SUMMARY OF THE BILL

Remote gambling is set to be regulated in Singapore, once a draft Remote Gambling Bill tabled recently in Parliament is passed. The Bill, which is the result of a study by the Ministry of Home Affairs (MHA) of regulatory approaches in other jurisdictions, as well as a public consultation with various stakeholders, aims to plug the regulatory lacuna created by Singapore’s pre-internet era gambling legislation. Its purpose is to maintain law and order and protect youths and other vulnerable persons from being harmed or exploited by remote gambling.

The Bill will prohibit all forms of remote gambling activity  unless specifically exempted, including gambling remotely, facilitating others to do so, transmitting and receiving bets and providing remote gambling services. It aims to target all participants in remote gambling activity, from the gambler to the betting agent to the operator. “Remote gambling” is widely defined by the Bill as gambling via the internet, telephone or any other platform that facilitates gambling. Liability will attach as long as part of the gambling activity takes place in Singapore, regardless of the location of the remote gambling operator or the placement of the bet.

The Bill’s definition of “gambling” is also very broad, encompassing  all forms of betting, gaming and participation in lotteries. In line with the MHA’s concerns that social gaming has the potential to “groom” younger players into future gamblers by desensitizing them to the pitfalls of gambling, games of chance which give players the opportunity to win any money or money’s worth are prohibited, even if such games do not present players with a risk of losing anything.

The Bill also provides powers to implement website access and payment blocking, and also makes it an offence to advertise or promote any form of remote gambling activity. Furthermore, the Bill seeks to further its objective of protecting youths  by mandating  rigorous penalties for  the offences of employing young persons (under 21 years of age) in remote gambling activities and inviting young persons to gamble remotely.

However, the Bill provides for a tightly controlled exemption regime. Gambling operators can apply for a certificate of exemption which the Government will grant if it considers such an exemption to be “in the public interest”. Criteria that applicants must meet include being a non- profit Singapore-based entity, contribution to social or charitable causes in Singapore and having a good track record of compliance with Singapore’s legal and regulatory requirements. The Singapore Turf Club, Singapore’s only authorised operator of horse racing and totalisator services, has announced that it will apply for a certificate of exemption.

PROS AND CONS OF REGULATION

As Singapore gears up to regulate remote gambling, an analysis of the efficacy of regulation is pertinent. Besides basic questions like whether winnings from remote gambling should be taxed and whether age- verification systems deployed by gambling websites are effective in keeping minors out, legalising remote gambling brings with it a whole host of issues.

First and foremost is the difficulty of actually regulating an entity as dynamic and penumbral as the internet. It will be a potentially impossible task to enforce the closure or sanction of unlicensed operators as these operators can simply change their URLs to avoid detection. Further, existing technologies are available for parties to use proxy servers to hid their URL access rights which may make detection difficult.

Secondly, financial institutions in Singapore will have to undertake additional compliance costs in identifying and blocking the processing of remote gambling transactions involving unlicensed remote gambling operators upon the directive of the Monetary Authority of Singapore or the regulatory agency that is to be set up. The Association of Banks in Singapore has already voiced its concerns regarding “undue regulatory and operational burdens” on the banking industry. Furthermore, measures taken by other jurisdictions to block financial transactions involving remote gambling operators have been bypassed through the use of unregulated foreign payment service providers.

Thirdly, policing the internet would be a gargantuan task for the new regulator to constantly monitor the proliferation of new gambling sites mushrooming regularly around the world. It appears that the Bill attempts to ban such sites upon complaints being filed or if the new regulator will on its own volition check out these sites to ban. Will this lead to a selective approach to ban only the aggressive sites that target Singapore residents as one could imagine the tremendous resources that would be required to regulate such gambling sites.

Current legislation would have to be amended for remote gambling debts to be enforceable. Under the Civil Law Act, no action lies in Singapore to recover any sum of money won on a wagering contract, save for narrow exceptions made for debts incurred in Singapore casinos.

It would be interesting to watch if social games which also reward players for their skill in games would be banned as well. The Bill prohibits all games of chance and treats them as gambling. Social games that are part skill and part chance may be caught in the quagmire of whether they will be banned. Many of these social games involve multiplayer platform games which although have a high element of skill involved may also

involve some element of luck. The Government has expended considerable resources in bolstering Singapore’s gaming ecosystem. For example, the Infocomm Development Authority aims to establish Singapore as the leading regional centre for developing and distributing games, and has set up several programs in furtherance of this purpose. The Media Development Authority also provides grants to gaming companies to develop ideas into game design. Given that the Bill considers games of chance which afford players an opportunity to win virtual objects that are purchasable in-game to be gambling, even if there is no possibility of losing anything in such games, it might undermine the efficacy of the aforementioned initiatives and result in a clash of policies.

It is not all doom and gloom however. Having a tightly-controlled exemption regime in place would provide a safe environment for gamblers to indulge their impulses, allowing the Government to minimise the social impact of remote gambling. Another important benefit of regulating remote gambling is the immense tax revenue that would accrue. Indeed, lost tax revenue is one of the main considerations behind gambling legislation reform in jurisdictions such as the United States and Australia. The Hong Kong Jockey Club is an example of the tax benefits that can come with regulation, being the single largest taxpayer in Hong Kong and providing funds for many social services.

CONCLUSION

It remains to be seen how effective the Bill will be in practice. However, even if it does not provide a foolproof method of preventing access to remote gambling, the Bill serves as a symbol of the Government’s intolerance of remote gambling and an indication of its commitment towards curbing such activities. In  particular, it is  likely that blocking payments, the lifeblood of the gambling industry, will serve as a potent deterrent for international remote gambling operators who would otherwise target the Singapore market.