Philippine lawmaker suggests raising tax on online gaming companies

Kelsey Wilhelm

5 August 2026 at 8:25am UTC-4

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A Philippine lawmaker has suggested raising taxes on online gaming companies in the country to offset other corporate tax exemptions and relief.

According to the Inquirer, Lapu-Lapu City district Representative Junard Chan suggested the move during a House Ways and Means Committee meeting on Tuesday.

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The politician reportedly asked “Are there ways of raising revenues that would have less impact on the daily cost of living for ordinary Filipinos? For example, I understand that online gaming is already being taxed. But did the department study whether those taxes can still be increased?”

The lawmaker further justified the idea by noting that imposing higher taxes is also a way of discouraging “activities that may have negative social consequences,” citing gambling addiction risks.

A Department of Finance official indicated that the authority “is closely listening to any proposal from Congress, particularly on the revenue-generating side. We will study all of these proposals and consider them.”

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The proposal comes despite a stark 41.9% yearly fall in PAGCOR’s 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 and an overall drop in PAGCOR gaming operations of 21.7% yearly, to Php38.9 billion (US$640 million)1 PHP = 0.0165 USD
2026-08-05Powered by CMG CurrenShift.

It also comes as authorities implement stricter measures on the sector, including increased advertising rules and player verification measures, and a Minimum Guaranteed Fee levy that came into effect just on 1 August.

Philippine online gaming operators have lamented previous increases, pointing to the drop in overall disposable income due to global conflicts and escalating fuel prices. DigiPlus recently reported a 9% quarterly drop in gross gaming revenue in 2Q26, to Php15.61 billion (US$257 million)1 PHP = 0.0165 USD
2026-08-05Powered by CMG CurrenShift, citing higher customer acquisition costs and broader economic conditions that affected player spending.

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The Backstory

From revenue engine to tax target

The proposal to raise taxes on Philippine online gaming companies lands at a turning point for a sector that only recently was being credited with powering record government revenue. Domestic e-games and e-bingo helped Philippine gaming regulator PAGCOR post an all-time high in 2024, when the agency reported Php112 billion, or about US$1.92 billion, in revenue. That performance was driven by the rapid expansion of regulated digital gaming, which PAGCOR said accounted for half of gaming revenue that year.

The 2024 results helped establish online gaming as a central pillar of PAGCOR’s fiscal role. The regulator’s contribution to nation-building rose to Php68.2 billion, including payments to the National Treasury, taxes, sports funding and socio-civic programs. At the time, PAGCOR Chairman and CEO Alejandro H. Tengco framed the e-games boom as proof that digital platforms were transforming the industry and expanding the state’s revenue base.

That growth also made the sector more visible politically. As lawmakers look for revenue sources that do not directly raise household costs, online gaming presents an obvious target: profitable, already taxed and socially sensitive. The current tax discussion reflects that shift. What had been promoted as a regulated growth story is now being weighed as a potential fiscal buffer and a tool to discourage activity viewed as carrying addiction and consumer-protection risks.

A regulatory reset changed the market’s trajectory

The latest debate cannot be separated from PAGCOR’s earlier effort to pull more operators and players into the legal market. Tengco’s administration cut electronic gaming license fees from above 50% to 35% in April 2024, then to 30% in January 2025. Operators with a land-based component saw their rate fall to 25%. The policy was designed to make legal participation more attractive and reduce the advantage of unlicensed competitors.

That approach worked in headline terms. Electronic gaming gross gaming revenue reached Php114.83 billion in the first half of 2025, making it the largest component of Philippine gaming revenue. But the strategy also set up the next phase: once the licensed market reached scale, regulators began tightening the standards operators had to meet.

Arden Consult described the process as a two-step transition in which PAGCOR first created incentives to operate legally, then raised compliance expectations. In its analysis of the decline in Philippine online gaming revenue as part of a longer-term stabilization process, the firm argued that the market’s contraction should not automatically be read as deterioration. A smaller regulated market, it said, could be healthier if weaker, passive or undercapitalized licensees exit and stronger operators remain.

That context matters for the tax proposal. Higher taxes would come on top of a broader reset already reshaping operator economics through stricter advertising rules, player-verification requirements, accreditation obligations for suppliers, enforcement against illegal websites and a Minimum Guaranteed Fee that took effect Aug. 1.

The e-wallet shock exposed dependence on frictionless payments

The fiscal backdrop has deteriorated sharply. PAGCOR’s first-half 2026 figures showed how quickly the online segment’s contribution can reverse when regulation and payment access change. As reported by Inside Asian Gaming, PAGCOR’s total revenue fell 26.6% year-on-year to Php43.3 billion in the first half, after a record Php59.1 billion in the same period of 2025.

The most significant fall came from the digital segment. Revenue from eGames, eBingo and bingo grantees dropped 41.9% to Php18.6 billion, driving a wider 21.7% decline in PAGCOR gaming operations to Php38.9 billion. Licensed casinos also weakened, but by a far smaller 3.85%, while PAGCOR-operated casinos fell 8.67%.

The central bank’s move to remove links to online gaming operators from e-wallets appears to have played a major role. Online gambling markets depend heavily on low-friction payments, and any break in the deposit process can reduce conversion, repeat play and customer retention. The sharp drop in PAGCOR revenue as online income fell in the first half of 2026 showed that compliance and consumer-protection measures can carry immediate fiscal costs, even when they are intended to support longer-term market integrity.

PAGCOR also cited wider economic pressure, including geopolitical tensions in the Middle East and higher fuel prices, which dampened consumer spending. Those conditions affected operators as well. DigiPlus reported a 9% quarter-on-quarter decline in gross gaming revenue in the second quarter of 2026, citing higher customer acquisition costs and weaker player spending.

Higher levies risk pushing against channelization

The central policy tension is whether the government can raise more from online gaming without making the regulated product materially less competitive than illegal alternatives. Arden Consult warned that the risk in the next phase is overcorrection. If licensed operators face high compliance costs, payment friction, advertising limits and heavier taxation while illegal sites avoid those burdens, channelization could reverse.

That warning is especially relevant because the Minimum Guaranteed Fee is still new. For e-casino operators, the first tranche sets a Php9 million minimum monthly fee, benchmarked to a minimum monthly gross gaming revenue of Php30 million. Arden said the fee did not cause the first-half decline because it was delayed until Aug. 1, but it clearly raises the cost of holding a license. The measure discourages passive license holding and rewards operators with sufficient capital, systems and compliance capacity.

A further tax increase would deepen that selection effect. Larger operators may absorb higher levies through scale, marketing efficiency and technology investment. Smaller operators may consolidate, surrender licenses or reduce spending on product and compliance. That could improve oversight if the weakest participants leave, but it also could shrink the tax base if too much legal activity migrates offshore or underground.

The government’s challenge is calibration. PAGCOR’s mandate is not only to raise revenue but also to regulate gaming and fund public programs. A heavier tax burden may satisfy short-term fiscal needs, but it could undermine the regulated ecosystem if enforcement against illegal operators and payment channels does not keep pace.

Global budget pressures are reshaping gaming policy

The Philippine discussion mirrors a broader pattern in which governments increasingly treat digital betting and gaming as flexible revenue sources during budget pressure. In the U.S., Maryland Gov. Wes Moore proposed doubling the state’s online sports betting tax rate to 30% from 15%, while also raising the table-games tax. Analysts warned that such a move could rattle operators and create a broader overhang if other states follow.

The Maryland tax hike proposal and analyst reaction underscored the same trade-off now facing the Philippines: governments can extract more from established digital gambling markets, but higher rates affect operator cash flow, investment and market behavior. The largest operators are usually best positioned to withstand the pressure, while smaller rivals face greater strain.

Other jurisdictions are still focused on legalization rather than higher taxation. In Georgia, a Senate tourism committee recently recommended legalizing mobile sports betting as part of a strategy to increase tourism-related fiscal and economic impact ahead of major events, including 2026 World Cup matches in Atlanta. The committee’s report suggested sports betting revenue could support event recruitment and marketing, drawing on examples from other states. That push for mobile sports betting in Georgia shows how gambling policy can be framed either as expansion, taxation or social control depending on a jurisdiction’s starting point.

For the Philippines, the stakes are immediate. The online sector has already proved it can generate substantial public revenue, but recent data show that revenue is sensitive to regulation, payment access and consumer conditions. Raising taxes may be politically attractive, especially when framed as both fiscal policy and harm reduction. The harder question is whether it would strengthen the regulated market or burden it at the moment it is being asked to become more compliant, better capitalized and more resilient.