Fall in Philippine online gaming revenue in 1H26 part of long-term stability: Arden Consult
The drop in online gaming revenue in the Philippines in the first half of the year was part of a two-step process that started with making the market more attractive to operate in legally, then improving standards and enforcement, according to a recent white paper by Arden Consult.
Philippine gaming regulator PAGCOR reported a 41.9% yearly fall in 1H26 revenues from eGames, eBingo and bingo grantees, to Php18.6 billion (US$306 million)1 PHP = 0.0165 USD
2026-08-05Powered by CMG CurrenShift, contributing to the overall fall in revenue from PAGCOR’s gaming operations of 21.7% year-on-year, totaling Php38.9 billion (US$640 million)1 PHP = 0.0165 USD
2026-08-05Powered by CMG CurrenShift.
But experts at Arden note that “the headline confuses a smaller market with a worse one,” noting that PAGCOR’s Chairman Alejandro H. Tengco had already described 2025 as a “regulatory reset.”
Tengco’s approach to boosting the online gaming segment was to improve its attractiveness. When first coming into office he lowered electronic-gaming licenses fees from over 50% to 35% in April of 2024, dropping to 30% in January of 2025. For operators with a land-based component, this tax rate fell to 25%.
“The logic was straightforward: a regulated market is easier to police if operators and players have a reason to use it,” highlights the paper.
The legal market did grow, reaching Php114.83 billion (US$1.9 billion)1 PHP = 0.0165 USD
2026-08-05Powered by CMG CurrenShift in electronic gaming GGR in 1H25, becoming the largest component of Philippine gaming revenues.
“Once the licensed market had scale, PAGCOR changed the question,” notes the paper. “The aim was no longer simply to bring operators inside, but to decide what standard they should meet once there.”
This involved increased rules for advertising and player verification, accreditation mandates for the B2B supply chain, crackdowns on illegal sites and a Minimum Guaranteed Fee which came into effect this year and increases starting next year.
Licenses can’t be held passively
Arden Consult notes that “PAGCOR’s Minimum Guaranteed Fee did not cause the H1 decline.” This is in part due to delays which meant that the measure only came into effect on 1 August. For operators with e-casino games, the first tranche of the fee is a Php9 million (US$148,095)1 PHP = 0.0165 USD
2026-08-05Powered by CMG CurrenShift minimum monthly fee, benchmarked to a minimum monthly GGR of Php30 million (US$493,650)1 PHP = 0.0165 USD
2026-08-05Powered by CMG CurrenShift.
Arden notes that “the direction of travel is clear. A license is becoming more expensive to hold passively.” The group notes that this is positive in that “a license should not be a commodity or an option on future market growth. It should be a responsibility, backed by enough capital, systems, technology, people and controls to justify continued access to a regulated market.”
The group furthers that “who enters next will also be revealing. Philippine operators will increasingly be expected to match the technology, compliance, cybersecurity, responsible-gaming and governance standards seen in more mature jurisdictions. The stronger operators will be those willing to keep investing in those capabilities and to compete not only on product and customer acquisition, but on the quality and integrity of their operations.”
Keeping pace
The group furthers that “PAGCOR should not protect incumbents from legitimate competition,” noting that the regulator’s role “is to protect the regulated market from competitors that follow none of its rules and do not pay taxes.”
While the experts note that “the second half of 2026 may still look untidy in the headline numbers,” and that “more licenses may be surrendered or consolidated … the better indicators are less dramatic: whether legal channelization keeps improving; whether action against illegal operators and payment channels becomes faster; whether surviving licensees invest more in technology and controls; and whether reputable domestic and international operators and suppliers continue to put capital and people into the market.”
The initial shock from the de-linking of e-wallets and the player verification measures “should become less important with time.” However, the group warns that “the risk is over-correction. If the licensed product becomes materially less usable than the illegal one, channelization can reverse. If enforcement does not keep pace, compliant companies bear the cost of regulation while illegal competitors keep the commercial advantage. The next regulatory challenge is calibration: hold the higher bar without raising it beyond what a viable legal market can carry.”
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The Backstory
A reset after rapid growth
The latest reading on Philippine online gaming revenue sits against a sharp policy turn that began after regulators deliberately made the licensed market more attractive, then moved to raise the cost of staying in it. PAGCOR’s strategy under Chairman Alejandro Tengco first lowered the government share charged to electronic-gaming operators, helping legal platforms compete with offshore and unlicensed rivals. That expansion was fast enough to make eGames the largest contributor to Philippine gaming revenue in 2025, but it also drew scrutiny from lawmakers, payment regulators and the public.
The revenue decline reported for the first half of 2026 is therefore less a sudden break than the visible result of a market being refitted. Arden Consult’s reading of the numbers argues that the headline drop should be viewed alongside the regulator’s broader objective: channel players into the legal market, then impose more demanding rules on the companies allowed to remain there. The process has created friction for operators and players, but it has also clarified PAGCOR’s longer-term priority — a smaller, more compliant market over one growing mainly on weak controls.
Lower fees brought operators inside
PAGCOR’s first step was commercial. The regulator cut online gaming fee rates from levels above 50% to 35% in April 2024, then to 30% from Jan. 1, 2025. Operators tied to land-based casinos received a lower 25% rate to reflect their higher operating costs. The agency said at the time that the reductions were meant to make the legal market viable and encourage unregistered platforms to come under supervision.
That policy shift helped fuel a dramatic rise in licensed activity. As PAGCOR further cut online gaming operator fees to 30%, it reported 1,188 licenses across on-site and online gaming offerings in early 2025, up 13.6% from 2023. Accredited gaming service providers also rose sharply, from 49 in 2023 to 174 in 2024. EGames, including e-casino, e-bingo, sports betting and specialty games, became a key growth engine for the industry.
That expansion carried a regulatory trade-off. Lower fees increased the incentive to operate legally, but they also widened the number of entities PAGCOR had to monitor. Once the licensed sector achieved scale, the regulator shifted from market-building to market discipline. That second phase is now driving consolidation, compliance spending and, in the short term, weaker reported volumes.
Payment friction became the flashpoint
The most visible shock came from the Bangko Sentral ng Pilipinas’ August 2025 order requiring e-wallet providers to remove direct links to online gambling platforms. The central bank framed the move as a consumer-protection and monitoring measure. The practical effect was to remove the tiles and in-app shortcuts that made licensed gambling platforms easy to find inside popular wallets such as GCash and Maya.
Industry participants argued the order risked weakening legal channelization. Without direct links, players had fewer simple signals to distinguish PAGCOR-licensed operators from illegal sites. PAGCOR later moved to make that case formally, with Tengco saying the regulator was preparing a position paper for the central bank seeking restoration of e-wallet links. In that effort, described in PAGCOR’s planned appeal to restore online gaming links to e-wallets, the agency intended to show that stronger safeguards had been introduced after Senate scrutiny of the sector.
The payment change did not amount to a full ban on e-wallet gambling transactions. Licensed operators remained BSP-supervised merchants, and users could still fund accounts by leaving the wallet app and going to operator sites. But the added steps reduced convenience, slowed casual use and hit reported revenues. The question for policymakers is whether that friction protects consumers more than it pushes them toward unlicensed alternatives.
Compliance burdens widened beyond payments
Arden Consult has argued that the softer market cannot be explained by e-wallet delinking alone. A broader set of measures also increased the cost and complexity of operating in the Philippines. These included real-time selfie requirements for know-your-customer checks, stricter advertising rules, deposit caps and the removal of credit card and cryptocurrency funding. Each rule may be manageable in isolation. Together, they amount to a significant operational reset.
That cumulative burden was central to Arden’s analysis of the online gaming decline and early recovery. The firm noted that operator-level activity began rebounding after the initial payment shock, as platforms and players adapted to the new routing requirements. Bi-monthly online gaming gross gaming revenue fell from about Php40.6 billion in May-June 2025 to Php23.5 billion in September-October, then recovered to Php26.6 billion in November-December.
The rebound matters because it suggests the licensed market may be absorbing the tighter framework rather than collapsing under it. Some operators with the capital and technology to adapt are treating online gaming as a growth channel even as land-based performance softens. That divergence is likely to sharpen the divide between well-capitalized licensees and those that entered the sector mainly to hold optionality on future growth.
Minimum fees raise the cost of passive licenses
PAGCOR’s minimum guaranteed fee is the clearest example of the regulator’s attempt to prevent license warehousing and revenue misreporting. The policy requires licensed operators to pay minimum monthly amounts tied to game type and revenue scale, with higher thresholds phased in over time. For e-casino operators above the relevant benchmark, the first tranche includes a Php9 million monthly minimum based on Php30 million in monthly gross gaming revenue.
The measure followed concerns that operators could underdeclare or misdeclare revenue while keeping licenses active at limited cost. PAGCOR also set specific revenue-share rates for sports betting, taking 15% of gross gaming revenue from live sports betting and 30% from virtual sports betting, according to its updated sportsbook contribution framework. The fee changes apply alongside the broader minimum-guarantee structure.
The policy is expected to encourage consolidation. Operators that cannot generate sufficient scale, maintain compliance systems or fund new technical controls may surrender licenses or seek partners. For the regulator, that outcome can be acceptable if it leaves fewer but stronger entities under supervision. For the market, it means revenue comparisons during the transition may understate improvements in channel quality, tax integrity and player protection.
The supply chain is now under scrutiny
PAGCOR’s reset is also extending beyond consumer-facing operators to the companies that supply games, technology, marketing and streaming infrastructure. The regulator has moved to accredit B2B suppliers and has created a new framework for data streaming providers, formalizing the pathway for Philippine live-dealer studios to stream content to foreign-licensed operators. That approach places more of the gaming value chain under local oversight.
The new framework for live-dealer studio streaming shows how PAGCOR is trying to distinguish regulated support services from the banned offshore POGO model. Data streaming providers do not accept bets or operate games directly. They provide live-streaming infrastructure to legitimate operators licensed abroad, while meeting requirements on accreditation, fees, workforce composition and ongoing compliance.
This supply-chain focus raises the stakes for the next phase. If PAGCOR calibrates rules well, the Philippines could retain a competitive online gaming sector with stronger controls, local employment and exportable content. If compliance costs rise faster than enforcement against illegal sites, licensed operators may carry the burden while unregulated rivals keep the commercial advantage. The first-half revenue decline is therefore best read as a stress test of that balance, not simply as a verdict on demand.
