CEZA denies authorizing Jack Lam's online gambling operations

The Cagayan Economic Zone Authority on Friday denied that it authorized the online gambling operations of Chinese businessman Jack Lam or any other companies in the country.

"CEZA is not authorized to issue licenses and/or accreditations to companies that intend to operate within the Clark Freeport," CEZA said in an emailed statement.

CEZA issued the statement after the Philippine Amusement and Gaming Corporation (PAGCOR) said "the government has been losing at least P6 billion annually from unregulated online gaming franchises granted by CEZA such as the shuttered operations of fugitive Jack Lam."

CEZA is the operator of Cagayan Special Economic Zone and Freeport and is independent of PAGCOR. 

Under Republic Act 7922, CEZA can "operate on its own, either directly or through a subsidiary entity, or license to others, tourism-related activities, including games, amusements, recreational and sports facilities" within the Cagayan freeport. 

CEZA, meanwhile, stated that it only charges hosting fee of 2 percent of the gross wins of foreign companies which tap local operators.

It cited that the alleged P6-billion revenue was "exaggerated" and "would not be viable in a 10-year span." 

"The supposed P6 billion annual revenue is exaggerated. If we are to check our facts, a research made by H2 Gambling Capital revealed that the whole Asian and Middle East market for online gaming in 2015 was just P136 billion," CEZA said.

"The market share of CEZA in the industry was just 55 percent, which amounts to P74.8 billion. From this amout, CEZA charges a hosting fee of 2 percent, which based on this figure, would amount to P1.496 billion," it added.

It also contested the claim of PAGCOR chairperson Andrea Domingo at the Senate hearing on Thursday that the government "should have collected roughly P60 billion in revenues from 84 licensees of CEZA in the last 10 years."

"P60 billion is too big an amount, even for CEZA, which is the pioneering online gaming jurisdiction," CEZA said.

It also clarified that they have a different structure from PAGCOR.

"Unlike PAGCOR's land-based casino and e-gaming operations, there are no actual bets or gaming transactions that enter the Philippines under CEZA's local gaming support service locators," CEZA said.

It added that they have been consistent in paying taxes and in remitting dividends. CEZA disclosed that half of its P4 billion earnings from 2005 to 2016 was remitted to the government.

"In the last five years, CEZA has become a consistent top taxpayer in Region II and a consistent dividends remitter. A big percentage of the multi-billion-peso revenue that CEZA has remitted to the national coffer came from the 2-percent hosting fee that CEZA has collected from the online-gaming industry," CEZA said.

"These government entities, including CEZA, are meant to work together, not to compete against each other, to generate billions of revenues from the online gaming industry," it added.

Philippine National Police chief Director General Ronald dela Rosa last February declared an all-out-war against illegal gambling. 

President Rodrigo Duterte signed on February 2 Executive Order No. 13 -- "Strengthening the Fight Against Illegal Gambling and Clarifying the Jurisdiction and Authority of Concerned Agencies in the Regulation and Licensing of Gambling and Online Gaming Facilities, and Other Purposes.” 

Law enforcement agencies were directed to end illegal gambling activities. —Marlly Rome C. Bondoc/KG, GMA News