A Brief Account of Indonesia’s Strong Opposition to Lottery and Gambling

indonesian gambling cultureCash lottery in Indonesia was banned several decades ago; but the availability of online lottery sites allows lottery enthusiasts to stay hopeful. Even if there’s only one in a million chance of winning the major prize money, the idea of having that chance can make people optimistic about their future. While the prohibition of lottery in Indonesia is often explained as a measure of addressing a potential and strong connection to the so-called games of chance in gambling.

Ordinarily in most countries, the federal government is in control of a nation’s lottery institution. The purpose of which is to ensure that part of revenues collected as commission will go to charities and non-profit, non-government socio-civic projects. These entities administer the funding of charitable and socio-civic endeavours like educational scholarships, medical assistance and environment protection actions.

However, in a predominantly Muslim country like Indonesia, the will of the Indonesian Muslim devotees and eminent religious leaders prevailed over the Indonesian government’s addition of lottery proceeds as a source of revenue.

A Brief Background in the Rise and Fall of Lottery in Indonesia

The demise of the lottery or togel  industry in Indonesia came around as a result of the massive riots that took place in 1974. Suharto, the second president of Indonesia was forced to issue a New Order, which introduced numerous reforms including the ban on lottery gaming in the country. The riots that took place in the country only proved that the government of Suharto did not have the ability to control the Indonesian people.

Apparently, the crisis and turmoil caused the revival of the Islamic religion as the safe and solidifying alternative solution to the riots. The growing concern among the millions of Indonesians brought together Muslims in both the urban and poor sectors, which forced the Suharto government to introduce new orders addressing the complaints of the majority of Indonesian Muslims.

indonesian Muslim LeaderComplaints about government nepotism, collusion and abuse of authority, as Suharto’s administration favored foreign investors but whose local projects were awarded exclusively to military officers; or to the minority Chinese Muslims doing business in Indonesia.

Suharto and his political allies were regarded as cultural or nominal Muslims who only identify as Muslims by birth but not religiously practising the doctrines of the Islamic faith. Yet their dominance of the country’s economy sowed deep resentment against the predominantly practising Muslim citizens of Indonesia.

While the first Indonesian president Soekarno had broken ties with the West, Suharto’s government restored the country’s alliance with major Western countries. The purpose of which was to secure foreign aid that Sukarno could use in wielding control over the people.

However, discussion of the complaints against the government and its lack of regard for Islamic laws, were taking place in mosques and incorporated in sermons. Religious leaders were careful not to speak out during demonstrations to avoid igniting sparks that will bring on more riots.

Finally, during the 1990s era, Suharto issued the set of New Orders that clearly established Islamic laws as the dominant rules and policies that must be observed by the people of the land.

Gambling Industry : A Viable Solution to Economic Recovery?

Gambling is common in all countries across the world, as each culture includes some form of gambling activity that people traditionally enjoy during gatherings. Yet in later years gambling activities began to take place in more sophisticated venues known as private rooms, salons and later in plush casinos. Although the State of Nevada was the first to establish a legal gambling industry, the U.S. does not have the largest number of gamblers nor the most steadfast gambling businesses. The countries that boast of the largest gambling markets are the United Kingdom, Australia and Canada, in that particular order.

Gambling in the United Kingdom

The UK tops the list for having the highest number of active gamblers, estimated to total 24 million adults that represent 44% of the country’s entire population. Actually, the UK gambling industry is the largest and strongest as its Gambling Act of 2005 permits gambling in any form, including online gambling and offshore betting.

In terms of economic value, the gambling industry has been good for the country as all casinos, whether land or Internet-based, pay licensing fees and taxes on gross gaming revenues. Although there is gambling addiction, it is not prevalent as only 3.1% of the country’s gamblers had experienced gambling addiction.

While there are numerous non-profit organisations that help problem gamblers overcome their addiction, the UK Gaming Commision has made it mandatory for online casinos to integrate the GamStop self-exclusion program.

Reports have it that the GamStop feature didn’t make much difference to regular casual gamblers. Yet it discouraged former, pre-pandemic land-based casino gamblers from playing at UK licensed online casinos. Many had to reference websites to look for casinos that will not consider their gambling behavior as a potential candidate for a self-exclusion program.

Gambling in Australia

Australia has the second highest number of casino gamblers, as more than 6.8 million Australians, representing 39% of the country’s population, gamble on a daily basis. Unlike in other countries, Australian gamblers do not have to pay taxes on their winnings. Moreover, although online gambling is not legal in the country, Australians can still access offshore-based online gambling sites as they are avid slot machine (pokie) abd card game players.

According to the country’s industry reports. gambling addiction is not a serious problem as only between 0.5% and 1% have experienced gambling addiction. Today, as many as 900 Australian punters have been permanently banned from entering any casino in Australia.

Gambling in Canada

Canada is another nation that is big in gambling but whose gambling industry is not federally regulated. Every Canadian province oversees the vetting, licensing and operations of offline and online casinos in their jurisdiction through their respective gambling authority.

Gamblers showing signs of addiction in every province are closely monitored, and entered into exclusion programs when deemed necessay. As a matter of fact, the overall number of gambling addicts in all provinces is said to total only 250,000, representing only 0.6% of the country’s gambling population.
It can be concluded therefore that a strong and robust gambling industry does not necessarily lead to moral turpitude in a society, As long as the gambling authorities are vigilant in protecting and helping vulnerable individuals overcome their gambling addiction.

The Importance of Korea’s Online Authentication to Its Growing eCommerce Markets

The high rate of connectivity in Korea has been instrumental in driving e-commerce growth in the country as nearly 99.5% of households have Internet access. In 2020, the ecommerce market in the Republic of Korea (ROK) became the 6th largest on a global scale, having gained as much as US$80 billion during the year. Yet the successful development of the ecommerce market was partly hinged to the effective implementation of online authentication systems.

 

Although high Internet penetration and digital technologies brought about a host of conveniences, it also enabled cyber criminals to perpetuate theft of private and confidential information, spread disinformation, launch cyber attacks, which affected many business websites.

Nevertheless, information and communication technology experts in Korea relentlessly pursued the development of measures in addressing the vulnerabilities affecting the country’s ecommerce industry.

As financial transactions and business activities continued to take place online, implementation of security measures for online authentication of identity became even more important. Moreover, access to information permitted new value creation in almost every domestic e-commerce sales, which made the sector the biggest retail channel in Korea.

However, it became apparent that establishing identity and trust online is more difficult than in an in-person environment. During the early years, cases of identity theft and unauthorized access to online platforms and data stored in the systems had hampered the growth of Korea’s ecommerce market. In response to public clamor for better and faster methods for online identity authentication and data access, the government took several trial and error steps toward developing tools and techniques for a broad and successful online authentication system.

Online Authentication System Helped Boost Online Business Operations in South Korea

Online authentication in South Korea has become a crucial security measure, not only in verifying the identity of transacting parties but also for validating the trustworthiness of the mobile online apps being accessed. Provision of the service is important in instituting consumer protection, broadening usability of online systems, encouraging digital innovations, ensuring reliability and achieving standardization.

As food and beverages are the most popular products sold via Korean e-commerce platforms, online authentication related to the processing of online food delivery orders became colloquially known as eat and run verifications. Authentication for businesses and consumers alike was critical at the height of the COVID-19 shutdowns as many relied on food delivery.

Another sector that benefited from using the eat and run verification systems is the covert online gambling industry in South Korea. Playing for real money at online casinos and wagering stakes on esports matches became more popular than ever during the pandemic outbreak.

Actually, there has been a growing number of mobile gambling app users even before the health crisis, making the online authentication service provided by private verification companies an important factor. Anyone needing 토토 검증 (Toto verification) to authenticate the genuineness and reliability of a toto (betting) mobile app can simply request an eat and run verification company to perform an online authentication.

A more straightforward method of choosing an eat and run verified online casino or toto app is to choose from the sites recommended as such by proponents of online gambling in Korea.

Although the government prohibits Korean citizens to engage in any form of online gambling, access to reliable toto sites other than the legal Toto and Proto betting outlets, is apparently an unavoidable trade off in the success of its online authentication systems.

Do Gamblers Pay Taxes on Crypto Gambling Winnings?

While many prefer to play casino games in Crypto Gambling sites because they are able to play incognito, such privilege does not include exemption from taxes. Understand that gambling in casinos that accept cryptocurrency as deposit is no different from casinos that accept fiat money.

Concealment of identity in crypto gambling applies only to the cryptocurrency transactions involving the crypto owner’s ewallet account and the ewallets of individuals or entities, as parties to crypto transactions. Staying anonymous as a crypto gambler should not be misconstrued as a way of avoiding payment of taxes on winnings. Although withdrawal of winnings collected from casinos will be paid in the same cryptocurrency that was used to place deposits, a gambler’s cryptocurrency will still be converted into fiat money for gaming and wagering purposes.

How are Taxes on Gambling Winnings Collected and Paid to Tax Bureaus

Casinos, whether land-based or online, assume the responsibility of deducting taxes on amounts paid as winnings to customers. The amounts deducted form part of the Taxes Withheld on behalf of a government’s tax collection bureau. Online casino operators therefore, have to remit to the Tax Bureau, the sum of all taxes deducted from customers’ winnings on a per month basis.

As part of withholding tax procedures, casino customers will receive a tax certificate for the amount of tax deducted from their winnings. Upon filing of individual tax returns for the year, casino customers must include information about all winnings gained from casinos or any gambling establishments. All information are to be itemized under the “Other Income” section of their tax return.

The information must also include pertinent details found in the casino-issued tax certificates. Mainly because the documents serve as proof that the gambling winnings received were already net of the taxes withheld by the gambling establishment/s.

That being the case, individuals should make sure that the casinos from whence they gained gambling winnings, must furnish them with corresponding tax certificates as proof that the taxes due, have already been withheld .Moreover, it’s also a must for individuals to keep their copies of tax certificates intact and available for presentation in case of tax audits.

How Do Tax Bureaus Monitor Compliance with Tax Collection and Tax Payment on Gambling Winnings

Understand that one of the responsibilities that gambling sites undertake as part of licensing conditions is to furnish periodic reports on winnings paid to casino customers. That way, casino operators can properly justify the amount being claimed as deductions on their gambling revenues. Tax regulators on the other hand, will use those reports in monitoring compliance with the withholding tax and remittance procedures that casinos must carry out as part of their licensing obligations.

Additionally, since all information will appear in the Tax Bureau’s centralized computer records, tax examiners will be able to verify if the individual taxpayers reported their gambling winnings as part of their income for the year. If in case, a gambler’s casino prize is non-monetary, let’s say a brand new car or a vacation package, the corresponding fair market value of the prize at the time the non-monetary item was won, will be the amount reported as “Other Income.”

The Philippine Online Gambling Industry : Is It the Best that Asia Can Offer?

While Southeast Asian countries continue to ignore Asia’s ranking as the second largest gambling market, gambling remains illegal in their jurisdictions.

Being frontrunners in technological advancements, Southeast Asian countries like Singapore, Malaysia, Thailand and Indonesia can easily hurdle the technical challenges of regulating online gambling. Yet political will seems to be the primary factor that keeps these countries opposed to the legalization of gambling.

Can the Philippines Depict the Best Example of a Sustainable Online Gambling Industry

The Philippines can be cited as the best example of how online gambling helped a country alleviate economic stresses caused by the COVID-19 pandemic. Yet the country still lacks the political will in making the online gambling industry a truly sustainable source of revenue for the Philippine government.

Prior to the pandemic, lawmakers passed tax reforms that more than doubled the tax imposed on offshore online gambling operators — from a previous 2% to the present 5%. Moreover, the reform also modified the tax base, from the previous gambling receipts net of customers’ winnings, to the straightforward gross gambling receipts regardless if portions thereof were actually paid out to winning players.

As a result, there is an ongoing exodus of offshore online gambling operators who have cancelled their accreditations. The cancellations starkly reduced the projected tax revenues that the country expects to collect at the end of year 2020.

Moreover, the Philippine government’s approach in adopting online gambling as an industry is ambivalent. Philippine Offshore Online Gambling Operators or POGOs as they are commonly known in the country, operate only as legal gambling businesses that can deploy their online casino games and sportsbook in neighboring foreign countries.

They are actually the operators of the Judi Online casino and betting sites patronized by Southeast Asian gamblers. However, POGOs are forbidden to give Filipino players access to their remote gaming websites, whether residing within the country or abroad. Mainly because online gambling is likewise illegal in the Philippines.

Moreover, POGO operations if allowed in the country will compete with the high-end, land-based casinos. That would be to the detriment of several major international hotel and resort companies who invested billions; convinced that the Philippines will be the next gambling Mecca for junket tours catering to wealthy Asian gamblers.

While junket tours are generally regarded as legal, Philippine lawmakers have held Congressional hearings because they were not aware of how junket tours work and how they can be prevented from becoming part of money laundering operations. Since revenue generation was the more important issue, the Congressional inquiry about junket tours all too soon quickly died.

The Philippine government continues to keep cordial alliance with the governments of neighboring countries due to economic ties. Yet the Philippines’ online gambling industry still remains vulnerable if Southeast governments persist in adopting measures that will prevent POGOs from accessing their communication networks, be they publicly or privately operated.

At worst, said governments may even consider imposing sanctions that could result in economic loss that is much greater than the economic benefits gained by the Philippine government.

Is POGO Good for The Philippine Economy?

The Philippine Offshore Gaming Operators a.k.a. POGO represents a contentious sector of the Philippines’ business process outsourcing (BPO) industry. Since 2016, when incumbent Phillippine President Rodrigo Duterte assumed office, POGO companies flourished and had fueled the growth of online gambling in the Asia Pacific Region.

The years thereafter had marked the phenomenal increase in participation among Asian gamblers in the world of online sports betting and casino gaming. It was noted that in 2017, global industry statistics reported that about 40 percent of the total bets wagered across all global betting sites, came from the Asian market.

Inasmuch as the foundations of the POGO outsourcing business are mainly gambling-related, the Philippine Amusement and Gaming Corp. (PAGCOR) was tasked to oversee the licensing and supervision of POGO companies. The purpose of this is to ensure that the gaming technologies, products, and gambling services offered by the POGO sector, met the global standards of fair, equitable, and responsible gambling.

Moreover, PAGCOR makes sure that the high-end land-based casino establishments of foreign investors will not suffer from stiff competition potentially posed by online gambling firms. An important licensing condition for POGO firms is to confine their outsourced gambling operations to countries outside of the Philippines.

The condition means POGO firms are barred from granting access to Filipino citizens whether residing locally or abroad, as well as to foreigners visiting the Philippines. Still, Philippine-based players are allowed to engage in online gambling, for as long as their betting or casino gaming sites are not operated by PAGCOR-licensed POGO firms.

The Magnitude of POGO Contributions in the Philippine Economy

At the height of the COVID-19 pandemic, when President Duterte ordered a lockdown on non-essential businesses, PAGCOR did its part by suspending not only land-based casino operations but also POGO operations. However, a short while later, POGO operators made an appeal to PAGCOR Chief Andrea Domingo, to allow them to continue their foreign online gambling operations, even partially.

Margarita Gutierrez, spokesperson of the Accredited Service Providers of PAGCOR (ASPAP) had presented compelling arguments. Most of which were based on the revenues that POGO firms generate in helping the government raise funds needed, in addressing economic challenges faced by Philippine citizens during the COVID-19 lockdown.

Ms. Gutierrez argued that POGO companies are contributing as much as ₱94.7 billion per year to the country’s coffers. Aside from local taxes, which in the year 2018 and 2019, amounted to P22.40 billion, POGO firms make the following additional economic contributions:

  • ₱34 billion to PAGCOR for BPO licensing and other fees.
  • ₱9 billion to the Department of Labor and Employment for worker employment permits and other fees;
  • P16.4 billion in wages paid to local staff plus the annual rental fees for offices and worker housing provisions, as well as the cost of living expenses incurred by foreign POGO workers.

Naturally, the arguments presented by Ms. Gutierrez on behalf of POGO companies had easily convinced the Philippine government to allow partial operations during the lockdown period. PAGCOR, once again dutifully carried out its role as regulator, by enumerating restrictions and prerequisites that must be in place as conditions to granting of its approval.

Aside from implementing measures to ensure the safety of workers, and from preventing the spread of the COVID 19 disease, PAGCOR required all POGO firms to update their licensing fees and to settle outstanding tax obligations.

Compliances with monetary requirements should be supported by a certification from the Bureau of Internal Revenue.

Thanks to POGO, gamblers in countries like Brunei, Indonesia, Malaysia, Thailand, and Singapore were furnished with online casino games during their trying lockdown period. Among the most accessed are those furnished by the 918Kiss mobile gambling platform, which features more than 30 exciting casino games, with the mega88 brand seeing the most number of application downloads.