07 October 2014

Second Reading Speech on the Remote Gambling Bill by Mr S Iswaran, Minister in the Prime Minister’s Office, Second Minister for Home Affairs and Trade & Industry

Madam Speaker, I beg to move, “That the Bill be now read a second time.”

Introduction

2.            Madam Speaker, the global remote gambling market is large and growing fast. Its size is estimated at between US$30 to $40 billion, with annual growth of 9%. This is about five times the expected growth of conventional terrestrial gambling. We see similar trends in Singapore.

3.            Compared to terrestrial gambling, remote gambling gives us greater cause for concern for several reasons. First, from a law and order perspective, illegal remote gambling operators are typically associated with other criminal activities and syndicated crime. Remote gambling operations are lucrative and can potentially become a source or conduit of funds for money laundering and other illegal activities. These operations are transnational and of a significant scale, taking bets from many players across many countries. They offer credit and operate without any restrictions on the types of games or bets.

4.            Let me cite one example to illustrate the scale of illegal gambling in the region. INTERPOL conducted an operation during the recent FIFA World Cup. It was targeted at illegal soccer gambling networks across Asia. Codenamed Operation SOGA V, law enforcement agencies from China, Hong Kong, Macau, Malaysia, Singapore and Vietnam made more than 1,000 raids and 1,400 arrests. INTERPOL estimated that these illegal gambling dens, many controlled by organised crime syndicates, handled about US$2.2 billion worth of bets placed mainly through illegal websites over the period of the World Cup.

5.            A second cause for concern is the nature and design of certain games that are offered remotely, and lend themselves to repetitive play and addictive behaviour. This is well-documented in both local and overseas research. Remote gamblers tend to have poorer self-control, are more likely to gamble at a higher frequency, for a longer duration, and with more money than they had initially planned.

6.            Thirdly, remote gambling is ubiquitous and easily accessible, largely due to the growing reach of the Internet, readily available and affordable mobile bandwidth, and the proliferation of smart devices. In Singapore, access to the internet has been growing over the years. In 2013, 87% of households had access to broadband Internet, and Singapore’s smart phone penetration was around 72%, one of the highest in the world. These trends allow for easy access to remote gambling.

7.            Remote gambling is evolving rapidly and several countries have reviewed or are reviewing their regulatory regimes to keep pace. In Singapore, our current laws, namely the Common Gaming Houses Act (CGHA) and the Betting Act, (BA) do not expressly address remote gambling as they were enacted before the Internet era. In developing the Remote Gambling Bill, the Government studied the laws and practices of other jurisdictions. A public consultation exercise was held to seek feedback on the proposed framework. Grassroots organisations, social services, religious groups and industry were also consulted, and their views have been taken into account in drafting the legislation.

Key objectives

8.            Madam Speaker, we have strict laws on gambling to maintain law and order, and to minimise the potential harm, especially to the young and vulnerable. We prohibit gambling, unless it is specifically allowed for by way of a stringently regulated exemption or license.

9.            We will adopt a similar approach to remote gambling. We aim to achieve this policy intent through a combination of new legislation, stepped up enforcement, and enhanced public education and engagement.

10.         The Bill has two key objectives. First, to tackle the law and order issues associated with remote gambling. Second, to protect young persons and other vulnerable persons from being harmed or exploited by remote gambling. The Bill will criminalise the entire spectrum of remote gambling, from individual gamblers to facilitators; agents and runners, to operators. The Bill also provides for website and payment transactions blocking measures, as well as advertising bans. It has provisions for exemption under stringent conditions.

Key Provisions

11.         Madam, let me now highlight the main clauses of the Bill, starting with the definitions of key terms.

12.         Clause 4 defines “gambling” to mean betting, gaming or participating in a lottery. “Gaming” refers to playing a game of chance for money or money’s worth. A person games if he has a chance of winning money or money’s worth in the process. The definition of “money’s worth” includes virtual currencies or in-game credits which can be monetised or exchanged for goods with real value. I understand that for some social games, they facilitate players to purchase credits to enhance their in-game experience, but cannot convert these in-game credits or tokens for money or real merchandise outside the game. It is not the intent of this Bill to prohibit such social games. However, it is essential that the Bill is comprehensive in scope in order to stay relevant over time against the backdrop of a dynamic industry that is continuing to evolve.

13.         Clause 5 defines “remote gambling” to mean gambling using any mode of remote communication, such as through the Internet, mobile telecommunication devices or other forms of technology that facilitate communication.

Prohibition of remote gambling activities

14.         Madam, let me now highlight the key offences under the Bill. The Bill will prohibit all forms of remote gambling activities in Singapore unless exempted. Hence, persons involved in the entire range of remote gambling activities would have committed an offence, from individual gamblers to facilitators; agents and bookies, to the remote gambling operators. To address the transnational nature of remote gambling activities, this prohibition would apply to facilitators and remote gambling operators even if they reside overseas, as long as their customers are in Singapore.

15.         Clause 8 makes it an offence for an individual in Singapore to gamble remotely with an unauthorised operator. The penalty is a fine not exceeding $5,000 or imprisonment not exceeding 6 months or both. This is consistent with our current laws on terrestrial gambling.

16.         Clause 9 is aimed at persons who may not be remote gambling operators but are involved in some aspects of the operations, such as being an agent of a remote gambling operator. Clause 9(1) makes it an offence for an agent, whether based in Singapore or overseas, to facilitate an individual in Singapore to gamble with an unauthorised remote gambling operator. Given the broader law and order concerns associated with remote gambling, Clause 9(2) also makes it an offence for a person in Singapore to facilitate others overseas to gamble. It will cover agents, who are also known as bookies and runners, operating in Singapore but who may be receiving bets from overseas. Our aim in clause 9(2) is to minimise the risk that Singapore could be used as a base for criminal activities of remote gambling syndicates. In the case of support services, the risk is exacerbated when any such support service is core or critical to the provision of an unauthorised remote gambling service. Enforcement will, therefore, be targeted at such persons. The penalty for an offence under clause 9 is a fine of not less than $20,000 and not more than $200,000, or imprisonment not exceeding 5 years, or both.

17.         Under Clauses 10 and 11 of the Bill, it will be an offence for a remote gambling operator, whether based in Singapore or overseas, to provide this service to a person in Singapore. It will also be an offence for a Singapore-based remote gambling operator to provide gambling services to customers outside Singapore. The penalty for such an offence is a fine of not less than $20,000 and not more than $500,000, or imprisonment not exceeding 7 years, or both.

Protection of young persons

18.         The Bill also aims to provide additional protection for young persons, defined as those below 21 years of age. Clause 12 makes it an offence for a person to employ a young person to carry out remote gambling activities. Clause 13 makes it an offence to invite or cause a young person to gamble remotely in Singapore. The penalty for each of these offences is a fine of not less than $20,000 and not more than $300,000 or imprisonment not exceeding 6 years or both.

Advertising and Promotion Bans

19.         Madam, the Bill will generally ban remote gambling advertisements and promotions. The prohibition extends to all forms of media, both electronic and non-electronic, including the Internet, broadcast and print media.

20.         Clause 15 makes it an offence for a person to publish or authorise the publication of a remote gambling advertisement in Singapore.

21.         Clause 17 makes it an offence to promote or authorise the promotion of remote gambling in Singapore. The penalty for each of these offences is a fine not exceeding $20,000.

Access Blocking Measures

22.         Madam Speaker, other than criminalising various aspects of remote gambling activities, the Bill will provide for powers to block access to websites and payment transactions related to unlawful gambling activities.

23.         Clause 20 provides for powers to issue access blocking orders to Internet Service Providers (ISPs). The orders will require that the ISPs take reasonable steps to disable access to websites identified by MHA. An ISP which does not block any website specified in an access blocking order is liable for an offence. The penalty is a fine not exceeding $20,000 for each day or part thereof for each website not blocked, subject to a total of $500,000.

Payment Transactions Blocking Measures

 

24.         Because financial transfers are key to gambling transactions, we will block payments transactions to and from the accounts of remote gambling operators. Clause 21 provides for the issuance of payment transaction blocking orders in respect of a remote gambling operator to our financial institutions, and other financial transaction providers. Apart from blocking electronic fund transfers, transactions via credit and debit cards with remote gambling operators will also be blocked.

25.         Failure of a financial institution or a financial transaction provider to comply with a payment transaction blocking order will be an offence punishable by a fine not exceeding $20,000 for each prohibited transaction, up to a total of $500,000 per account.

26.         Clause 25 provides criminal and civil immunity for an ISP, a financial institution or a financial transaction provider for complying with access blocking or payment transaction blocking orders.

27.         Madam, we recognise that these blocking measures may not be foolproof.  However, this suite of measures is among the most comprehensive in the world. And, taken together, website blocking, payment transactions blocking, and the prohibition of advertisements and promotions, can and will significantly restrict and impede access to remote gambling.

Exempt Operator Regime

28.         Madam, Part 5 of the Bill makes provisions for a tightly controlled exempt operator regime. A complete ban on remote gambling might appear straightforward but would likely drive these activities underground, and exacerbate the associated law and order and social concerns. Notwithstanding our prohibitive stance on remote gambling and comprehensive set of restrictive measures, the provision of a strictly regulated exempt operator could help to mitigate these concerns. This has been our experience with, and approach to, terrestrial gambling. So too for other jurisdictions, such as Hong Kong and Norway, which adopt similarly restrictive remote gambling regimes but have also recognised this challenge and provided for a regulated authorised operator.

Strict qualifying criteria

29.         Let me now cover the key features of the exempt operator regime in the Bill. A person may apply to the Minister to be an exempt operator to provide a Singapore-based remote gambling service with a Singapore-customer link.

30.         A strict set of criteria will be used to assess any application as specified in clause 26. 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.

31.         The entity has to possess a consistent and good track record of compliance with legal and regulatory requirements. The Minister will also consider any other relevant factors in deciding whether to grant an entity a certificate of exemption. The strict qualifying criteria will set a high bar which few will be able to meet.

Stringent operating conditions

32.         Should a certificate of exemption be issued, the Minister will impose stringent conditions on the exempt operator in three main areas as specified in clause 28. The operator must keep the management and operations of the remote gambling service free from criminal influence, ensure the integrity of the operations, and implement social safeguards and responsible gambling measures.

33.         In addition, we will restrict the type of products that may be offered. For instance, casino-style games and poker will not be allowed.

34.         The Minister may also impose directions on the exempt operators in relation to the conduct, supervision or control of the remote gambling operations.

35.         Regulatory sanctions will be imposed if an exempt operator fails to comply with the directions or contravenes the exemption conditions. These sanctions include letters of censure, financial penalties not exceeding $1 million dollars and the curtailment of operations. In very serious breaches, the Minister can suspend or revoke the certificate of exemption.

 

Powers Granted to Police Officers and Authorised Officers

36.         Madam Speaker, the Bill will grant powers to Police officers and authorised officers to enforce its provisions.

37.         Clause 32 allows the Minister to designate relevant public officers as authorised officers to enforce parts of the Bill.

38.         Clauses 33 and 34 grant police officers and authorised officers powers in relation to investigating an offence or a contravention of any provision in the Bill. These powers include the powers to require a person to furnish information, examine a person orally, as well as to enter and search a premise suspected to be connected to the commission of an offence under the Bill.

Other Miscellaneous Provisions

39.         Clause 40 allows the Minister to make specific exemptions by way of an order published in the Gazette. The exemptions may either be applicable generally or for a particular situation, subject to a set of conditions imposed by the Minister. For example, online lotteries or lucky draws organised by charities or businesses, for the purposes of promoting the sales of their products, could be exempted by way of an order made under this clause.

 

40.         Currently, Singapore Pools and Singapore Turf Club are allowed to provide tele-betting and mobile betting applications for their existing products, only to registered account holders under the exemption regime within the CGHA and BA. These remote services will henceforth be covered under the RGA. Clause 42 allows such a currently exempted operator a transition period of up to 6 months after the Bill comes into effect to either cease operations or apply for an exemption under the new legislation.

Conclusion

41.         Madam, allow me to summarise. The Remote Gambling Bill seeks to put in place measures to prohibit remote gambling in a manner that is consistent with our overall approach to gambling. It will restrict remote gambling by criminalising the entire spectrum of remote gambling activities and imposing blocking measures. The Bill will provide our enforcement agencies with the powers to tackle remote gambling and its associated concerns decisively. The Bill will also provide for a tightly controlled exemption regime with an extensive set of safeguards.

42.         These measures, together with enhanced public education and engagement initiatives, will allow us to address our law and order concerns, and protect young and other vulnerable persons from the potential harms of remote gambling.

43.         Madam Speaker, I beg to move.