Analyst fears grow over Asia online gambling clampdown
Operators and suppliers at risk as Chinese officials initiate crackdown in the Philippines
Asia-facing gambling firms could face further headwinds following the Chinese government’s latest clampdown on online gaming, multiple industry analysts have said.
According to Chinese state newspaper Global Times, Chinese officials have ramped up their efforts to combat online gambling operations in the Philippines and other neighbouring countries.
Last week saw the closure of one of the Philippines’ biggest online gambling business process outsourcings (BPO) over alleged tax irregularities, with 8,000 jobs lost locally.
Cambodia, Myanmar and Laos are also thought to have been working closely with the Chinese government to crack down on overseas internet crimes.
Analyst firm Regulus Partners warned operators active in the region that this potential spike in enforcement action could spell trouble.
“This escalation, if we are right that it is now occurring beyond sabre rattling, matters on several levels,” said analyst Paul Leyland.
“First, it affects a relatively large number of operators and suppliers and second, it potentially significantly affects the relative probity of regional operators.
“Third, it could have an impact on licensing elsewhere: so far there has been a helpful firewall between Asian and ‘Western’ activity, but it might become part of Chinese policy to break this down.
“Finally, growth in the region is something that many operators are keen to benefit from: while undoubtedly operationally compelling but far from simple, they should probably tread very carefully.”
Online gambling suppliers are among the most exposed to the crackdown. Numis analyst Richard Stuber forecasts Playtech’s FY19 revenue from Asia at €115m, below previous guidance of €150m.
Playtech is thought to generate almost 20% of its core B2B gaming revenues from Asia and increased enforcement could be a material threat to earnings for the London-listed giant.
However, the firm is understood to be relatively unconcerned by the developments and is licensed in the Philippines, potentially making it less at-risk than some rivals.
Evolution Gaming could also be at risk, with some analysts estimating that between 35-40% of the live casino supplier’s EBIT comes from Asia.