOR to the Philippine gambling market. Today, the total Internet Casino revenue in the Philippines averages at Php50 Million a month or Php1.896 Billion a year.

Young adults and yuppies today are going crazy over RPGs and other multiplayer online games. To ride with this craze, PAGCOR created an environment which caters to that market. Through this, e-games offer a different gambling and gaming experience from walk-in casinos. However, these cannot be played in any ordinary Internet café. As the government’s appointed gambling agency, PAGCOR established e-Games cafés and are open to franchisers which exclusively offer e-Games. This venture clicked because not every Filipino has unlimited access to the Internet and it is imbibed in the Philippine lifestyle to bet.

E-games are not only innovative and modern, it is also highly convenient. In order to play, all you have to do is visit PAGCOR e-Games Café, give them your cash and then you could play in your own computer terminal, at your own pace, in your own time. The fact that it is open 24/7 to anybody 21 years old and above gives a gambler no less of a reason to drop by. Typical casino games can be played in these e-games terminals. These include Black Jack, “21” games like Caribbean 21, Face Up 21, Match Play 21, Pontoon, Super 21, Baccarat, Pai Gow Poker, War, Red Dog, Tri-card Poker and Vegas Three Card Rummy. Presently, these e-games could be played in Metro Manila and a few chosen provincial stations.

The statement of Dennis Valdes, the president of Philweb Corporation, attests to the success of this venture. "The key driver of core Net Income continues to be our PAGCOR e—Games Cafes," noted Dennis Valdes, president of PhilWeb. "In 2008, we opened 45 new cafes, a 59% increase in outlets, ending the year with 121 cafes.”

Aside from online casino, there are also sites which cater to online sports betting. This is basically another form of gambling. These sites permit users to place bets on athletic competitions of every kind as well as other events like political elections or outcomes of reality TV shows like Pinoy Big Brother or Survivor. In the Philippines, sports betting is made popular by BasketballJackpot. Since basketball is considered the Philippines’ national sport, PAGCOR offered the first online sports betting in the Philippines. It is applicable to all the basketball events operated by the Basketball Leagues in the Philippines. However, it’s not only limited to the Philippine setting. You can also bet for basketball games in NBA leagues in the US. You can place as many bets in as many game formats as you wish. According to Philweb Corporation, the website aims to tap into the $10—billion worldwide Internet sports betting market. "This innovation presents a tremendous opportunity for PAGCOR to extend its reach to the overseas market;" said PAGCOR Chairman and CEO Efrain Genuino. The appeal of basketballjackpot.net lies in the fact that it combines the thrill of watching a basketball game and that of placing a wager into one accessible and convenient website which unfolds the result in one click of a mouse.

Another one of PAGCOR’s accredited online betting website is XchangeBet. It is an exchange for betting transactions conducted between customers. The exchange provides registered customers with an automated facility for the placing of bets with each other. In XchangeBet, the customers are the ones who create the bets, set the odds of the bets, and most importantly, set the payouts for those bets. All customer winnings are automatically credited to the customer's XchangeBet account.

BasketballJackpot is operated from a network of kiosks called Internet Sports Betting Stations or ISBS. PhilWeb had a total of 149 ISBS as of end—December 2008. Premyo Sa Resibo or PSR is a mobile raffle operated on behalf of the Bureau of Internal Revenue with the objective of increasing tax revenues by uncovering companies that do not issue proper receipts. Since its inception in June 2006, PSR has awarded over P120 million in prizes and continues to pick a new millionaire every two weeks. Txtingo Super Singko, PhilWeb's newest product, is a mobile lottery, with a daily draw giving ‘texters’ the chance to win P10 million outright. This is the first Philippine multi-million peso jackpot SMS lottery.

However, these are but just the types that are legalized by PAGCOR. It is inevitable that illegitimate online gambling operations exist since gambling as an industry is generally profitable.

Providers of Online Gambling in the Philippines

In the Philippine government, there exist two appointed working bodies functioning as regulators on matters concerning the gambling industry in the country that is including the growing industry of online gambling. The government’s gambling arm is the Philippine Charity Sweepstakes Office (PCSO). The PCSO is a fund-generating organization which is responsible for holding and conducting charity sweepstakes and lottery games which are used to finance health and welfare related investments. Since the world of gambling is revolutionized with the growth of ICTs, PCSO expanded its market to the online community by appointing Pacific Online Systems Corporation as its exclusive online lottery system provider.

On the other hand, the Philippine Amusement and Gaming Corporation (PAGCOR) functions as a regulator of the operation of gaming casinos. It was established in the year 1976 to help curb illegal gambling. The establishment of PAGCOR supported the industry of gambling in the Philippines proving that legalized gambling is a potential tool in uplifting the country’s economic status. Then again, to meet the challenges of the times, the gaming corporation is constantly searching for ways to broaden its reach. Therefore, in 2000, the Sports and Games Entertainment Corporation was appointed as the exclusive operator of the Philippines’ only online casino. This was www.sagecasino.com. In 2001, however, this was shut down by President Erap Estrada but the shutdown was inhibited by the president’s impeachment. In 2002, the government granted Philweb Corporation control over online casinos. Philweb is now in collaboration with PAGCOR for the regulation and taxing of online gaming sites based in the Philippines.

Philweb successfully signed a contract with PAGCOR to be its principal service provider for Internet Gaming Technology. To date, they have agreed on four terms, which include: (1) Intellectual Property License Agreement (IPLMA) for Internet Sports Betting, (2) IPLMA for PAGCOR e-Games Cafes, (3) IPLMA for Premyo sa Resibo Mobile Games, and (4) IPLMA for TXTINGO mobile game. These contracts legalized the operations of online gambling in the Philippines and also promised to update these technologies as the times improve.

Users of Online Gambling in the Philippines

The Philippines is poised to be wooed by gambling opportunities. This is because betting, to a vast population of Filipinos, has been integrated into the Filipino lifestyle. It ranges from betting which cock or rooster will win to which league would make it in the finals. All Internet users, who are part of the Philippine gambling market and are at least 21 years old, may qualify as users of any online gambling site. However, the power of a non-excludable Internet allows minors to cheat their way through the age limitation. This issue would be further discussed in the latter part of the report.

The increasing participation of women is phenomenal because it enables top online casinos and online gambling platforms to respond to the opportunity to expand its market by introducing developments such as social networking within these gambling sites. Online casinos are in competition to add social networking applications in order to increase their opportunities to attract women players.

The Philippine gambling market is not clearly defined by statistics; however, it is safe to assume that those of the upper classes are the apparent users of online gambling for the very reason that they have more financial capacity and more means to access the Internet. In relation to this, the bets are relatively small. Combined with the accessibility of these sites, the gambling market is then open to the middle social brackets through online gambling. Aside from socio-economic status, the demographics of the Philippine gambling market is heavily dominated by the teenage age bracket.

Issues Faced by Online Gambling

Issues Applicable to the Philippine Setting: Ethical, Business and Legal

The lure of easy money is what attracts many to gambling, while the prospect of losing money fast is what deters most of people from it. However, when the prize becomes obscenely large in proportion to the amount that one has to bet, the attraction becomes too great that almost everybody is magnetized. The lure is that gambling can already be compared and associated to human nature. People are generally drawn to excitement and adventure, yet are risk-averse. Therefore, they are limited only by the fear of ruination. There are also some who are more recklessly adventurous than others, often to their unending grief. Because of the deleterious effects of gambling in general, it is essentially illegal. Our law prohibits gambling because many people become poorer and poorer and more miserable by waging their hard-earned money rather than by using it for their family’s needs. Yet, since it is recognized as a profit-generator, legislations fight for its legitimacy. Despite its widespread practice and long history, any form of gambling is often considered a controversial issue with strong advocates on both sides.

The influence and positive externality effect of modern technology continues to grow at a rapid pace. This growth subsequently forced the field of gambling innovation to expand continuously and to broaden its reach by making it instantly accessible. However, the growth of modern technology, as much as people are enjoying the benefits it reaps, continues to pose debatable issues and problems that are raised time and again.

While the Church opposes all forms of gambling, the Philippine government continues to push the limits as to publicly legalize gambling in our country since gambling as an industry is notably profit-generating. That is why online gambling still remains a sensitive topic of dispute in the Philippines. Perhaps, the most common arguments for the protagonists of online gambling are focused on its accompanying economic benefits, especially in disadvantaged communities which rely on gambling as a source of livelihood. Its advocates see its many economic benefits such as the notable increase in the rates of research and productivity, employment, cash flow and income for the company providers of these games. As with employment, gambling provides a temporary source of money for supposedly jobless people. According to the National Statistics Office, unemployment of the country rose to 8% last April 2008, and the worldwide recession that we are witnessing today has tremendously increased the unemployment data. This high rate of joblessness may be pacified as these formerly jobless people are hired by e-Games cafés that offer online gambling games to serve as gaming assistants and cashiers.

At the end of 2007, there are already more than 90 of these e-Games cafes. The proliferation of these cafes is solid proof that these are gaining popularity in the Philippine gambling market. This is not to say, though, that this is the only possible source of work the industry has to offer, but it nevertheless provides an additional job opportunity. Others would also claim that online gambling helps generate more revenues and funds for the company provider in the form of collectible taxes that prove useful for the government for financing its projects and similar undertakings. The overall advantage in this is hard to measure since the focus of this veers away from the concern of the rest of the community’s majority. Whatever the concrete ‘benefits’ that online gambling in general may bring about, if there are any, there have been endless disputes and refusals as whether to accept and declare it as a general legal undertaking.

A firm statement by the Roman Catholic Church headed by Balanga Bishop Socrates Villegas, "desiring to become wealthy through gambling is sign of indolence," is reflective of how the Church naturally opposes gambling because gambling in the most simplistic form is defined as “risking money in an attempt to multiply the money on something that is against the odds.” The Philippines, being a predominantly Christian country, is home to religious conservatives who believe that the operators of gambling platforms are taking advantage of our human nature to succumb to materialism. It is widely acknowledged that gambling often leads to or incites greed. This is important to Christians, for the Bible strongly condemns “greediness.” The Church is firm in its stand against the legalization of gambling just as it is firm in its stand against abortion. "The Church does not approve of gambling and strongly condemns it as morally wrong, and classes also with this gambling, games of chance and lottery, of all kinds, and earnestly disapproves of any of its members engaging therein" For the religious authorities, gambling in any form is much too worldly, is corruptive of the moral fiber, especially that of the youth, and it devotes money to improper use and does away with its potential allocation to more productive endeavors.

When the market is unregulated, the probability that a cheater or a fraud would get apprehended is very slim. This results to a gratifying incentive to cheat – not only for the gamblers, but for the operators, as well. This is the very reason why regulators want to terminate the operations of Internet gambling. For one, the Internet gamblers cannot be assured that the games they play are legitimate and there is no guarantee that they could collect their winnings. Some gambling sites generally operate on building up a secure gambling environment yet turn out to be scams by stealing credit card information from the naïve gamblers. On the other hand, some gamblers charge handsome debts for their bets onto countless credit card accounts which turn out to be illegitimate or non-existent. These gambling sites have become a haven for hackers and scammers alike, and this has been made possible partly because the Internet lacks sufficient consumer protection. The Internet could not be blamed, though, for these players voluntarily plunged themselves into these ventures. Modern technology is too technical that regulating online gaming becomes very difficult, and our government has not shown technical competence to do so. At the same time, the government is said to be “missing out” on taxes because it is unable to properly tax online gamblers unless it regulates online casino operators.

Aside from the fact that online gambling blurs and further confuses the issue of legality mentioned above, it ultimately breeds addiction. While it serves as a form of hobby or recreation for many, the introduction of gambling through the World Wide Web gives access to much more people, probably millions, who otherwise would not have access to it. The more gamblers there are ultimately translates into more potential addicts. Also, because gambling is now quick and accessible, it is more likely for a person to gamble more frequently. Backing up this assertion, statistics have shown that if you have to get up and travel to go to a casino, you would not play as much. Adding to the dilemma of online gambling, it makes it easier for people to cheat. While dishonesty constitutes a major breach in ethics, it also costs casinos millions or billions. In walk-in casinos, there are a myriad of spy cameras to monitor cheating on site. However, it is almost impossible to monitor someone who bets online in the privacy of his own house.

Another problem is the existence of the high degree of suspicion among the players. More than security and legitimacy concerns, it is also becoming alarming how dangerous gambling is becoming especially to the young and addicted. These young people are often underage and are easily distracted from their studies, which should be their primary concern for securing a better future. However, with gambling becoming more and more rampant online, it is easy to see its bad effects to our country, more so to teenagers, (reportedly the highest-ranking in number) who by traversing the web, could easily be lured because of the prizes the winning bet could promise, such as fancy cars, luxurious vacation getaways, and big fat cash which even a college degree could not guarantee so quickly. Also, more often than not these scams not only trick the money out of people’s pockets but it can even be used for money laundering. Let us not lull ourselves into thinking that the underage are supposedly banned in all gambling sites - but this is precisely one of the negative features of online gambling, as it enables minors to gamble undetected. There is simply no way to know the ages of people visiting their gambling site. This is where the exclusion limits of online gambling concerning the young get out of hand. The ability to restrict access certain website operations is very much dependent on the technical capability of the users. Since the Internet excludes no one from enjoying its benefits, most of the times the Internet is misused and abused.

The following is a situation involving a concrete online gambling issue. Last Jan.17,2004, the Supreme Court has unanimously declared null and void a franchise for online gambling that was given to a private firm by the Philippine Amusement and Gaming Corporation (hereinafter referred to as PAGCOR) . In its ten page decision, the high tribunal said that PAGCOR acted beyond the borders of its authority when it allowed Sports and Games and Entertainment Corporation (SAGE) to permit sports betting and Internet gaming stations. The Court said that Internet gambling does not fall under any of the categories of the authorized gambling activities enumerated under PD 1869, the legislative franchise of PAGCOR, which grants to it the right and privilege to operate and maintain gambling casinos, clubs, and other amusement or recreation places. The High Court went on to say further that an institution like PAGCOR is allowed only to provide just the physical structures where people who intend to gamble go to play. Moreover, the decree could not have possibly contemplated internet gambling, since at the time of its enactment on July 11, 1983, the internet was still nonexistent and that gambling activities were then confined to real space.

The Internet has been dubbed as the information superhighway. As such, it is not surprising that indeed, the cons go along with the pros. In the Philippine scenario regarding the ongoing debate as to the issue of the legality of online gambling, Narciso Santiago of the minority Alliance for Rural Concerns party has proposed that gambling on the Internet be made illegal. He noted in his proposed legislation that there are basically no existing regulations on Internet gambling. The bill asserts that it should be made illegal for people running a gambling operation to use the Internet, “ or for any other interactive computer service to place, receive, or otherwise make a bet or wager; or send, receive, or invite information that may assist in the placing of a bet or wager.” However, this bill, called House Bill No. 5613 or the "Internet Gambling Prohibition Act of 2008," exempts, among other things, the situation when the bet placed on an interactive computer service that uses a private network and if the person making the wager is physically in a place open to the general public, as in the case of Internet cafes. As proposed, those found violating the proposed law would be fined with appropriate amounts or sentenced to jail for up to four years.

In sum, even as the intendment and efforts of legislators and lawmakers to completely regulate gambling through the Internet are evident in the concrete and tangible laws that they have proposed, the problem lies in the inherent difficulty in its enforcement. For an online gambling ban to achieve effectiveness, the support must come internationally. However, such is highly unlikely to happen. Any effort to ban online gambling is worthless when the big operators, which are the First World countries, are targeting the Philippines as a profitable market. It may perhaps be appropriate and realistic to simply regulate, because its complete eradication seem to be infeasible and idealistic. After all, legislators and law enforcers have not been successful in completely stamping out other attempts such as illegal sports betting.

Assessment of Online Gambling

SWOT (Strengths, Weaknesses, Opportunities, Threats)

The Strengths of Online Gambling

Online gambling’s attractiveness takes pride on the nature of the technology’s ability to address convenience and accessibility. Online gambling takes away the travel time, the hassle of following a dress code and the confines of the establishment’s operating hours. The only prerequisite of online gambling is access to the Internet. This does not, however limit the disadvantaged sector of the digital divide. Not only can it be accessed by people who have Internet, but it can also be played by those who have no internet connection through the e-games cafes established by PAGCOR. These are played in Internet Casino Stations (ICS) available nationwide for those who do not have Internet access. Second, gambling online offers a multitude of games for users to choose from. Not only can users choose the online casino they prefer, they can also select virtual rooms offering not just an assortment of games, but also a variety of one specific game. To expound further, virtual rooms provide customers with different types of poker, blackjack, and even specialty games. Online, a lot of games are provided to suit a horde of preferences. Since there are a lot of game providers, online casinos sometimes offer bonuses to their customers. Cash prizes or credit bonuses are just some of the additional perks casinos offer in order to attract more users. Bonuses are also made available among games online. For example, bonus rounds are provided for slot machine users, as well as free spin to increase even more one’s take home money. Also, online casino operators allow free trials for those who are interested to play but are not willing to shell out cash. Gamblers can use this to their advantage and figure out the type of game that suits their preference. Security wise, participating in casinos online is safer than most people think. Contrary to the belief that it is unsafe, most virtual gambling businesses are as secure as land-based casinos. In fact, one’s winnings can be snail mailed to one’s home address or transferred directly to one’s bank account. However, certain caution should be considered when signing agreements.

The Weaknesses of Online Gambling

The major loophole of online gambling as an industry is centered on the issue of legality. The group couldn’t overemphasize the issue further. However, with the introduction of online gambling market into the gambling industry, it blurred out further the boundaries of legitimacy. At present, only those regulated under PAGCOR are considered legal. All other games or gambling activities outside the jurisdiction of PAGCOR are considered illegal. However, even if the boundary of legality has been set, the proliferation of illegal gambling activities still exists online.

The Opportunities of Online Gambling

Revenue from online gambling is relatively high. In an article released by GMANews.TV, operating income increased from P23.1 million in 2006 to P121.2 million in 2007. This is a 100 million increase in revenues in a span of only 1 year. Lastly, online gambling tends to offer its users more revenue in return for their deposit or bet. It usually has higher payout percentage than normal gambling establishments.

The Threats of Online Gambling

Although the revenues generated by the online gambling industry are remarkably high, the social repercussions the industry imposes on its consumers are if not understated, unrecognized. The opponents of online gambling counter that the legalization of this industry would further elevate the social ills which damage the society. As the bets are getting higher and higher by the minute, it becomes more difficult to oppose the urge to gamble. The gambler becomes progressively unable to resist the impulse. This behavioral disorder known as Pathological Gambling is brought about by the intensity of the gamble. Since it is rooted in every firm to maximize their profits, the objective of these online gambling operators is to bind gamblers into games which are addictive so that they will continuously bet again and again. Since the Internet brings the compulsive gambler closer to the opportunity to gamble with just a few clicks of the mouse, it smoothens out the path to addiction. Online gambling games are like mouse traps and the gamblers don’t actually get the “cheese.”

Another weakness of participating in online casinos is the threat of fraud and cheating. As was said earlier, certain precautions should be taken when agreeing to terms and conditions because online gambling sites have constantly been a target of hackers, as well as con-artists. The usual modus operandi of these con-artists is to hack the system and acquire the credit card numbers. However, under the Philippines’ e-commerce act, this problem is being addressed. Chapter II Declaration of Principles for Electronic Commerce Promotion, a section is provided specifically addressing the protection of users. This is to protect the users’ privacy, confidentiality, anonymity and content control. Users should be given the right to exercise their freedom of choice, as well as right to privacy, anonymity, confidentiality and content control. However, although a specific section was provided for this issue, it cannot be fully resolved because according to the e-commerce act, the Internet system was not designed to accommodate these restrictions. Sec 48 of e-commerce act also addresses the problem of hacking. The law states that:

Section 48. Hacking. Hacking or cracking which refers to unauthorized access into or interference in a computer system server or information and communication system; or any access in order to corrupt, alter, steal, or destroy using a computer or other similar information and communication devices, without the knowledge and consent of the owner of the computer or information and communications system, including the introduction of computer viruses and the like, resulting in the corruption, destruction, alteration, theft or loss of electronic data messages or electronic document shall be punished by a minimum fine of one hundred thousand pesos (P100,000.00) and a maximum commensurate to the damage incurred and a mandatory imprisonment of six (6) months to three (3) years.

Alternatives/Substitutes of Online Gambling

Given the game set-up, there are issues concerning the assumption that online gambling sites are not as well-regulated as their land-based counterparts. There have been instances where online gambling sites have apparently not paid appropriate winnings, have cheated players with unfair games, or have absconded with player deposits. There are also reports that players get away with cheating online.

According to a site called Problem Gambling Prevention, there are risks involved in gambling online that can be avoided when gambling in a casino for an instance. Online gambling is more addictive because first, there is no limitation on availability. A user can play anytime and anywhere he pleases with a laptop as long as he can access the Internet. There is no need to search for the nearest gambling establishment because the convenience of playing in the comforts of one’s one home is now available through online gambling. Second, there is no limitation on time. The unlimited time available in playing makes it more addictive. Users can play for hours in any time of day or night. Third, there is little limitation on money. Being able to pay on credit, users have the tendency to forget that they are spending real money. Thus, they play to their satisfaction and because they are spending on credit, they have decreased perception of the value of cash. Also, gambling online enables an accelerated speed of play. Users can play faster and can therefore spend more money through credit card faster. As an alternative, gambling “on-land” has certain advantages over gambling online, given the aforementioned ones, which clearly leads to gambling addiction. In a gambling establishment, time and money are limited. Because of these, players can control their resources better. This clearly shows that online gambling is a very wise and effective way to gain profits from players because it is highly addictive compared to “on-land” gambling.

As substitute for online gambling, people can resort to playing downloadable online games instead of betting their money on online gambling. Entertainment need not be highly dependent on the hopes of acquiring more money. There are a myriad of money games online that do not require the betting of money.

Also, since social networking sites dominate the general public’s web browsers, one particular social networking site offers a close alternative to online gambling. Facebook revolutionized the social networking platforms by providing a framework for software developers to utilize its interface by creating applications which are enjoyed by millions of registered Facebook users. The Zyngas Game Network offers a Facebook Texas Hold 'Em application that allows you to play a friendly round of poker against your friends or random Facebook users. Unlike online poker platforms online, this is free of charge and there is no real money on the line. New batch of chips are awarded for the player every day and bonus chips are rewarded when you invite your friends to play. If you want to hone your online poker skills, all you need is a Facebook account and a basic grasp of rules of Texas Hold ‘Em.

Feasibility and Justification of Online Gambling

More Profits, Revenues, Tax Payments and Better Economic Growth

Internet gambling represents a very large potentially untapped market in our country. Recent news report that online gambling companies enjoyed their best year in 2008, posting healthy revenue and profit increases despite the fiscal crisis and slowing world economy. A rational reason why Filipinos embrace the gambling tradition so much is poverty. The win of a gamble can blind a prospective gambler because it promises fast and easy money. It is because of this false hope that the future of online gambling in the Philippine society continues to be promising.

According to Dennis Valdes, the President of PhilWeb Corporation, “The company did not only sustain its meteoric growth of 2007, it actually accelerated that growth last year.” As a result PhilWeb Revenue totaled P457.2 million in 2008, 71% higher than the previous year. Net income increased more than half and this is driven by the excellent growth in the company’s investment in the market of Internet gambling gaming business. This revenue growth was fueled by the operations of PAGCOR’s e-game cafés coupled with the Filipino’s enthusiastic response to sports betting games and mobile gaming operations. With this continuing trend, there is optimism that this growth would accelerate in 2009 especially with the introduction of newer and more updated games.

Growth and Expansion of Online Gambling

With the proven success of gambling as a recreational tradition, especially heightened by the Filipino’s welcoming response to online gambling, it is not surprising that gambling operators would accordingly tap the market of the mobile community.

According to the data collected by The National Telecommunications Commission, about 70 percent of Filipinos have and are using mobile phones. NTC commissioner Ruel Canobas noted that out of the 88,542,991 population last year, only 32 million are not using mobile phones. This translates to about two out of three cell phone users. This double-digit growth of penetration is because of the ‘text’ phenomenon. Similarly, this is also the reason why the SMS content sector of the industry continues to grow. This includes ringtones, downloadable applications, daily quotations, etc.

Gambling operators successfully tapped this market by exploiting the given demographics. In so doing, online gambling operators have foreseen success in penetrating the mobile industry and therefore took advantage of it by introducing mobile gambling. The Filipinos’ love and enthusiasm for entertainment resulted to the growth of mobile gambling. Since more Filipinos are connected through cellular phones rather than the Internet, it brought gambling more accessible to the masses. Also because more Filipinos have cellular phones in handy, the appeal of mobile gambling overwhelmingly cites convenience as a benefit. The estimated growth of mobile gambling is promising because its target market is already built-in.

The Online Casino Archives Website claimed that Asia is the place for all present-day and future online gambling developments. Experts and industry professionals prove that Asian nations constitute the majority of the online gambling market. Gaming analysts at Christiansen Capital Advisers attest that the online gambling market in Asia has grown faster than all other established markets, making developments of new gambling technologies possible such as mobile gambling. Today, there is an overwhelming public response to online gambling services. Business and investment opportunities have also been offered. PAGCOR online gambling services are also open for franchising. A company named Star Games Services offers different investment options or packages to choose from. The initial investment is as low as thirty thousand pesos. With this, the growth of online gambling as an industry is reflected in the revenues it generates.

Conclusion

In general, online gambling is being incorporated in the Filipino society. Betting on casino or sports type games over the Internet has been powered by technological innovations. The increasing revenues reflect the enormous growth in online gamblers. The Philippines is potentially a profitable market for online gambling. However, to harness this potential, changes and liberalization in state legislations are necessary. In line with this need, the government appointed official gambling agencies such as PAGCOR and PCSO. In cooperation with its chosen online service providers namely, Pacific Online Systems Corporation and PhilWeb Corporation, they regulate and control all legal gambling activities in the country. Online gambling creates a modernized gambling experience attuned with the times in its different forms which include online sports betting as propagated by BasketballJackpot. Other internet-based e-games sites include Xchangebet that features consumer-controlled free betting site and other online mobile lottery sites like PremyoSaResibo, Txtingo SuperSingko, etc.

However, just like other technological applications, its promising benefits are equated by the increasing ethical and legal issues that it poses to society. Its general growth and development was brought about by its easy, accessible and convenient nature. Conversely, it is also this very reason that issue of underage users arises. Online gambling is open to all online users of legal age who are generally those of the upper and the middle class society. Among the many issues related to this is the lack of stringent policies to prohibit underage internet users from playing. In addition, the dominance of Catholicism in the country further increases ethical disputes concerning legalization of gambling. Moreover, users are also susceptible to the dangers of fraud and addiction.

On the other hand, the biggest motivation for its regulation and prevalence is its economic benefits. Internet gambling provides jobs and serves a major source of government funds. In the careful analysis of online gambling it has been noted that other alternatives are available and able to guarantee a similar level of satisfaction. Land-based casinos offer the same thrill in a more secured gaming environment. In addition, for those who only play for entertainment, there are numerous online gaming sites that do not require monetary bets.

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