In Malaysia, people view gambling as a form of entertainment. One can practically divide gambling into online and land-based segments, with the latter confronting a significant threat to its survival. From 2024 to 2027, online gambling in Malaysia is expected to grow by 6.94%. This will result in a market volume of approximately $32.03 million by 2027. Estimates suggest that platforms will generate $26.19 million in revenue in 2024 as they strive to onboard more customers. The size could grow to 4.9 million by 2027.
It threatens the existence of land-based casinos for two main reasons: first, online platforms enable customers to participate in their favorite casino titles from the comfort of their homes; and second, online platforms offer higher bonuses and promotions to new and existing customers. The penetration of Internet service undoubtedly supports this growth.
The Push for Online Gambling Regulation
Efforts are underway to legally recognize online gambling for the people of Malaysia. The current regulatory climate does not specifically encourage people to engage, but it also does not discourage them from doing so.
Current Regulatory Climate
Regulating online gambling across Malaysia does more good than harm. Recently, Deputy Communications and Multimedia Minister Zahidi Zainul Abidin confirmed that it allows the government to collect tax revenue from businesses while regulating their operations. In other words, the government can work to protect customers and extract tax revenues at the same time. It will be interesting to see what results their efforts yield.
Goals for Regulation
Regulating Malaysia’s online gambling platforms primarily aims to combat illegal operations and secure the lost tax revenue. Illegal online casinos entice customers into signing up on the platform, following which their sensitive data is stolen for misuse. This extends even to the theft of funds. Only when online casinos are subject to the law, which requires them to maintain tax payments, does the need for securing tax revenue become evident.
Regulations will also cover foreign online gambling operators, as they are more likely to shut their doors after wrongly attracting locals to their platforms.
Proposed Changes
Three aspects are under consideration – modification to the Common Gaming Houses Act 1953, discussion about types of licenses, and the rise of trusted platforms.
The modification to the Common Gaming Houses Act 1953 aims to overturn the ban or non-recognition of online gambling platforms. Types of licenses cover duration and distribution based on their land of origin. Offshore online casino platforms may have to undergo a more strict compliance process in comparison to local platforms. Finally, the rise of trusted online casinos is bringing a new set of challenges and opportunities for countries, including Malaysia.
Political Pressures and Religious Influences
Islamic political parties in Malaysia would rather ignore the ways to generate tax revenue from the segment and regulate it via laws. PAS has even threatened to shut down casinos if it comes to power, citing that gambling is harmful. The statement does hold validity, but only if authorities lack the wisdom to apply relevant laws.
There is no denying the potential impact of gambling, but it also highlights the pressure on the industry and current government authorities. They have a lot to take into account before making a move, for if the opposition comes to show power (irrespective of their intention), there could be political shifts in Malaysia. A lot depends on the upcoming general elections, with the current government more likely to stay popular. Online gambling platforms are popular, and people would rather have stringent laws to control the space than lose it all forever.
Economic Implications of Gambling Regulation
Casinos have contributed to nations’ economic welfare in the form of tax revenue. Plus, they have generated employment opportunities for a large number of citizens. For instance, Genting’s casino made up almost RM5 billion to Government coffers before the global pandemic kicked in. PAS has now committed to shut them down, but in accordance with laws and the constitution, which many believe may not be possible.
Shutting down casinos altogether could potentially affect tourism, as many people from different parts of the world would want to turn to casinos for entertainment. A decrease in tourists will ultimately impede economic growth, impacting both small and big businesses.
Other neighboring countries, namely Singapore, Vietnam, Philippines have different approaches to online gambling. Vietnam has tight gambling laws, and in 2018, football, horse, and greyhound racing were legalized. Two agencies in the Philippines, PAGCOR and CEZA, are responsible for issuing licenses and overseeing gambling enterprises, which makes for an intriguing regulatory framework.
