The recent slowdown in the Philippines’ online gambling market reflects the impact of stronger regulation rather than industry weakness. This is according to a new position paper from gaming law firm Arden Consult.
In its report, Smart Regulation: One Year On, Arden argues that PAGCOR’s regulatory reforms are prioritizing long-term sustainability. These reforms strengthen the licensed market, even if that results in lower short-term revenue.
Regulation Prioritizes Market Quality
The report follows PAGCOR’s first-half 2026 financial results, which showed total revenue falling 26.6% year-on-year to PHP43.3 billion. During the same period, the number of licensed Gaming System Administrators declined from more than 70 in August 2025 to 60 in July 2026.
According to Arden, the contraction reflects a deliberate effort to improve regulatory standards rather than a weakening industry.
The firm noted that PAGCOR first reduced e-gaming licence fees from more than 50% of gross gaming revenue in 2024 to 30%. For integrated resort online platforms, the fee was reduced to 25%, helping legal online gaming revenue grow significantly before introducing stricter compliance measures.
Stronger Compliance Requirements
Following the fee reductions, PAGCOR introduced tighter rules covering advertising, player verification, B2B supplier accreditation, and a Minimum Guaranteed Fee. These measures were designed to remove inactive or underperforming licensees.
Arden described the strategy as first making the regulated market commercially viable before raising the standards required to remain licensed.
The report also noted that other policy changes have further reshaped the market. For example, the Bangko Sentral ng Pilipinas’ directive requires supervised financial institutions to remove in-app gambling links from e-wallets.
Channelization Seen as the Key Metric
Rather than focusing solely on revenue, Arden argues that the industry’s success should be measured by channelization. This refers to the proportion of gambling conducted through licensed operators.
The firm said effective regulation should encourage players to use licensed, supervised platforms instead of illegal gambling sites. These illegal sites operate without consumer protections or regulatory oversight.
Market Expected to Stabilize
Arden expects further consolidation during the second half of 2026. This is because B2B accreditation requirements and the Minimum Guaranteed Fee continue to reshape the industry.
According to the report, the long-term health of the market will depend on improving legal channelization. It will also rely on stronger enforcement against illegal operators, continued investment by licensed companies, and maintaining a regulatory framework that remains competitive with the unlicensed market.
The firm believes the sector is likely to stabilize before returning to slower, higher-quality growth as the new regulatory framework matures.
