Singapore criminalises online gambling – who is affected?

From Monday, 2 February 2015, the full force of Singapore’s extensive new Remote Gambling Act will be felt, both inside and outside of Singapore.

The Act will criminalise the entire spectrum of remote gambling activities. The restrictions are extremely broad and will be felt by operators, agents, brokers, service providers, broadcasters, advertising networks, payment processors, financial institutions, ISPs – and, of course players, with potential sanctions including site blocking, payment blocking, fines and prison terms.

As with any new law, particularly one that is so broad in scope, there are a number of grey areas, so we look here at some of the implications for different categories of individual and organisation within the remote gaming ecosystem.

What does the Remote Gambling Act mean for…?

Gambling operators based outside of Singapore

Operators based outside of Singapore will need to take operational measures to comply, otherwise they risk falling foul of the extra-territorial measures of the Act that apply to services with a “Singapore customer link”.

The long arm of the new law actually requires operators based overseas to make operational changes in order to comply. These include informing prospective customers that Singapore law prohibits the provision of the service to Singapore-based users, updating 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 remains unclear at this time whether geoblocking will be a minimum expected 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, with these measures to kick in immediately from Monday, 2 February. The MHA is reportedly preparing a list of online gambling sites to target.

The Government has also 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.

Gambling operators based in Singapore

From 2 February, it will be illegal to run a “Singapore-based remote gambling service”. Put simply, if the service is based in Singapore then the rules apply, wherever the customers are based. It does not matter whether the service targets Singapore customers or foreign customers, so geoblocking Singapore will not be a workaround.

A service will be viewed as a “Singapore-based remote gambling service” if:

(a)    The service is provided in the course of carrying on a business in Singapore;

(b)   The central management and control of the service is in Singapore; or

(c)    Where the service is provided to customers using an Internet carriage service, all or any of the relevant Internet content is hosted in Singapore.

There are still many questions as to exactly what types of operations would be caught by these rules, and whether locating operations such as hosting, payment processing, disaster recovery and other technical operations used to support remote gambling services might fall foul of the Act. There is a possibility that applicable companies based in Singapore who provide support functions to remote gambling businesses will be considering a move away from Singapore to other parts of the region.

Players

From Monday, it will be an offence for any individual to gamble remotely in Singapore with an operator that has not been exempted under the Act. Currently, there are no exempt operators, so there will be no legal options for Singapore residents to gamble online from Monday. If exemptions are granted, they will not extend to casino games, so it seems that Singapore residents will be permanently prohibited from playing online casino games.

The advertising and TV sectors

The Act has broad prohibitions against publishing or authorising the publication in Singapore of advertisements for remote gambling services.

In the case of online advertising, this includes any advertisements that are “available for access by end-users in Singapore”, which suggests that advertisers, publishers and ad networks will need to consider geoblocking remote gambling advertisements to ensure they are not accessible from Singapore.

Broadcasters, meanwhile, will need to review their ad policies and processes to ensure that they do not breach the Act by broadcasting advertisements for online gambling services.

The local monopoly operators

The only likely candidates at this point for the limited licensing regime are 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.”

The licences will come with some stringent conditions and social safeguards, 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.

Hosting / data centres

Whilst the definition of a “Singapore-based remote gambling service” includes the hosting of the service in Singapore, there are certain exemptions for companies who are simply in the business of providing network access or transmitting or routing data, an exception that is presumably included in order to protect ISPs and hosting companies.

Betting agents

The Act is clearly targeted at betting agents who facilitate participation in illegal remote gambling by others. In short, any person who:

(a)    wherever in the world that person is, organises or supervises remote gambling, distributes prizes or stakes, facilitates participation by others or assists in any of these matters and, in doing so, facilitates someone in Singapore to illegally gamble online, will be committing an offence; or

(b)   if that person is in Singapore, organises, manages or supervises remote gambling by others, distributes prizes or stakes, facilitates participation by others or assists in any of these matters and, in doing so, facilitates a person outside of Singapore to gamble remotely, will be committing an offence.

Social gaming companies

Social gaming companies can breathe a collective sigh of relief.

There had been concerns since the first publication of the Bill and subsequent passage of the Act as to whether the Act would apply to social games.

The language of the Act itself does strongly suggest that it applies to certain social games. Amongst the definitions of gambling is “playing a game of chance for money or money’s worth”, and “money’s worth” is defined as “any thing recognised as equivalent to money”, including “virtual credits, virtual coins, virtual tokens, virtual objects or any similar thing that is purchased within, or as part of, or in relation to a game of chance”. This certainly seems to apply to any game of chance (or of chance and skill combined) that allows players to win virtual goods or credits.

Concerns amongst the social gaming industry were compounded by the Minister’s comments leading up to the passage of the Bill: “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”, albeit that this was language balanced somewhat by subsequent comments suggesting that social games were not the core target of the Bill.

Nonetheless, despite the seemingly broad definitions of “money’s worth” under the Act, the Media Development Authority (MDA) went on the record yesterday to state that social gaming platforms are outside of scope:

“The Act does not target games which do not allow players to convert in-game credits to money or real merchandise. The Act thus will not cover social games such as Farmville and Candy Crush Saga in their current forms….MDA wishes to reiterate that the Act does not cover games which do not, as part of the game design, enable players to receive money or money’s worth consequent to the outcome of the game”.

The MDA also provided a list of game types that it believes are out-of-scope, which basically cover any games that do not provide an in-game facility for players to win either money or real-world merchandise that can be exchanged for money. Even some games that reward players for skill with real-world prizes appear to be outside of scope “provided that these are not within casino-style games or are not used as a means of facilitating syndicated criminal activity”.

These “real money out” and “casino-style games” tests do not form part of the language of the Act itself, so it seems that the Government has elected to adopt a pragmatic interpretation of “money’s worth” to avoid unduly limiting the growth of the vibrant social gaming market. This approach does, however, leave many areas for interpretation and questions will certainly be raised, as new and ever-more-inventive game mechanics are launched, whether they will be viewed as “in scope” or “out of scope” based on the interpretation of “money’s worth”.

Matt Pollins

Author: Matt Pollins

Matt is an international technology, media and telecoms lawyer and Head of Commercial and TMT at CMS in Singapore. He supports clients across Asia-Pacific. You can contact Matt via the "Contact" page. Views expressed on Connected Asia are those of the author. Nothing here constitutes legal advice or creates a lawyer-client relationship.

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