Booming Online Base

Asians are renowned for their love of gambling, and recent technological innovations have made them increasingly comfortable with placing their bets over the internet. Cagayan Special Economic Zone and Free Port in the Philippines is the only online gaming jurisdiction in Asia, and Emphasis Services Ltd (ESL) was one of the first companies to obtain a license from the zone. ESL Marketing Director Jeff Mann explains why the zone offers the ideal base for operators seeking to ride Asia’s online gaming boom

Republic Act 7922 was enacted in the Philippines in 1995, establishing the Cagayan Special Economic Zone and Free Port (CSEZFP), situated in the north eastern-most part of the country. It also mandated that the Cagayan Economic Zone Authority (CEZA), an office under the Office of the President of the Philippines, manage and promote the resources of the Zone. The zone became the first—and remains the only—online gaming jurisdiction in Asia, offering a strategic location for I-Gaming enterprises targeting the region given its proximity to the biggest gaming markets—China and Southeast Asia. The country also boasts an abundant multilingual, hardworking and highlyskilled workforce.

CEZA has entered into a Master Licensor agreement with First Cagayan Leisure and Resort Corporation (FCLRC or First Cagayan). CEZA, working with First Cagayan, has been granting licenses offering numerous benefits and incentives to a growing number of internet gaming operators.

Licensed operators can run online interactive casinos, sportsbooks, fixed odds, betting exchanges, lotteries and bingo. To date, First Cagayan has issued 38 licenses, 34 of which are operating. Most of these licensees primarily target Asian customers and operate online casinos, baccarat and poker rooms and sportsbooks. First Cagayan only allows operators that perform well to renew their licenses by evaluating their revenues and compliance regularly.

Emphasis Services Ltd (ESL) was among the first companies to obtain a license from the jurisdiction and continues to be one of First Cagayan’s largest gaming operators. ESL currently operates several online casino and poker brands, and its agency business, which operates out of several Asian cities, continues to grow. ESL’s success as a gaming operator with a Philippine license has prompted other casino operators to secure their licenses from First Cagayan.

First Cagayan hopes to have at least 50 licensees by the end of the year, and has a target of 80 licensees by 2008.

Just some of the benefits offered to registered operators in the zone are income tax holidays, tax- and duty-free importation of materials and permanent resident status for investors and their immediate family members.

The Philippines’ communications infrastructure has improved considerably following the deregulation of the Philippines’ telecommunications industry in the early 1990s. The rise of the BPO industry in the Philippines has also provided excellent inbound and outbound telecoms facilities for the I-Gaming industry. Additionally, an influx of foreign telecoms companies investing in the Philippines has contributed to a significant decrease in telecoms costs, and First Cagayan offers lower high-quality bandwidth costs than other online gaming jurisdictions.

Meanwhile, First Cagayan provides Internet Data Centers (IDCs) employing the latest technology to host gaming operations 24/7.

New innovations

Most online gaming operators started operating with and still continue to run Random Number Generator (RNG) systems, whereby the computer generates a sequence of numbers that lack any pattern to ensure fair gaming and security for players.

Although RNG systems are fair and reliable, Asian players tend to place less trust in them, and some losing players may feel the game could have been manipulated.