Recently, discussions about the Philippine gambling tax policy have heated up again. International gambling consultant Martin Perbrick bluntly states that setting the tax rate for online gambling at 25% to 30% of Gross Gaming Revenue (GGR) may already be on the edge of economic risk. This is not alarmist talk; there is a set of classic economic logic supporting it.
The "Laffer Curve" warning behind high tax rates
Simply put, the Laffer Curve tells us that higher taxes are not always better. When the tax rate exceeds a certain threshold, the behavior of businesses and consumers changes, which could ultimately lead to a decrease in total government revenue. The gambling industry, especially sports betting, is extremely sensitive to price changes (reflected in odds). The tax burden will eventually be passed on to players, manifesting as reduced odds or increased rake.
At this point, players often do not choose to quit gambling, but rather "vote with their feet":
Turn to illegal or unregulated platforms, where there might be higher odds.
Flow into less regulated grey markets.
Causing legal operators to exit the market due to excessively squeezed profit margins.
Protecting consumers, but placing them at higher risk?
Policy makers sometimes assume a premise: "If taxes are high, everyone will stop gambling." But the reality is quite the opposite. When the legal market deteriorates and becomes less attractive due to high taxes, it actually pushes players into more dangerous situations. These underground markets lack "Know Your Customer" (KYC) checks, anti-money laundering measures, complaint channels, and responsible gambling interventions, leaving consumer rights fully exposed to risks.
On the surface, higher tax rates increase national revenue; but behind the scenes, an uncontrolled black market may be quietly expanding, which deviates from the original intent of regulatory consumer protection.
Is the Philippines repeating the POGO debacle?
From the chaos and comprehensive ban during the POGO (Philippine Offshore Gaming Operators) era to the current shift towards the PIGO (Philippine Inland Online Gaming) system, the Philippine government has been seeking a balance between regulation and revenue. However, the current high tax burden model is concerning.
Looking at Asia-Pacific, many regions choose to outright ban online gambling; while regions that retain sports betting also generally have high tax rates. The Philippines was once seen as a "regulatory experimental field," but it is now quickly moving towards a high tax burden model. Perbrick cites studies indicating that when the online gambling tax rate exceeds 25%-30% GGR, black market growth will explode exponentially. His suggested "relatively ideal range" is 10%-20% GGR, which contrasts sharply with current Philippine policies.
This reliance on gambling taxes to fill other budget gaps can easily shift policy goals from "regulating the market" to "exploiting the market." For practitioners or researchers who want to delve into global regulatory dynamics, they can follow the relevant analysis and reports on the PASA official website.
Summary: Pursuing maximum tax revenue does not equate to market health
Imbalances often do not happen suddenly. Policy gradually pushes the market to a tipping point, until one day when the black market spirals out of control, regulation fails, and trust collapses, the cost required may be much greater than imagined. The case of the Philippines is worth deep reflection for all countries seeking a balance between gambling regulation and taxation.
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This article is from "PASA-Global iGaming Leaders," a gambling industry news channel:https://t.me/pasa_news
Original deep gambling channel:https://t.me/gamblingdeep
Free data reports: @pasa_research
PASA Matrix: @pasa002_bot
PASA official website: https://www.pasa.news
