Industry takes stock after Singapore’s Remote Gambling Act is passed

This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

Singapore's Remote Gambling Act is here - and far beyond the borders of the South-East Asian city-state, the gambling industry is weighing up the implications of one of the most far-reaching and restrictive remote gambling laws seen in any jurisdiction to date.

The Act, passed after its second reading, criminalises the entire spectrum of remote gambling activities. The restrictions are extremely broad and will be felt by operators, agents, brokers, service providers, advertising networks, payment processors, financial institutions, ISPs - and, of course players.

There will be a licensing regime, but the Minister's speeches during the Parliamentary session indicate that there are only a couple of real candidates - Singapore Pools and Singapore Turf Club. In the Minister's own words: "The entity has to be based in Singapore so as to aid the enforcement of the exemption conditions. The exempt operator has to be a not-for-profit entity which contributes to public, social and charitable purposes in Singapore."

Even when the licences are handed out, casino-type games will not be permitted, so Singapore customers will have no legitimate options available to play online casino games. In addition, the licences will come with some heavy conditions, which are expected to include requirements for customers to register and provide certain information, imposing a minimum age requirement for registration and not granting betting on credit.

It does not matter whether the services are hosted or based in Singapore or abroad. By providing a remote gambling service with a "Singapore customer link", operators are subject to the rules, wherever in the world they are based. What's more, the long arm of the new law actually requires operators based overseas to make operational changes to comply. These include informing prospective customers that Singapore law prohibits the provision of the service to Singapore-based users, updating their terms and conditions and taking "such other measures as far as reasonably practicable to ensure that the service did not, or could not reasonably have, a Singapore-customer link." It is not yet clear whether geoblocking will be a minimum requirement.

With extra-territorial laws, enforcement is always the challenge, which is why the Government is introducing payment blocking (via local financial institutions) and site blocking (via local ISPs) as part of the Act. The Government has even indicated that it could seek the extradition to Singapore of individuals involved in the operation of offshore remote gambling services that target Singapore, although one would expect that to be reserved for very serious cases.

If the service is based in Singapore then the rules apply, wherever the customers are based. It will be illegal to operate a "Singapore-based remote gambling service." This applies regardless of whether the service targets Singapore customers or foreign customers, so geoblocking Singapore isn't a solution. However, the Minister's speech does raise some question marks as to exactly what types of operations would be caught by the rules: "Enforcement will be targeted at those who are deeply involved in, and provide core and critical services in support of the illegal activities of the unauthorised remote gambling operators." The question of what types of Singapore-based service would be regarded as being "deeply involved in" gambling operations has not yet been answered and further guidance will be needed for services established in, or considering a move to Singapore. In the absence of clear guidance, there is a risk that companies based in Singapore who provide support functions to remote gambling businesses (whether to those businesses specifically or as part of a range of clients) will be looking to move away from Singapore to other parts of the region. Other territories seeking to develop a "hub" offering in Asia, such as Cagayan in the Philippines, may stand to benefit.

The law even attempts to regulate games of chance (or chance and skill combined) that are played for virtual credits or virtual currencies. The Minister's speech suggests that regulatory action won't be targeted at games such as Candy Crush or Farmville: "As a matter of principle, the bill does not intend to cover social games in which the players do not play to acquire a chance of winning money, and where the game design does not allow the player to convert in-game credits to money or real merchandise outside the game." This suggests that "real money in but no real money out" games will not be regulated. Unfortunately, the actual drafting of the legislation is broader than the Minister's comments suggest, which does leave some room for uncertainty. Social casino games, in particular, may still wish to seek further clarification, given the Government's apparent concern with all casino-related gaming: "Social casino games are of particular concern as they are designed to simulate real world gambling such as slots and poker and replicate the experience of a casino."

Despite this being one of the most restrictive remote gambling laws ever passed, much of the Parliamentary debate focused on whether, by opening the door to a limited licensing regime, the Government was somehow "condoning" gambling activities. As such, there will be some pressure for the law to be actively enforced - and it certainly has teeth, with fines of up to US$400,000 and/or imprisonment for up to seven years.

So what happens next?

The law itself is expected to take full effect from 2015. This gives a brief window of opportunity for organizations engaged in the remote gambling industry, wherever they are based, to review the requirements and assess what steps they need to take to comply. It also provides an opportunity for the potential candidates for a licence to weigh up their options, which may include seeking operational support and industry experience from licensed operators in other parts of the world.

This article was originally published in Asia Gambling Brief.