REGULATORY FRAMEWORK FOR ELECTRONIC SABONG (E …

REGULATORY FRAMEWORK FOR ELECTRONIC SABONG (E-SABONG) APPROVED 10202021 of 15

REGULATORY FRAMEWORK FOR ELECTRONIC SABONG (E-SABONG)

“Sabong” or the placing of bets on live cockfighting is an established tradition in the Philippines that dates as early as three thousand (3,000) years ago. The gaming activity is essentially placing two roosters/cocks in an arena and betting on which between the two comes out victorious. Regulation of live cockfighting in cockpit arenas is regulated by the Local Government concerned. On the other hand, regulation of online sabong or E-Sabong is regulated by the Philippine Amusement and Gaming Corporation pursuant to the PAGCOR Charter which fact was clarified by the Office of the Solicitor General and the Department of Justice. By virtue of the foregoing, the following are laid down as the Regulatory Framework for E-Sabong:

I. GENERAL PROVISIONS

1. E-Sabong is defined as the online/remote or off-site wagering/betting on live cockfighting matches, events, and/or activities streamed or broadcasted live from cockpit arena/s licensed or authorized by the Local Government Units having jurisdiction thereof.

2. For treatment purposes, E-Sabong shall be considered a distinct and

independent sports betting content/ product of PAGCOR with its own regulatory framework herein after taking into account the following attributes:

a. Sabong has cultural and traditional value in the Philippines as a

national pastime leisure; b. Pool betting or pari-mutuel system of determining the payout or

dividend rate is utilized as opposed to traditional bookmaking which is generally utilized in sports betting;

c. Sabong is a recurring match with a very short interval between each fight or match as opposed to the scheduled sporting events in sports betting, e.g. basketball, football, etc.;

d. In terms of pacing, results or outcome of a sabong fight or match in general is quick and fast; and

e. In terms of the betting behavior, sabong aficionados bet and re-bet in one fight or match after the other.

3. Cockpit Owner/Operator refers to the entity owning; the rightful proprietor,

having the legal or rightful title to and has the exclusive right to hold, use, benefit from, enjoy, convey, transfer and otherwise dispose of the cockpit arena.

4. E-Sabong Operator refers to one who develops, maintains, and operates an E-Sabong betting platform or system.


5. E-Sabong betting platform or system (E-Sabong platform) refers to the system developed to allow the live streaming and/or broadcasting of cockfight feeds through the internet from an LGU-licensed cockpit arena which is then processed for wagering or betting on the outcome of each fight, match, or events; through the use of a remote device or an off-site betting station.

6. E-Sabong brand refers to the mark, tradename, logo, name, label, word,

and/or other denomination that identifies the E-Sabong service, operations, and/or system of an E-Sabong Operator.

7. PAGCOR shall license E-Sabong Operators and approve their corresponding

E-Sabong platform and brand.

8. Only a PAGCOR-accredited E-Sabong Operator with its approved E-Sabong Platform and brand is authorized to offer, activate, deploy, and/or operate E- Sabong.

II. LICENSING OF E-SABONG OPERATORS

1. The Applicant must submit a Letter of Intent (LOI) addressed to the Chairman and CEO of PAGCOR.

2. Only corporations duly registered with the Securities and Exchange

Commission (SEC) may apply as an E-Sabong Operator, referred herein as the Applicant.

3. The Applicant must pass PAGCOR’s standard probity check for gaming

operator suitability and comply with all documentary and system requirements.

4. The E-Sabong Licensing Department (ESLD) shall process all applications for licensing as an E-Sabong Operator.

5. The Applicant shall submit a duly filled-out E-Sabong Operator Registration

Form – Application for License (ES Form No. 1) together with the following requirements:

A. Company-related requirements:

i. Company profile; ii. Detailed location sketch of company office; iii. Copy of Registration Certificate from Securities and Exchange

Commission (SEC) with required capitalization of 50 Million Pesos authorized capital stocks and 12.5 Million Pesos paid-up capital;

iv. Articles of Incorporation, By-laws duly approved by the SEC; v. Latest General Information Sheet (GIS) duly filed with SEC; vi. Photocopy of the following documents:

a. Mayor’s Permit/Business Permit/Municipal License for the relevant gaming activities from the location of the company office;


b. BIR Registration Certificate; B. E-Sabong system and business-related requirements:

i. E-Sabong Platform Documentations, i.e. website and/or desktop or

mobile application documents indicating, among others, the main functions, web design and contents, accounting documents and other salient details

ii. Certification from an independent gaming laboratory certifying that the betting system of the Applicant’s E-Sabong platform was extensively tested and has been found compliant with the following standards:

a. All data are captured, accounted and reported by the system; and,

b. Game is fair, secure and able to be audited and operated correctly. Note: The above certification is required to be submitted three (3) months after the commencement of live commercial operations.

iii. Detailed location sketch of the base of operations. iv. List of contracted local government unit (LGU)-licensed cockpit

arena/s; v. Mayor’s Permit/Business Permit/Municipal License of the cockpit

arenas/venues where the E-Sabong feeds will be coming from; vi. Letter of No Objection (LONO), in any form, interposing no

objection to the conduct of sabong operations in said cock-pit arenas/venues and the taking and broadcasting of feeds therefrom;

vii. Certification from an independent gaming laboratory attesting to Internet Protocol (IP) blocking of all other IP addresses excluding Philippine IP addresses excluding the Philippine IP addresses designated by the applicant. Note: The above certification is required to be submitted three (3) months after the commencement of live commercial operations.

C. Payment of the non-refundable Application Fee based on the license

validity applied for as follows:

License Validity Application Fee

3 years Php 2,500,000.00

10 years Php 8,300,000.00

III. E-SABONG PLATFORM REQUIREMENTS AND STANDARDS

1. The Applicant’s gaming protocols must comply with minimum requirements and standards provided set forth hereunder.

2. The E-Sabong platform shall not accept bets emanating outside the Philippines

and shall not be accessible in any way whatsoever outside the Philippines. 3. The proposed E-Sabong system or service must comply with the following

standards:


A. Player Registration

The E-Sabong system’s player registration or Know Your Customer (KYC) process must have the following minimum capabilities and/or functionalities:

i. Requires the prospective Player to submit his/her Full Name, Date of Birth, Contact Number, Current Address, Nationality, Occupation and/or Source of Income. Only persons twenty-one (21) years of age and above shall be allowed to register.

ii. Requires the prospective Player to submit a recent photo of himself/herself;

iii. Requires the prospective Player to submit a copy of one valid government-issued ID (Driver’s License, Passport, SSS, TIN ID, Postal ID, Voters ID, UMID, etc.);

iv. With a verification process, for those applying through an online facility, where video calling is utilized to verify and confirm the identity and the submitted information and IDs of the player prior to confirmations of his/her account. Said verification process must utilize PAGCOR’s National Database of Restricted Persons (NDRP) where persons listed therein shall not be registered;

v. A registered player shall only have one (1) account per E- Sabong brand or service.

vi. Prior to account confirmation, each player must read and accept the Terms of Use of the E-Sabong service. Each operator shall submit its respective E-Sabong Terms of Use and must be approved by ESLD prior to implementation in the E-Sabong platform. A Player’s violation of any provisions of the Terms of Use shall be a ground for the cancellation of his/her E-Sabong account.

B. Account Funding and Withdrawal

i. Account Funding and Withdrawal shall be done only through

AMLC-compliant channels, such as over-the-counter and online banking, eWallet systems, and through other legitimate money transfer services. Only those payment solutions or money transfer services accredited by the Banko Sentral ng Pilipinas shall be considered legitimate and shall be utilized under this framework.

ii. For the above purpose, the E-Sabong Operator and its

authorized agents/coordinators shall regularly submit an updated list of all accounts they are using in receiving bets from its players. They shall likewise ensure, that their players may only place bets, collect their winnings or withdraw their betting credits, through an account duly registered with them and only under the name of the registered player.

Funding, withdrawals, and transfers from and to an account


other than these registered accounts are hereby strictly prohibited

iii. For proper monitoring, the E-Sabong Platform shall be required to be integrated with PAGCOR’s third party audit platform.

C. Membership Verification and Monitoring

The E-Sabong system shall have the capability to ensure that only the registered player is using his/her account to bet on E-Sabong. Hence, either of the following functionalities for membership verification must be implemented in the platform:

i. Video calling prior to log-in ii. Biometrics verification

a. Facial verification; b. Fingerprint scanning; or, c. Iris scanning.

iii. OTP Verification where the system sends a randomly- generated one-time-PIN (OTP) to the registered number of the player which must be inputted by the player to allow access to the platform.

D. Minimum Buy-in and Betting Limits

i. The Player’s initial minimum buy-in/deposit/top-up amount

shall be PhP1,000.00. This minimum buy-in/deposit/top-up requirement shall be maintained for thirty (30) days.

ii. Minimum Bet shall be PhP100.00 per fight.

E. Responsible Gaming

i. The E-Sabong platform must show an infographics or short video clip to the player upon log-in which must discuss the responsible gaming reminders of PAGCOR including the prohibition to play in open and public places.

IV. COMMENCEMENT OF OPERATIONS

1. Once the application is Board-approved, the applicant shall now be regarded as a licensed E-Sabong Operator whereby it shall be issued a License Certificate.

The applicant may opt to apply for a license with a validity of 3 years or 10 years.

A licensed E-Sabong Operator may also opt to increase its existing license validity from 3 years to 10 years through payment of the corresponding application fee less the remitted amount for the initial validity term.


2. The PAGCOR Inspection Team shall then conduct a site inspection of the Applicant’s office/s and all its related facilities, whether owned or outsourced, and testing of the E-Sabong platform, from its player registration up to income reporting, to determine the compliance of its system with the regulations and its capability and readiness to fulfill the prescribed scope of service. The E- Sabong Platform is required to be integrated with PAGCOR’s third party audit platform.

3. Only upon consolidated satisfactory results of the inspection and testing shall the Applicant be informed and instructed to post the required PhP75M Performance Cash Bond. Thereafter ESLD shall issue a Notice to Commence E-Sabong Operations.

4. The operator shall strictly ensure that bets emanating from outside Philippine

Territory shall not be allowed and that streaming feeds for E-Sabong shall strictly be sourced live from invitational cockfighting derbies held in the Philippines and only from cock-pit arenas/venues duly licensed by the LGUs and registered with PAGCOR.

V. FINANCIAL CONSIDERATIONS AND OBLIGATIONS

1. The E-Sabong system may implement pool betting or pari-mutuel and/or bookmaking in determining the payout or dividend rate for each of the bet options. Provided, that should the system implement a pari-mutuel system, the Plasada/Commission rate must not exceed 8.00% of the Gross/Total Bets.

2. The Plasada/Commission is subject to 5% Franchise Tax (FT) which shall be

remitted by the operator to the Bureau of Internal Revenue.

3. The E-Sabong Operator, by virtue of the license granted herein, shall initially be charged with a fixed regulatory fee in the amount of PhP12,500 per fight or a minimum guaranteed fee of PhP75,000,000 per month, whichever is higher. This shall be paid within five (5) days from the end of every month and will be in effect until the implementation of PAGCOR’s third party audit platform.

Cancelled fights or fights resulting to a draw or any other analogous circumstances where there is no declared winner, shall not be included in the count of fights for purposed of computing the regulatory fee.

CMED for I-Gaming will be in-charge of checking and validating the actual number of fights offered for betting by the operator per day.

4. Failure to remit the amounts due to PAGCOR on time shall result in surcharge

penalty of one percent (1%) of the amount due on all remittances made after the prescribed remittance schedule up to the time of payment, prorated on a daily basis.


5. All costs that an E-Sabong operator incurred whether essential and/or incidental for the operation of the E-Sabong platform, must be shouldered by them.

6. All claims by any contractee of the E-Sabong operator or by a third-party shall

be shouldered by the operator and the latter shall hold PAGCOR free from all claims and obligations.

7. The table below is the schedule of fees that will govern the operations of E- Sabong:

Application Fee for three (3) years Php 2,500,000.00 (non-refundable)

Application Fee for ten (10) years Php 8,300,000.00 (non-refundable)

Printing of License Php 10,000.00

Re-printing of License Php 5,000.00

Certified True Copy of License *Request for CTCs should be for valid reasons only so as to prevent misuse of the PAGCOR License.

Php 1,000.00

Renewal Fee for three (3) years Php 2,500,000.00

Renewal Fee for ten (10) years Php 8,300,000. 00

Performance Cash Bond Php 75,000,000.00

Monthly Guaranteed Fee Php 75,000,000.00

Fixed Regulatory Fee Php 12,500.00 per fight

Additional E-Sabong Platform/System/Brand

Php 500,000.00

VI. MISCELLANEOUS PROVISIONS

1. The regulations herein are designed specifically for online E-Sabong. However, if the E-Sabong operator desires to establish off-site E-Sabong betting stations, it must comply with the requirements of and is subject to the Gaming Site Regulatory Manual for Electronic Games, except as regards the minimum number of terminals and spacing requirements.

2. As a licensed E-Sabong operator, it is allowed to develop, operate and maintain its one (1) registered and approved E-Sabong Platform/System/Brand. Any additional E-Sabong Platform/System/Brand that it desires to operate shall be subject to evaluation by ESLD with corresponding registration and approval fee in the amount PhP500,000.00 and be separately subjected to the MGF.

3. The E-Sabong operator must submit monthly to CMED for I-Gaming its list of newly registered players.

4. The E-Sabong operator must maintain in its records the files including the copies of IDs of its players for PAGCOR’s use upon demand.

5. Operations shall be monitored by CMED for I-Gaming, as well as operations


at the source, i.e. at the registered cock-pit arenas without prejudice to the guidelines and requirements of the concerned LGU. The CMED for I-Gaming, together with PAGCOR’s third-party audit platform, must continuously monitor and ensure that the E-Sabong platform captures all data, and properly accounts and reports the same. For this purpose, the CMED shall create its own Implementing Rules and Guidelines for the proper monitoring of E- Sabong.

6. The E-Sabong operator shall design and implement a registration process for its agents, coordinators, or promoters to ensure the identity, probity, as well as the responsibility and accountability of the latter.

7. The E-Sabong operator shall maintain in its records the files, the application and contracts, including the copies of IDs of its active agents, coordinators, or promoters for PAGCOR’s use upon demand.

8. The E-Sabong operator shall submit to ESLD the updated list of all its currently

accredited agents, coordinators, or promoters with their complete names and addressed in CSV or Excel format.

9. The E-Sabong operator shall subsequently submit a list of newly accredited

agents with their complete names and addressed in CSV or Excel format daily.

10. All acts including violations with rules and guidelines by the agents, coordinators, promoters, etc. shall be attributed to the principal E-Sabong operator and both parties may be jointly and severally liable.

11. The E-Sabong operator shall comply with all Anti-Money Laundering and

Countering the Financing of Terrorism (AML/CFT) Laws, and Rules and Regulations issued and shall be issued by the Anti-Money Laundering Council (AMLA), PAGCOR, and other relevant government agencies, including but not limited to, Republic Act No. (RA) 10927, an Act Designating Casinos as Covered Persons under RA 9160, as amended, and its Casino Implementing Rules and Regulations; AML/CFT Guidelines for Casinos; and Customer Due Diligence Guidelines for Land-based Casinos.

12. Any misrepresentation, breach and/or circumvention, directly or indirectly, of

any of the conditions set in this regulatory framework for E-Sabong, any other relevant communication or memorandum issued by PAGCOR, and/or any law, local or national, of the Philippines shall be sufficient ground for the immediate blacklisting of the erring E-Sabong operator and shall be cause for the imposition of suspension, penalties, and revocation of the operator’s license.

13. To ensure the compliance with the Regulatory Framework for E-Sabong,

Regulatory Framework for E-Sabong Auxiliary Operations (ESAO), Regulatory Framework for ESabong Off-Cockpit Betting Stations (OCBS), and other lawful orders of PAGCOR, the following demerits and administrative penalties shall be imposed accordingly.


A. Table of Offenses

VIOLATION DEMERIT POINTS

ADMINISTRATIVE PENALTIES

1ST COMMISSION

2ND COMMISSION

CONTINUED NON-COMPLIANCE

1.

Conviction of an offense in violation of anti-gambling laws of the Philippines.

-

Upon commission of such violations, the following shall be imposed: - Forfeiture of Performance Bond in favor of PAGCOR; and - Cancellation of the E-Sabong Operations License

2.

Conviction of an offense involving perpetuating an investment scheme, defrauding the public, bribery of public officials, estafa, and other similar or analogous offenses that will affect the gaming industry and to the detriment of PAGCOR.

-

3.

Obtainment of License by a materially false or misleading misrepresentation.

-

4.

Falsification of documents/ requirements submitted to PAGCOR.

-

5.

Employment of personnel below 21 years old

20 Notice of Demerit

and warning Suspension of

operations

Cancellation of the E-Sabong

Operations License


6.

Noncompliance/ nonconformity to E-Sabong Regulatory Manual, Implementing Rules and Guidelines, and other subsequent orders issued by PAGCOR.



operations


Operations License

7.

Failure to prevent minors, and those prohibited by law to participate in its E-Sabong operations.



operations


Operations License

8.

Failure to cooperate with PAGCOR- accredited probity checker, Gaming Laboratory and/or third-party audit platform



operations


Operations License

9.

Failure or refusal to cooperate with the PAGCOR Inspection Team for the inspection of their premises, machines and equipment



operations


Operations License

10.

Failure to remit monthly financial obligations due to PAGCOR



operations


Operations License


for two (2) consecutive months.

11.

Failure to declare a website, platform, and/or brand.



operations


Operations License

12.

Using registered E-Sabong websites to offer other games other than E-sabong



operations


Operations License

13.

Failure to declare an E-Sabong Auxiliary Operations



operations


Operations License

14.

Failure to declare an Off-Cockpit Betting Station



operations


Operations License

15.

Failure to settle applicable fees as reflected 20

Notice of Demerit and warning

Suspension of operations


Operations License

16.

Failure to reply and resolve complaints filed by players within 5 days from receipt of the operator or endorsement by ELSD to the operator

5 Notice of Demerit


operations


Operations License

17.

Failure to provide PAGCOR with remote access to operational data



operations


Operations License


18.

Failure to submit updated names of players and agents/coordinators.



operations


Operations License

19.

Operating E-Sabong websites, E-Sabong Auxiliary Operations, and/or Off-Cockpit Betting Stations prior to issuance of Notice to Commence, approval, and/or accreditation



operations


Operations License

20.

Failure to replenish Performance Cash Bond within 15 days from notice



operations


Operations License

B. Assessment of Demerits and Penalties

1. Based on the nature of offense, each offense will correspond to demerits

with equivalent monetary penalties. Each demerit point is equivalent to

TEN THOUSAND PESOS (P10,000.00).

2. The corresponding monetary penalties will be collected from the licensed

E-Sabong Operator and/or Off-Cockpit Betting Host, or may be deducted

from the posted Performance Cash Bond, as applicable.

3. All licensed E-Sabong Operator and/or Off-Cockpit Betting Host will each

be given 1,000 merits at the start of their license/accreditation/renewal

year.

4. Demerits incurred through-out the three-year license/accreditation validity

will be recorded and notwithstanding the imposition of penalties and

payment of fines, demerit points will still be taken into consideration in the

renewal of license or accreditation.


5. ELSD shall issue a Notice of Demerit to the licensed E-Sabong Operator

and/or OCBS Host upon commission of the offense and the

corresponding demerit points. The ELSD shall likewise inform the

licensed E-Sabong Operator and/or OCBS Host of its remaining merit

points.

6. For collection of the corresponding cash penalty, the following shall

apply:

a. All licensed E-Sabong Operator and/or Off-Cockpit Betting Host

shall immediately settle monetary penalties within 15 days from

receipt of Notice of Demerits.

b. Should the licensed E-Sabong Operator and/or Off-Cockpit Betting

Host fail to settle its monetary penalties pursuant to above item

(a), all unpaid monetary penalties incurred at the end of the

license/accreditation validity shall be assessed and deducted from

the Performance Cash Bond.

If the Performance Cash Bond is insufficient to cover for the cash penalty and other arrears, the total amount of the cash penalty shall be collected directly from the licensed E-Sabong Operator and/or Off-Cockpit Betting Host. Otherwise, application for renewal of license shall be deferred.

7. At the end of their respective license/accreditation/ renewal year, licensed

E-Sabong Operator and/or Off-Cockpit Betting Host with 1001 demerit

points and higher will not be eligible to renew their E-Sabong operations

license/ accreditation.

8. For those licensed E-Sabong Operator and/or Off-Cockpit Betting Host

who are eligible to apply for the renewal of their E-Sabong operations

license/accreditation, application is subject to payment of arrears and

settlement of financial obligations, to include cash penalty for demerits.

9. Upon cancellation of the E-Sabong operations license/accreditation,

demerits incurred shall be deducted from the Performance Cash Bond. If

the Performance Cash Bond is found to be insufficient to cover for all

financial obligations due to PAGCOR, the licensed E-Sabong Operator

and/or Off-Cockpit Betting Host must settle the remaining balance

immediately.

10. In case of forfeiture of the Performance Cash Bond as a result of non-

payment of financial obligations, demerits, and other analogous cases,

the licensed E-Sabong Operator shall be required to replenish the

Seventy-five Million Pesos Performance Cash Bond (Php75,000,000.00)


plus an additional Ten Million Pesos (Php10,000,000.00) for each time

the Performance Cash Bond is ordered forfeited in full.

11. Whenever monetary penalties are deducted against the Performance

Cash Bond, the licensed E-Sabong Operator and/or Off-Cockpit Betting

Host are required to replenish them same within 15 days from notice.

12. Monitoring and recording of demerits shall be the responsibility of the

ESLD- CRGAD.

13. ELSD may issue additional list of offenses with corresponding penalties,

as deemed necessary.

C. Suspension and Cancellation of License/ Accreditation

1. The penalty of suspension or cancellation shall be by written notice given

to the licensed E-Sabong Operator and/or an OCBS Host and shall take

effect upon receipt, or tender if the licensed E-Sabong Operator and/or

an OCBS Host refuses receipt of otherwise cannot be served notice.

2. For cases when the Board cancels the E-Sabong Operations License of

the E-Sabong Operator or the Certificate of Accreditation of the OCBS

Host, and orders the closure of the site and cessation of the E-sabong

operations, the following shall apply:

a. The licensed E-Sabong Operator and/or Off-Cockpit Betting Host

shall be banned from re-applying with ESLD for a period of one (1)

year from the date the license/accreditation cancellation except in

cases of voluntary cancellation;

b. The original certificate/s issued to the licensed E-Sabong Operator

and/or Off-Cockpit Betting Host must be surrendered to ELSD

immediately upon cancellation;

c. Performance bond shall be forfeited in favor of PAGCOR, if the

ground for cancellation so warrants; and

d. E-Sabong Operator will be required to pay other outstanding

financial obligation due to PAGCOR.

D. Motion for Reconsideration on Cancellation of License/Accreditation

1. For cases when the licensed E-Sabong Operator and/or Off-Cockpit

Betting Host files a Motion for Reconsideration on the cancellation of the

previously granted license/accreditation, operations shall remain

suspended pending decision of the Board, unless otherwise ordered.


2. In meritorious cases when the Board grants the request for

reconsideration, the licensed E-Sabong Operator and/or Off-Cockpit

Betting Host shall resume its operations only upon issuance by ESLD of

Notice to Resume E-Sabong Operations.

14. The above are general provisions regulating PAGCOR’s E-Sabong gaming

product which are still subject to continuous review and to changes, revisions, modifications, or amendments from time to time, as the case may be, considering the novelty of the gaming product and the rapid changes in technology that require to be updated.

15. Finally, this regulatory framework shall repeal previous issuances the

independent provisions of which are inconsistent with the same.

-o0o-

In God We Trust.

REGULATORY FRAMEWORK FOR ELECTRONIC SABONG (E …

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