Asia-Pacific gaming industry undergoing a transformative shift

The Asia-Pacific gaming industry is undergoing a transformative shift, with various countries implementing new regulatory frameworks to balance growth and player protection. A panel discussion at the recent 2024 G2E Expo shed light on the latest trends and challenges shaping this dynamic landscape.

The panel included experts from various countries who shared insights on gaming regulation in their respective regions.

Moderator Rui Pinto Proença, managing partner of MdME, led the discussion with panelists Lau Kok Keng, partner and head of Gaming Law Practice at Rajah & Tann (Singapore); Tomohiro Takagi, partner at Nishimura & Asahi (Japan); Jaewoo Kwak, Partner at Lee & Ko (Korea); Long Gia Nguyen, partner at Tilleke & Gibbins (Vietnam); and Marie Antonette Quiogue, CEO and principal of Arden Consult (Philippines).

STRICT REGULATIONS AND MONEY LAUNDERING SCANDAL

The Singaporean government has implemented a regulatory framework that allows casinos to operate only in the form of integrated resorts (IRs), such as the iconic Marina Bay Sands. Despite only having two casinos, combined gaming revenue surged to SGD5.25 billion (MOP31.35 billion) in 2023.

In 2020, a major money laundering scandal rocked Singapore, involving a network of PRC Chinese nationals who had taken on “different nationalities” to evade detection.

“The scandal led to the seizure of assets worth SGD3 billion (MOP17.9 billion), with the majority belonging to individuals who had fled the country, so of course there is need to regulate,” said Kok Keng.

The People’s Republic of China (PRC) reacted to the scandal and has issued warnings to its citizens not to gamble in Singapore. The Chinese embassy in Singapore posted a statement on WeChat, urging Chinese citizens to refrain from gambling, even if it is legal in Singapore.

The scandal has had significant implications for the gaming sector in Singapore; with the courts never having the chance to determine whether gains derived from a licensed operator overseas would be considered proceeds of crime. This has raised concerns about the potential for cross-border money laundering and the impact on the industry.

PLAYER PROTECTION

Singapore has been at the forefront of player protection, with measures in place to limit the number of visits by local players to casinos. The entry levy has increased to SGD150 (MOP 895) per 24 hours, and annual passes now cost SGD 3,000 (MOP17,908). The government has also extended the exclusion scheme to include individuals receiving social assistance and those who receive criminal legal aid.

Comparably, Japan’s gaming industry has also undergone significant changes, with the introduction of the IR Promotion Law and the IR Implementation Law.

The country has learned a lot from Singapore and other jurisdictions, with measures in place to protect local players. The entry fee in Japan, described by Takagi, “locals must pay JPY6,000 and are limited to playing three days a week and ten times a month.”

STRICT GAMING REGULATIONS AND SOCIAL IMPACT

Macau is one of the most mature gaming markets in Asia and it focused on the traditional casino model. Newer gaming hubs like Singapore, the Philippines and Vietnam are investing in integrated resorts and online gaming, which may be more attractive to players.

Macau’s gaming revenue was MOP80.14 billion (USD9.93 billion) in the first half of 2023, a 205% year-on-year surge. In contrast, South Korea’s casino revenues are roughly a sixth the size of Las Vegas’s alone, generating around $1.3 billion (MOP10.4 billion).

In South Korea, there are around 20 casinos, but most are “foreigner only,” meaning only non-Korean citizens can enter and play. The only place where Korean nationals can enjoy casino gambling legally is Gangwon Land Casino.

Conversely, Macau allows both locals and foreigners to gamble. Allowing locals to gamble is crucial for market growth, but South Korea is unlikely to change this regulation anytime soon.

When asked about the social impact of gaming in the Philippines, Quiogue noted that while formal statistics are not yet available, the industry’s effects could be understood through general statistics and societal context.

“The Philippines is predominantly Catholic, with approximately 80% of the population identifying as Catholic.”

This strong religious influence has shaped the way gaming has been introduced to society, with the Catholic Church exerting a significant influence on both politics and society in the Philippines.

Despite all countries experiencing a backlash about the societal impact of the gaming industry, the government and casino operators hope to continue regulating the industry and promoting transparency, with a focus on responsible gambling measures to mitigate these concerns.

GROWING MARKETS

While traditional gaming hubs like Macau focus on the casino model, newer markets in the region are embracing integrated resorts and online gaming.

Vietnam’s pilot program for local players “requires a minimum age of 21 and a minimum income of $400 (MOP3,219), and it has been successful,” said Nguyen. The government is considering extending the program and making it more flexible for foreign investors.

“We are looking at ways to attract more capital investment into the country,” said Nguyen. “We want to make sure that the regulatory framework is robust enough to attract foreign investors and allow them to build integrated resorts.”

The Philippines has also seen significant growth in its gaming industry, with a focus on integrated resorts and land-based casinos.

“We have seen a lot of interest from foreign investors in our gaming industry,” said the CEO of Arden Consult.

“We are working to create a regulatory framework that is attractive to foreign investors and allows them to build IRs.”

Quiogue describes new projects as “expanding beyond Manila, with Clark experiencing a resurgence in growth and plans to replicate this in Boracay.”

The Philippines has been actively promoting its gaming industry, with a focus on integrated resorts and land-based casinos. The country’s unique “hybrid model” allows land-based casinos to offer online gaming services, making it an attractive destination for customers.

When asked about online gaming, Quiogue said the adoption of online gaming casinos in the Philippines.

In 2020, during the pandemic, land-based casinos were permitted to offer online gaming services to their existing VIP clients. This allowed domestic players to bet online through a limited licensing regime extended to existing land-based casinos as an online component to their current land-based license.

NEW HORIZONS: THAILAND

Thailand is also looking to legalize casinos, with a draft bill currently being considered.

“We are looking at ways to legalize casinos and create a regulatory framework that is attractive to foreign investors,” said Kok Keng. “We want to make sure that the industry is regulated in a way that protects players and prevents problem gambling.”

They have proposed a tax rate of at least 30% on gaming revenues and minimum age and earnings requirements for players.

The gaming expert shared his insights on Thailand, stating, “I heard that the tourism department in Thailand has signaled that they are trying to push back on the proposal.” The suggestion is that they are seeking to obtain the advantage that would come with the tourism. “But from the government’s perspective, I think there’s always a tax element to be collected from the big casino registration.”

“Thailand is currently proposing a very competitive rate of 17%. I don’t know if that can happen, but that rate is very competitive compared to 30% in Vietnam and Japan or 20% in Korea.” Kok Keng believes that this nevertheless represents a very feasible plan, which may happen in the future in Thailand, approximately in 2029. Nadia Shaw