Leading Philippine gaming law firm warns BSP payment crackdown could backfire on licensed gambling operators

Newsdesk

22 September 2026 at 7:26am UTC-4

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Top Philippine gaming law firm Arden Consult has told the nation’s central bank- Bangko Sentral ng Pilipinas (BSP) – that its draft crackdown on gambling-related payments risks harming licensed operators unless implemented carefully.

The BSP’s draft circular would require gambling operators, gaming platforms and affiliates handling player funds, along with licensed crypto businesses, money changers and adult-content sellers, to be acquired only under direct merchant arrangements. The central bank identified more than 8,000 merchants using small retailers as intermediaries to channel payments.

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Samuel Tarng, COO and Head of Commercial at Arden Consult, said he supports the BSP’s objective but raised four primary concerns.

The executive noted that first, banks may “de-risk” entire industries by imposing blanket prohibitions rather than assessing merchants individually. Tarng said the Financial Action Task Force has warned since 2014 that cutting loose whole customer classes is a failure of the risk-based approach, and that payment firms already decline transfers when a counterparty’s name contains a word like “bet.”

Next, a centralized merchant database could harm operators wrongly flagged. Tarng cited Mastercard’s MATCH list, where listings can stand for five years with limited means of removal.

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On top of this, settlement limits set too low on high-risk merchants could push players toward unregulated operators. Tarng pointed to the Netherlands, where tightened deposit rules on licensed sites saw the legal market’s share of gambling revenue slide toward half.

Lastly, Tarng said the draft’s definition of “affiliates” should be limited to entities that directly handle player funds, rather than applied broadly.

Tarng said the rules should proceed regardless, noting that licensing routes for operators already exist in the Philippines.

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The Backstory

Payment rules land on an already tightened market

The Bangko Sentral ng Pilipinas’ proposed restrictions on gambling-related payments arrive after more than a year of rapid regulatory tightening in the Philippines’ online gaming market. The central bank’s draft circular targets merchants that route transactions through intermediaries rather than direct acquiring relationships, a practice the BSP said was used by more than 8,000 merchants across high-risk categories. For licensed gambling operators, the issue is not whether payment flows should be traceable. It is whether a broad crackdown could make legal operators harder to reach while leaving illegal sites with less visible payment channels.

That concern reflects a wider policy tension in Manila. Regulators have sought to pull online gambling into the formal economy through licensing, know-your-customer checks, accredited suppliers and monitored payments. But each new control also adds friction. As Arden Consult argued in a recent analysis of the country’s online gaming slowdown, the post-2025 decline cannot be attributed to one intervention alone. The firm said the market has been affected by a cumulative set of requirements, including real-time selfie KYC, deposit caps, restrictions on advertising, removal of credit card and cryptocurrency funding and the suspension of wallet shortcuts inside major e-wallet apps. The firm’s assessment that multiple factors drove the Philippines’ online gaming decline provides the immediate backdrop for the BSP debate.

From e-wallet shortcuts to direct acquiring

The payment issue became more visible after the BSP’s August 2025 order suspending in-app links from e-wallets to online gaming platforms. That move did not ban e-wallets from processing gambling transactions for licensed merchants. Players could still fund accounts through approved operators. What changed was the convenience of clicking a gambling tile or shortcut inside an app such as GCash or Maya. Arden said that distinction matters because transaction rails remained open, even as user behavior shifted and volumes fell.

The draft circular would go further by requiring certain merchants, including gambling operators, gaming platforms and affiliates that handle player funds, to be acquired only under direct merchant arrangements. The central bank’s concern is that small retailers and other intermediaries may obscure the true merchant behind a transaction. In financial-crime terms, that creates risk. In market-structure terms, however, poorly calibrated rules could produce unintended effects. If banks and payment companies treat licensed gambling as a category to avoid, rather than a sector to assess by risk, legal operators could lose access to compliant payment services while offshore operators continue using disguised or informal channels.

That is why the current dispute is less about whether the BSP should supervise payments than how precisely it should define the perimeter. Licensed operators argue that direct acquiring, merchant transparency and player-fund controls can support regulation. The risk is that enforcement tools aimed at hidden merchants sweep in visible ones, especially if “affiliates” is read broadly enough to include marketing and service providers that never touch player balances.

Channelization gains are the prize at risk

The stakes are high because the Philippines has spent the past three years trying to move online gambling from illegal offshore sites into licensed platforms. Policymakers and industry participants describe that process as channelization: making the regulated market attractive and accessible enough that players choose it over illegal alternatives. The strategy has included lower license fees, stricter registration standards, supply-chain accreditation, real-time monitoring and more aggressive blocking of illegal domains.

A recent Complete iGaming special report on proposed advertising restrictions made the channelization argument explicit. It warned that a total advertising ban could push players back to offshore sites because only licensed companies would obey the ban, while illegal operators would continue marketing through social media, mirror domains and private channels. The same logic applies to payments. If legal platforms become harder to fund, players do not necessarily stop gambling. Some migrate to operators that ask fewer questions and operate outside Philippine law. The analysis of how a total Philippines gambling ad ban could hand market share back to illegal operators underscores how quickly regulatory friction can reverse channelization gains.

The government’s own tools are strongest inside the licensed market. PAGCOR can fine operators, suspend licenses, require responsible-gaming controls, monitor wagers and compel compliance with player-protection rules. It cannot impose those obligations on an offshore site that changes domains or uses informal payment channels. Payment policy therefore affects more than transaction processing. It influences whether gambling activity remains visible to regulators or moves to places where neither PAGCOR nor the BSP has practical reach.

Operators face heavier costs and consolidation pressure

The payment debate also comes as licensed operators face new commercial pressure under PAGCOR’s evolving framework. A moratorium on new Gaming System Administrator applications since March 2024 has made existing accreditations more valuable, but also more burdensome. PAGCOR’s minimum guaranteed fee structure means licensed companies can no longer remain dormant without cost. Operators that fail to meet revenue benchmarks still face monthly obligations, while also absorbing the expense of stronger KYC, technical controls, marketing accreditation and responsible-gaming systems.

That has encouraged consolidation and investor interest, but legal advisers have cautioned that buying a PAGCOR-accredited company is not equivalent to buying a free-standing license. Arden Consult warned that acquisitions require PAGCOR Board approval and that the regulated corporation retains liabilities tied to fees, player funds, taxes, AML compliance, penalties and supplier arrangements. Its report on why purchasing PAGCOR-accredited igaming companies is more complicated than it appears shows how much regulatory authority remains with the state, even when commercial assets change hands.

Payment restrictions could intensify that pressure. Operators already below revenue thresholds may struggle further if banks or payment providers reduce exposure to the sector. Larger platforms with stronger compliance teams may adapt, but smaller licensees could face higher costs or diminished access. In that scenario, consolidation may accelerate, not because bad actors are removed but because compliant operators cannot absorb the combined burden of fees, controls and payment uncertainty.

Advertising, affiliates and payments are converging

The BSP proposal also intersects with the changing role of affiliates and marketing partners. Across regulated markets, affiliates are no longer treated as peripheral traffic vendors. They increasingly fall inside licensing, disclosure, content and responsible-gaming rules. A feature on Latin America’s maturing affiliate market noted that affiliates in regulated jurisdictions must adapt to rules on advertising, influencer conduct and operator approval. The discussion of how to keep pace in the rapidly maturing LatAm affiliate market mirrors the Philippine challenge: marketing, payments and compliance are becoming connected parts of the regulated supply chain.

That convergence explains why the definition of “affiliates” in the BSP circular matters. An affiliate that controls deposits, wallets or settlement flows presents payment risk. A marketing partner that refers traffic but never handles player money presents a different risk. Treating both the same could deter legitimate service providers and reduce the legal market’s ability to compete for players. But leaving payment-handling intermediaries outside the rules would create a loophole. The policy challenge is to separate promotional activity from custody or movement of funds.

Industry forums are increasingly focused on that distinction. The inaugural CiG iDEA Summit in Manila, scheduled during IAG EXPO at Newport World Resorts, is being positioned around the regulatory and technological forces shaping Asia-Pacific igaming. Its sponsor announcement described a market in which compliance, payments, KYC, artificial intelligence and platform infrastructure are now central to growth. The event’s focus on the Philippines as PAGCOR implements its new framework, described in the announcement of official sponsors for the inaugural CiG iDEA Summit, reflects how quickly the country has become a test case for regulated online gambling in the region.

The policy choice is calibration, not inaction

The BSP is acting on a legitimate concern. Hidden merchant routing can undermine anti-money laundering controls, consumer protection and transaction monitoring. Direct merchant acquiring can improve accountability and make it easier to identify who is receiving funds. In a sector as sensitive as gambling, those goals align with PAGCOR’s push to formalize online play.

The risk is that a blunt approach produces the opposite result. If licensed operators are cut off or constrained while illegal operators continue using evasive payment methods, the state loses visibility, tax revenue and enforcement leverage. The Philippines’ recent experience suggests that regulated access, not prohibition alone, has moved players toward supervised platforms. The central bank’s challenge is to close payment loopholes without making the legal market less viable than the illegal one.

That balance will determine whether the circular strengthens the country’s gambling framework or adds another layer of friction that offshore operators can exploit.