Asian Free Trade Zone Adopts I-Gaming

23 June 2003

Online gambling licenses can now be obtained in the Cagayan Economic Zone and Free Port, located at the northeastern tip of the Philippines.

The zone's governing body, the Cagayan Economic Zone Authority (CEZA), can issue licenses without needing acceptance from any other international government. Located near Taiwan, China, Korea, Japan and Hong Kong, the zone gives operators a chance to do business in one of the world's hottest regions for gambling.

CEZA has given the responsibility of master licensor for the region to First Cagayan Leisure and Resort Corp., making First Cagayan the only company in the region with the authority to distribute online gaming licenses. The group, which debuted its services last week at the Global Interactive Gaming Summit & Expo in Montreal, is permitted to grant an unlimited amount of licenses permitting all forms of interactive gambling and spanning up to seven years.

First Cagayan examined several existing jurisdictions in drafting a regulatory model and ultimately designed one that, according to First Cagayan President Albee Benitez, resembles Australia's model; although it avoids some of Australia's commercially restrictive measures.

Benitez considers First Cagayan's competitive fee structure and low tax rates to be among the zone's greatest attractions to applicants. The fee for application is $40,000 and includes the first annual fee. All following yearly fees are also $40,000 and include up to $15,000 as an advance against future taxes. First Cagayan also collects a tax of 2 percent of gross earnings.

Along with the application fee, applicants must submit an application form, a business plan and personal probity forms. Additionally, the software must be tested and certified by a reputable testing agency.

"We have put in place a comprehensive reporting system along with stringent security measures that insure the operation and its software are fair and remain accountable," Benitez explained, adding that, "First Cagayan welcomes already certified operators who wish to relocate."

The group will additionally inspect several aspects of the operator's control system, such as interactive game conduct, maintenance of equipment, recording processes, winner payoffs, security, money transfers and general administration. Operators must also have suitable means of dealing with complaints, complying with financial institutions, registering players and identifying and managing problem gamblers. If an operator wishes to change any part of its control system, it must notify First Cagayan at least 60 days before the planned change and then be subject to evaluation.

Operators are required to keep their funds in a bank located in the Philippines and licensed under the General Banking Act. They need to maintain all gambling records and submit them periodically to First Cagayan for auditing.

First Cagayan has enlisted International Casino Services (ICS) to assist operators in managing and dealing in the potentially unfamiliar foreign markets. ICS has 15 years of experience in maintaining Asian gaming and casino sites and could be a valuable resource to operators wishing to target Asian gamers.

Click here to view a copy of the Cagayan Economic Zone & Free Port Interactive Gambling Act.