Considerations for Granting Online Gambling Operator Licence

The following question stood in the name of Mr Edwin Tong Chun Fai –

2 To ask the Minister for Home Affairs (a) what are the considerations in the grant of an exempt operator licence for online gambling; and (b) in the grant of such a licence, what specific measures will be taken to contain and control the potential of remote gambling to cause harm, especially to young persons, vulnerable persons and society at large.

Mr Christopher de Souza (Holland-Bukit Timah): Question No 2.

The Senior Minister of State for Home Affairs (Mr Desmond Lee) (for the Minister for Home Affairs): Madam, before I proceed, I would like to say that I believe all of us in this House have views on this issue, given the number of questions that have been raised. All of us feel very strongly about the ills of remote gambling, both the law-and-order concerns, as well as the social concerns that arise from problem gambling. Like many people outside this House, many of us here may also have personal convictions, values and beliefs about gambling. We respect and understand those personal viewpoints, values and beliefs. But we have to look at the issue from the national viewpoint, understanding the realities, practicalities and challenges at hand.

Madam, the Remote Gambling Act (RGA) was passed by Parliament two years ago in 2014 and came into force in February last year.

The legislation aims to tackle law-and-order issues associated with remote gambling and to protect young persons and other vulnerable persons from being harmed by remote gambling. The Act provides for a general prohibition on remote gambling. It criminalises the entire spectrum of remote gambling activities and puts in place a comprehensive set of website- and payment-blocking measures. It also provides for a tightly controlled exempt operator regime. So, when the Act was introduced, that was the framework: prohibition with a tightly-controlled valve.

Madam, globally, remote gambling is a significant and fast-growing sector. Global remote gambling activities were estimated to be around US$40 billion in 2015 and grew at a rate of 6%-8% annually over the past five years. At this rate, the remote gambling market will double in size roughly every 10 years.

Singapore is not immune from these global trends, given our high Internet and smartphone penetration rates. If we look at IDA's data, in 2014, our mobile penetration rate was at a whopping 148%, compared to the global rate then at 93%. Likewise, the Internet penetration rate in Singapore was at 73%, versus a global average of 35%.

Since the RGA came into force, we have effected a general prohibition, with robust enforcement and comprehensive blocking measures, to stem the growth of remote gambling within Singapore. Several hundred gambling websites, together with bank accounts and payments linked to remote gambling services, have been blocked. These measures are necessary, but not sufficient, to protect Singaporeans from the harms of illegal remote gambling and problem gambling.

The nature of the Internet is such that it is not possible to completely block access to illegal gambling websites. We would be mistaken to believe that illegal online gambling does not exist today. Determined gamblers can circumvent website-blocking measures by using virtual private networks (VPNs) or through proxy websites. Since February 2015 to date, Police have arrested more than 120 persons for remote gambling activities.

Underground gambling poses serious law-and-order concerns, particularly because of its linkages with organised crime. Secret societies are known to offer illegal 4D and other gambling products. Illegal bookies also engage in unlicensed moneylending and money laundering.

Illegal remote gambling does not come with any social safeguards, as the Minister for Social and Family Development reiterated a number of times in his response. There is no expenditure limit, no prohibition on the use of credit cards, no monitoring of gambling behaviour and no help provided to ensure responsible gambling.

Many underground gambling operations are related to international crime syndicates. For example, in the run-up to and during the recent Euro 2016 football championship, Police worked with foreign law enforcement agencies through Operation SOGA VI, which was an Interpol-led effort, to arrest persons involved in syndicated remote betting operations. In that one operation, 4,000 individuals were arrested across France, Greece, Italy, Malaysia, Thailand, Vietnam, China and Singapore. As part of that operation, the Singapore Police Force apprehended 39 suspects in Singapore, who dealt with S$2.5 million of bets.

Taking a realistic and clear-minded approach, we have to recognise that a complete ban on remote gambling will drive demand underground and create larger incentives for criminal syndicates to target Singaporeans. Hence, the Remote Gambling Act provided for a tightly-controlled exempt operator regime. The exemption regime complements our strategy of general prohibition and blocking measures. Seen in totality, it is an entire ecosystem and framework of measures trying to reduce the problem of online problem gambling.

Madam, this is consistent with our existing approach in the terrestrial gambling space – gambling activities are criminalised and a tightly-controlled valve is allowed as part of the overall system to minimise law-and-order concerns. From our experience with the terrestrial gambling space, this has worked well. A number of other jurisdictions, such as Hong Kong and Norway, adopt a similar approach – allowing regulated operators to complement a general prohibition of remote gambling.

However, we are very careful with providing the exemption. We have imposed strict qualifying criteria for the exemption certificate. The exempt operator has to be a not-for-profit entity that distributes monies to public, social or charitable purposes. Directors and key officers of the operator cannot have been convicted of offences that render them unfit. The operator must possess a consistent track record of compliance with legal and regulatory requirements.

We have also restricted the betting products that the operators can offer. Betting products are limited to those currently available via terrestrial channels. Casino-style games and poker will not be allowed.

The exempt operator is also required to implement strict social safeguards, to minimise potential harm to customers. The Minister for Social and Family Development had earlier elaborated on those social safeguards, in response to Mr Christopher de Souza's question.

I would like to stress that the exemption regime does not change our stance towards gambling. We do not promote gambling. We do not think gambling should be a way to make a living. We conduct public education on the potential harm of gambling and we have social safeguards in place. We will continue to enforce strongly against all underground gambling activities.

Our approach towards gambling is somewhat similar to the approach in many countries when managing other vices, such as drinking and smoking. Although we discourage drinking and smoking, we do not have a complete ban. Instead, we manage the potential harm through regulations and public education.

Some have compared gambling to drug abuse and say if we allow a safety valve for gambling, why not have a safety valve for drug taking or drug offences. I believe they are asking a rhetorical question and conflating the way in which you tackle crime and the way in which societies manage vices that have been around for ages. The magnitude of harm resulting from drug abuse is vastly different and much more severe. Our regimes towards drug abuse and vices, such as gambling, are , therefore, different in complexion.

To conclude, the reality is that illegal gambling exists today. We cannot wish away the presence of underground markets, where criminal activities abound and signs of problem gambling go undetected.

The exempt operator regime aims to provide a regulated and controlled outlet, to divert activities from illegal operators. It is an integral part of our strategy to deal with the problem of remote gambling. It complements the general prohibition of remote gambling, blocking of access and payments to illegal sites, strict enforcement and promotion of awareness and personal responsibility through public education, outreach and engagement.

Ms Denise Phua Lay Peng (Jalan Besar): I would like to thank the Senior Minister of State for his response. Four supplementary questions.

Firstly, how does the Government intend to address the mixed signals that come from this provision? On one hand, we say that gambling, especially remote gambling is pervasive and very undesirable, but on the other hand, it is kind of legal if you go to the exempt operators like Singapore Pools and Singapore Turf Club.

Secondly, a total ban has happened for the last two years. I would like to ask the Ministry how the performance of this total ban has been. From what I have heard on the ground, the Ministry has performed quite well in terms of measures, enforcements, such as the blocking of the remote gambling sites. I would like to ask the Ministry for some details on that.

Thirdly, if we are doing well for that, would the Government seriously consider investing even more resources in the enforcement of this total ban, which has happened for the last two years, instead of spending more money trying to manage things downstream?

Fourthly, again, would the Ministry or the Government consider a total ban in view of the fact that Singapore has banned many less significant things, such as chewing gum and pornographic materials and so forth. Under what circumstances would the Government consider a total ban?

Mr Desmond Lee: I thank the Member for her questions. She asked about mixed signals, when in 2014 remote gambling was banned and then now in 2016 remote gambling is allowed through the exempt operators. As both the Minister for Social and Family Development and I have reiterated, in 2014 when the Bill was passed through Parliament, it was made clear that the framework comprised a comprehensive blocking of illegal websites, advertising targeted at Singaporeans and payments related to online gambling, as well as a safety valve. It reflected the way in which the problem could be managed and had been managed in the terrestrial sphere. Madam, in response to the Member's question, there has been no mixed signal. We were very clear and upfront that this was the framework and this was the way to tackle the growth of online gambling back in 2014.

But let us be clear that we understand and we share the concerns of the Member and others who have voiced concerns consistently over the years about problem gambling. We are not in favour of gambling. We do not promote and we do not encourage it amongst our people. But we recognise gambling exists and people have very different viewpoints and values about gambling. Some object to gambling, fundamentally and in principle; others think that responsible gambling is possible and there is some autonomy they want to exercise. We have to be practical and recognise the realities when regulating and managing these vices.

As I have said earlier, with Internet access and smartphone penetration rates in Singapore being amongst the world's highest, the reality is that online gambling is available at people's fingertips, whether it is in your home, as Mr Png Eng Huat mentioned in 2014 in his speech, or in people's pockets because they have smartphones with them. Likewise, with VPN and other technology, punters and syndicates will continue to try to circumvent blocking and enforcement measures.

We hope people do not take to remote gambling. The collective effort must be undertaken by the Government, NGOs and VWOs. Public education and awareness raising have to work together with deterrence and law enforcement. But if you ask if a total ban will mean absolutely no online illegal gambling whatsoever, I think the answer is no.

Let me just give some proxy data. As the Member has said earlier, in the last year plus, we had not had this exempt operator regime. Under the framework, there was, in fact, a grandfathering of existing remote betting facilities by both the applicants until the application is resolved. So, in some ways, it has not been an entire total ban, although we had implemented blocking measures.

Nevertheless, online gambling has been here for the last year plus. It is attracting many people and is set to grow. How do we know this?

First, look at the global trends. As I have said earlier, estimates are that the global online gambling size was around US$40 billion last year. Over the last five years, it grew by 6% to 8% percent. It will double every 10 years or so, assuming that the rate does not increase. And most of us are very connected to the Internet and are very tech-savvy. So, these global trends will impact us and we have to recognise that these trends will affect us. Hence, we have to make sure our system is sufficiently robust, sophisticated and practical to address them.

Some people asked for hard data. They say, "There are global trends, we know all these but do you have any data?" I think Mr Christopher de Souza had also asked this question. As the Minister for Social and Family Development had earlier alluded to, the nature of remote gambling, especially underground illegal gambling, is such that it is hard to get precise and accurate details of the nature and extent or the exact number of people who are accessing these sites. As a result, we can only rely on best estimates, where there will be varying figures, estimates and statistics.

Let me give Members a few proxies, so you get a sense of where we are. In 2013, MHA, prior to introducing the Bill, had conducted and commissioned a study. Then-Second Minister for Home Affairs mentioned this in a speech in 2013. This was a study by an external consultant for the Ministry which included a survey of Internet users. Out of over a thousand respondents, three in 10 acknowledged that they had engaged in remote gambling at least once in the past year, and two-thirds of them were between the ages of 25 and 44. That was 2013, so it is just one data point.

There are varying estimates by external analysts on the size of remote gambling in Singapore. We can look for these reports, you can purchase them. The reports analyse the remote gambling market around the world, including in specific jurisdictions. For Singapore, there is a wide range. One estimate suggested that remote gambling in Singapore in 2015 could well be as large as S$461 million, at a time when remote gambling was banned.

Enforcement wise, since 2015 till 2016, Police have arrested more than 120 people involved in illegal remote gambling – syndicates, runners, punters – and these include the 39 arrested during Operation SOGA VI, which was the prelude to Euro 2016. Police carried out more than 100 raids against illegal gambling – terrestrial and online – each year. They continue to keep up this tempo. In 2015, close to 300 people were arrested for illegal gambling, with about 50 charged under the Remote Gambling Act. About 90% of those arrested for illegal football gambling were involved in online football gambling. More than one-third of those arrested for illegal lotteries were involved in online remote lotteries.

Police also continue to arrest illegal bookmakers and agents on an on-going basis. Our experience with terrestrial gambling since the 1960s is that illegal terrestrial gambling activities have largely been kept under control, based on recent arrest figures, which number in the few hundreds each year. In a way, the safety valves in Singapore Pools and in Singapore Turf Club have partly contributed to that.

We have observed and monitored the illegal gambling situation. Whilst the ban and the prohibitions have reduced traffic to a lot of these sites, there is still this traffic from Singapore to some of the blocked sites, via diversionary measures. There is also traffic to new sites, which pop up each and every day.

Over the years, the Police have observed a very obvious shift – syndicates expanding their realm from terrestrial gambling to online remote sphere. Syndicates run bet exchanges for online horseracing, casino gambling, soccer betting and lotteries. Syndicates also use technology – WhatsApp, WeChat – to collect bets, finding ways to circumvent detection and enforcement.

As part of implementing the exempt operator regime, MHA is working with both operators to conduct surveys and studies. This will give us more data points. Indeed, the experience of foreign jurisdictions with narrow exempt operator frameworks – Hong Kong and Norway – has allowed regulators and law enforcement agencies to collect data on betting patterns, which may otherwise have gone undetected. This helps them to finetune policy decisions relating to remote gambling.

I hope that this addresses the Member's question about what has been the experience since 2015 to date. I have given Members some data points and statistics. At the end of the day, given the nature of what we are grappling with, it is very difficult to have and to pin down the exact numbers as you would with something that happens legitimately on a daily basis out in the daylight.

That also answers the Member's third question, which is why not invest more in technology. The exempt operator framework only provides for what is already existing in the terrestrial framework. It does not provide for casino-style games and poker. We will continue and must continue to invest in technology. But at the end of the day, we recognise that this is almost like a technological cat-and-mouse game and we recognise that there will still be growth in online gambling. We must have an entire ecosystem – prohibitions, enforcement, education, moral suasion, family support, community support as well as a tightly-controlled valve – that reflects what we do in the terrestrial sphere.

Ms Chia Yong Yong (Nominated Member): Madam, may I request the Senior Minister of State to elaborate on the measures that are in place or should be in place to safeguard against proxy online gambling whereby persons who are not eligible gamble through accounts of those who are?

Secondly, in relation to the gambling trends, I note that the Senior Minister of State has said the Government does monitor the macro-trends. Could we also consider or are we considering monitoring at a more focused level whereby we gather data from the gambling accounts and ascertain gambling patterns for earlier counselling intervention?

Mr Desmond Lee: In response to the Member's first question, when a person uses another person's online gambling account as a proxy ‒ presumably because he may not qualify due to age or because he or she is on the exclusion list ‒ the application for both Singapore Pools and Singapore Turf Club is not automatic, and approval is not given immediately. The person can make an application but he has to turn up physically in person to be verified at one of the centres, to verify his age and eligibility. The operators are required to vet for exclusions and other requirements. The requirement for physical appearance is important.

There is also two-factor authentication every time the real gambler accesses the online account. Two-factor authentication takes place through a mobile number, which ought to belong to the real gambler. So, that is an additional friction. And there will be monitoring by the operators and regulators. If it is detected that an account is used as a proxy, then, the exempt operators would, first of all, have to take firm action. Additionally, the regulators and the Police would have to see if any offence has been committed.

In her second question, the Member asked whether we monitor local trends and will be looking at the data that is generated from the exempt operators' systems. We certainly will look at all trends and all the data that are available. As I have said earlier, in both Hong Kong and Norway, the valve has enabled the regulators there to have more data points about online gambling trends. They can use this information to help sharpen, tighten and revise their overall framework on online gambling.

Mdm Speaker: Mr Alex Yam, next question.