The Philippine gaming regulatory body PAGCOR recently issued a memorandum tightening the Cash Rebate and Cashback policies for licensed electronic gaming operators. This document specifies the rebate cap, approval process, and accounting requirements.
According to the new regulations:
1⃣ Based on turnover (Gross Bets) or deposits: Slot Machine, Electronic Bingo, Numeric Games, Sports Betting, etc., a maximum of 1.50% rebate (excluding Casino Table Games and Arcade-type Games).
2⃣ Based on net losses (Net Losses): up to 15% Cashback for all electronic games.
3⃣ Other games require EGLD approval, and the proportion is determined after considering RTP.
4⃣ Submission of EG Form No. 28 for approval is required in advance, and IRG must detail tier levels (minimum deposit, turnover requirements, rebate rate, cap amount), eligibility conditions, and settlement rules.
5⃣ Rebates are recorded as marketing expenses, cannot be deducted from GGR, and must not exceed limits when combined with other promotions.
6⃣ Transition period until May 15, 2026, after which strict enforcement will be implemented, and violations will face regulatory penalties.
📉 The gray market platforms will see a short-term increase in profit margins, while compliant major platforms will be restricted
After reducing rebates, 🔴 the impact on traffic (user acquisition and engagement) for compliant platforms is expected to decrease by 15-40% in the short term.
Philippine online gaming platforms have generally adopted high rebate strategies (20%-30% or even higher), which are core to platform customer acquisition. High rebates can directly reduce the effective betting cost for players, enhancing conversion rates and retention, especially for price-sensitive local Filipino players.
Industry data shows that promotions (including rebates) often account for a large proportion of the marketing budget and are key to driving traffic growth.
🔴 If rebates are reduced from an average of 20-25% to a cap of 1.5%/15%, similar to the German market's regulatory restrictions on promotions, short-term new user registrations and initial deposits may decrease by 20-35%, and active users (DAU/MAU) will decrease by 15-30%.
Meanwhile, as high rebates from gray market platforms fill the traffic void, this loss of traffic for compliant platforms may intensify to 30%-40%.
Moreover, once compliant platforms need to increase other marketing investments (such as advertising, SEO), the overall customer acquisition cost may rise by 20%. The Philippine iGaming market is highly dependent on digital marketing and affiliates, and the reduction in rebates will amplify this effect. After the restrictions, the overall market traffic growth rate may slow from the previous high of 80%+ to low single digits or even single digits, especially for licensed platforms.
📉 Compliant platforms will face short-term profit pressure, and GGR growth will slow down
The key change is that in the past, high rebates were often accounted for as "gaming losses" or implicitly deducted, actually compressing reported GGR and optimizing tax/revenue sharing. Now, they must be listed separately as marketing expenses, making costs fully transparent and no longer allowing income manipulation through rebates, which also increases the explicit cost burden for compliant platforms.
In the iGaming industry, promotional expenses (including rebates and bonuses) usually account for 15-30% of GGR or even higher. After the restrictions, the rebate portion will be significantly compressed to the cap, potentially lowering the overall marketing expense rate, but due to reduced traffic, total marketing expenditures may not necessarily decrease—platforms need to invest in advertising and other channels to fill the customer acquisition gap.
In 2025, electronic games contributed approximately 201 billion pesos in GGR (total gaming revenue) to the Philippines. If traffic (number of players and betting volume) decreases by 20-30% due to reduced rebates, then GGR is likely to decrease by 15-25%.
For licensed operators, the short term will be noticeably more challenging. Large platforms, due to their strong capital, brand, and user base, will face relatively smaller impacts, with GGR likely decreasing by about 10-20%; however, medium and small licensed platforms will face much greater pressure, potentially exacerbating losses or even forcing them out of the market.
From a financial perspective, NGR (net revenue after deducting bonuses and promotions) will improve due to the strict cap on rebates—less money is spent on promotions. 🔴 But because overall player traffic may decrease, the total revenue base will shrink, and gross profits will still be under significant pressure.
Previously, many platforms relied on heavy spending subsidies to maintain operations, often operating at minimal profit or even relying on subsidies to stay afloat. Now that high rebates have been "cut off" and must be accounted for as marketing expenses, they can no longer be used to offset income, 🔴 leading to a potential short-term decrease in EBITDA profit margins by 5-15 percentage points.
Furthermore, platforms will now have to spend more time and money on approvals (submitting Form 28, writing IRG rules), and compliance costs will also increase, while the flexibility of promotional stacking will be reduced.
Gray market platforms will undoubtedly be the biggest winners in the short term. They can continue to aggressively offer high rebates, even at higher percentages, and in 2023, the gray market still accounts for about 92% of online GGR. Although by the end of 2025, the share of licensed platforms will have surpassed 50%, the asymmetry in regulation allows gray market platforms to easily fill the void left by the "welfare shrinkage" of licensed platforms, attracting those players who care most about high rebates.
😍 How can restricted platforms break through? Short-term pressure is high, and it's difficult to find policy loopholes
The new regulations clearly prohibit certain practices for licensed operators regarding approvals, rebate ratios, and accounting, making it difficult to achieve through "packaging as other rewards" or "indirect subsidies through third-party channels".
Platforms must change towards more mature market directions:
🔴 For example, refined and differentiated rebate designs, working within the 1.5%/15% cap. Create multiple VIP tiers, with low tiers attracting entry-level players with low thresholds and high tiers binding high-end users with high turnover + close to cap Cashback + non-cash benefits (such as free spins, exclusive events, accelerated points, offline activities). Emphasize "stable and sustainable rewards" to cultivate player loyalty.
Focus on product experience, game diversity, and user service; use big data for precise marketing, targeting only high-value/high-active players for rebates, reducing overall marketing costs.
In the short term, the decrease in benefits for compliant platforms may lead some players to turn to gray market platforms, causing market share fluctuations, and increasing survival pressure for small licensed operators.
In the medium to long term, PAGCOR's core intent is definitely to regulate the market and increase tax revenue, and they do not want to completely eliminate competition, so it's hard to say whether the policy will shift later. In any case, the Philippines is currently in a painful transition period from wild growth to regulated development. For licensed platforms, a long-term healthy market ecosystem still needs to be gradually cultivated.
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