07 October 2014

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

Introduction

 

Deputy Speaker, I would like to thank all the Members who have spoken of the Bill and I would say in general, they are supportive of the intent – policy and legislative – with some qualifiers which I will address shortly.

 

2.            Members have expressed their views and raised queries on a range of issues. Minister Chan Chun Sing has spoken on the social concerns associated with remote gambling and how the Ministry of Social and Family Development and the National Council on Problem Gambling will step up public education and awareness efforts. 

 

3.            Let me address the issues that have been raised and broadly fall into the four themes: – the need for the Remote Gambling Bill, how the Bill will be enforced, the blocking measures and, finally, the exemption regime.  

 

Need for the Remote Gambling Bill

 

4.            Several Members have spokenon their concerns associated with remote gambling and there are good reasons for this. The growth of remote gambling worldwide has been aided by advances in technology.  Anyone who has a smartphone or internet is a potential customer and we share the concerns of members.

 

5.            First and fundamentally, from a law and order perspective,experience shows that there is a material link between illicit remote gambling activities and international criminal syndicates, money laundering, match-fixing and corruption.

 

6.            Let me cite a few examples to illustrate the nature of the problem.In an illegal online gambling raid in June 2013, the Chinese and Hong Kong police arrested more than 50 people, nine of whom were involved in organised crime. It was estimated that the online syndicate laundered more than US$32 million.

 

7.            Closer to home, in early 2010, a male Singaporean was arrested in an islandwide police operation against an Unlicensed Money Lending syndicate. Investigations revealed that he was not just an unlicensed moneylender but also involved in illegal soccer betting activities as an agent, and a punter with an overseas remote gambling operator. 

 

8.            In 2012, Police arrested a male Singaporean, who was the Headman of a Secret Society gang, during an islandwide operation against illegal soccer betting activities. He was involved in illegal soccer betting activities as a ‘master agent’, and accepted illegal soccer bets from his five agents and numerous punters through a remote gambling website.

 

9.            Second, there are also the social concerns which Minister Chan has elaborated on, and the young are particularly vulnerable as they are more tech-savvy and therefore more able to use technology.

 

10.         Hence, we need robust legislative and regulatory levers to deal with remote gambling and its associated ills.

 

Enforcement of the Remote Gambling Bill

 

11.         I am glad that Members, such as Mr Tong, acknowledge and support the need to have broad provisions, given the nature of the challenge we face. Criminalising the entire spectrum of remote gambling activities is necessary to give our enforcement agencies the wherewithal to deal with and deter syndicates from targeting, or operating in, Singapore.

 

12.         But, some have asked whether the Bill is too broad in its scope, within and without this chamber.  Sir, we have deliberately sought to be comprehensive in the Bill’s coverage.If not, it will lack the efficacy and currency in regulating a sector which is innovative in the extreme, fast changing, and quick to adopt new technology. Remote gambling has profoundly altered the terrain.  It allows a person to gamble anywhere, any time.Moreover, remote gambling operators are increasingly using virtual currencies such as Bitcoin, even though it is a recent and somewhat controversial innovation, which has yet to gain widespread traction in the real world.It is precisely such disruptive developments and innovations that can potentially, and easily, circumvent any remote gambling legislationif it is cast too narrowly. That is why broad provisions are vital, to use Mr Edwin Tong’s language.

 

Social Games

13.         Mr Vikram Nair asked whether the Bill will cover social games such as FarmVille, Candy Crush, Monopoly and the like.  There is a wide spectrum of games that could be considered social games, ranging from those that are free-to-play to social casino games. I want to give Members a sense of the continuum. There are freemium games, in other words, games which you can get it for free, and in-game, buy additional credits. This is where players can purchase in-game credits to improve the game-playing experience (e.g. to outfit a avatar with a new costume); others have developed virtual currencies of their own which can be used to buy or redeem other entertainment products such as games of other developers, music or even movies; yet others allow their virtual currencies, credits and points to be traded with possible value in the real world. 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.  The only difference is that in-game credits are used. The fact is, and it is quite clear, that the space is diverse; there is a large penumbra and not all social games are as innocuous as some may make them out to be, and I think we need to bear this in mind when we make certain arguments.

 

14.         The fact is that the line between social gaming and gambling is increasingly becoming blurred.What may appear benign today can quite quickly morph into something a lot moresinister tomorrow in response to market opportunities and consumer trends. This is why the legislation is cast broadly. However, as a matter of principle, the Bill does not intend to cover social games in which the players do not play to acquire a chance of winning money, and where the game design does not allow the player to convert in-game credits to money or real merchandise outside the game. The games such as Farmville, Candy Crush and Monopoly, in their current form, would fall into this category. They are not the target. MDA has issued a statement that the Bill will not impede the development of legitimate gaming businesses and we will work with MDA and the industry to clarify the application of the law.

 

Enforcement Actions

15.         Several members have asked about enforcement actions by the Police. The primary focus of our enforcement efforts will be on the operators of illegal remote gambling services as they are the more likely to be associated with or be used to support criminal activities. They rely on a complex structure of master agents, agents and runners to market their services, set up accounts and manage bets locally in target countries, while the remote gambling operator or the agent is based in another country where such activities could well be deemed legitimate.

 

16.         The Police, as part of on-going operations, have the capabilities to proactively detect, monitor and take enforcement actions against such persons and organisations.For those who operate from overseas, Police will continue to collaborate with its counterparts to provide and share evidence of unlawful remote gambling activities, with a view to prosecuting these persons.Other options would include possible extradition to Singapore under applicable treaties and arresting these agents if they were to arrive in Singapore. The Police will also take into account any complaints or feedback that is received from the community, and in response to Er Lee Bee Wah, there is a hotline, and police crimestopper (an online link), police feedback email and other sources. There are multiple channels to which members of the public can alert the police.

 

17.         The Bill also prohibits remote gambling operators from establishing operations in Singapore, even if they do not offer their services to the Singapore market. This is necessary to address the risk of associated criminal activities and other spillover effects which could have taken root in Singapore. It will deter remote gambling operators from using Singapore as a base for their operations which could subsequently be a conduit for other criminal activities. It will send a clear signal to criminal syndicates and their associates who minded to think otherwise.  

 

18.         Some members have expressed concern that Singapore-based companies which provide services for the online gaming world would be prohibited under the Bill. I want to be clear about this.

 

19.         Remote gambling syndicates operate through a myriad of layered structures. They rely on a whole suite of service providers.Clause 9 is aimed, in particular, at agents who play a critical role in remote gambling networks, and are associated with other criminal activities.That is the focus. Enforcement will be targeted at those who are deeply involved in, and provide core and critical servicesin support of the illegal activities of the unauthorised remote gambling operators.The focus and emphasis is to preserve law and order and it will not impede legitimate activities in Singapore. 

 

20.         Mr Nair asked about whether it is an offence for tourists to gamble remotely while in Singapore. Firstly, if it is an offence in Singapore, it applies equally, whether you are a foreigner or a local. I would say that the possibility of a tourist engaging a remote gambling activity in Singapore should significantly reduced by the fact that we will undertake blocking measures.

 

21.         That said, I would like to assure the Member that SPF will take a calibrated approach when enforcing this provision.The primary focus of its enforcement activities is on unlawful remote gambling operators and agents and less on individual gamblers per se.

 

Blocking measures

 

22.         Let me now move on to elaborate on the blocking measures which most Members have voiced their support for.

 

Effectiveness of blocking measures

23.         Some members have asked how we ensure effective enforcement of the blocking measures. A unit has been formed within MHA to develop our capabilities to monitor gambling websites and related payment mechanisms.It will also make use of appropriate 3rd party resources and build on existing collaborations with regulators in other jurisdictions to track remote gambling trends and learn from regulatory best practices.The blocking lists will be reviewed and updated regularly.We will also block websites of VPN service providers that offer services openly aimed at bypassing our blocking measures for remote gambling.  This unit will work closely with the Police.

 

24.         Mr Png has asked for clarifications on the defence for the publication of in-app remote gambling service advertisements by mobile application developers.I was intrigued by Mr Png’s argument. On one hand, he is greatly concerned on the problem of remote gambling, yet you do not want to douse entrepreneurial flame of social game developers who may have access or may be facilitating access to remote gambling. So I think we need to be clear about this. You cannot reasonably expect that developers who derive revenue from such advertisements to be provided with a defence because it requires a conscious act of clicking on the pop-up in your app that will lead you to getting your revenue from that particular remote gambling service. If you are getting your revenue, you must be aware that this is happening. We need to be clear about this. The intent here in offering the defence is where there is incidental and accidental advertisements or promotion, that is where the defence applies. For example, when you are broadcasting a soccer match and some of the players are wearing something on their jerseys which promote a remote gambling service, this is something that is incidental or accidental, and this is an appropriate defence. But where you are getting a clear economic benefit from this activity, then I think it is surely quite self-evident that individual or the entity must be held accountable.

 

25.         Mr Edwin Tong has sought clarifications on the proposed payment transaction blocking orders and whether they would cover virtual currencies. The orders can cover virtual currencies, though the virtual currency economy is still at a nascent stage of development in Singapore. The House may recall that MAS announced in March 2014 its intention to regulate virtual currency intermediaries to address the potential money laundering and terrorist financing risks.Hence, we will work with MAS and monitor developments closely. The way the legislation is framed, it will cover virtual currencies.

 

26.         I think Mr Tong would appreciate that payment blocking is a more serious form of intervention. This is why we require a higher threshold for the imposition of such orders. However, I would like to reassure Mr Tong that MHA will be quick to act to issue payment transaction blocking orders once it is clear that a website is targeting Singapore.The clause is phrased broadly to allow the authorities to decide which factors are material, so there is a list of factors, but if you read the clause carefully, it also makes quite clear that enforcing officer has the flexibility to decide on which factors are material in evaluating a particular case, and decide the weights accordingly. Factors such as the presence of advertisements and promotions directed at those in Singapore, the use of Singapore domain names or even the Singapore flag to attract patrons would certainly be taken into account.

 

27.         We will be introducing a comprehensive and restrictive set of measures as part of the proposed remote gambling regime, perhaps one of the most restrictive in the world.However, these measures cannot be foolproof and there is really no silver bullet, as many members have observed, and we cannot have a silver bullet against the particular individuals and/or remote gambling operators who are determined to circumvent the system. It is the nature of the terrain. It is a game of cat and mouse. Nonetheless, the collective adoption of these blocking measures will be ample signal to the vast majority, and it will significantly disrupt and impede the remote gambling activities of the few who may be recalcitrant, and I think this is the approach we want to emphasize. 

 

28.         It is also important that we consider the proposed measures in their entirety and not just the enforcement or blocking measures, but also about public education and engagement initiatives to raise awareness and emphasise personal responsibility; a point which was also highlighted  by Er Lee Bee Wah.

 

Exemption

 

29.         Let me now address the exemption regime on which several Members have spoken. Mr Edwin Tonghas pointed out that no amount of legislation or enforcement can completely eradicate gambling, and there is a need for a controlled outlet as a consequence. On the other hand, Ms Denise Phua and Mr Png Eng Huat opine that an exemption regime would send the wrong signal and has asked why we are not imposing a complete ban on remote gambling.

 

30.         We have always adopted a prohibitive stance towards gambling and this has not changed. And this Bill does not change it. All gambling, regardless of channel or medium, is not permitted unless authorised, licensed or exempted.  Such exemption is not new or unchartered territory for us. Mr De Souza says there is a contradiction. Today, in our terrestrial gambling regime, the laws are very clear that these range of activities are illegal but there are exempt service providers in the terrestrial gambling regime under the Common Gaming House Act and the Betting Act. So, the regime is consistent and we have taken this approach. And why do we do that? We granted exemptions in the 1960s to Singapore Pools and Singapore Turf Club even as we were dealing with triads, illegal gambling syndicates and underground gambling. These fundamental law and order concerns have not changed.One cannot dismiss the risk of underground criminal activity as some kind of inevitable consequence of any law that renders an activity unlawful. The greater the extent of the underground illegal activities, the greater the risk to law and order, and most importantly, the greater the danger to individuals who might one reason or another be involved in that. If we have a complete ban, it will simply enlarge the price and probably create larger incentives for criminal syndicates to target Singapore. The bet in of itself is one argument.

 

31.         The key point is this. When you look at our experience, what we have done in the terrestrial gambling environment, we seek to maintain law and order. We have criminalised the range of activities and we have allowed a very tightly controlled valve, not because we wish to promote it, not because we condone it, but because it is there as part of an ecosystem that seeks to minimise the law and order concerns, and the social consequences that we are concerned about. That is the objective of the exercise. So for those who argue, like Mr Pritam Singh, that you need evidence and you argue for the counter-factual, I would ask you to produce the evidence because, our evidence is our experience, what we have done over the last five decades. This is the outcome. If you believe a complete ban can produce a superior outcome, then please produce the evidence. We are not unique in having a tightly regulated exemptoperator in terms of this kind of legislation. Jurisdictions like Hong Kong and Norway, with some of themost restrictive remote gambling regimes, have allowed for a tightly controlled regime with comprehensive safeguards and this has been administered without exacerbating law and order concerns or social concerns.

 

32.         We have held several rounds of consultation with stakeholders such as community groups, religious groups and social workers on remote gambling and the issue of exemptions. The views were varied, not unlike what we have heard in this chamber today. Some advocated a complete ban; others felt that it would be better to have a tightly controlled exemption regime offering very limited gambling products and subject to stringent conditions. Some even opined that a tightly controlled regime will provide a safer gambling environment.

 

33.         I acknowledge and respect the strong views expressed by several Members of the House, and others in the wider Singapore society, on gambling and specifically in this context, the issue of exemption.These stem from deeply held personal beliefs and I respect that. Equally, there are others who hold quite the contrarian view and argue that these matters should be left to individuals to decide.Yet others advocate a pragmatic approach that curtails, but does not eliminate, the avenues for gambling while minimising the risk of social harm. So there is a spectrum.

 

34.         Ms Phua made a case. She says that by having an exempt operator, we are dignifying, ennobbling or condoning remote gambling. I fail to see this. We are criminalising the spectrum of remote gambling activities. We are introducing stiff penalties for those who engage – not just the operators, not just the bookies and the agents, but even the individuals who engage in gambling. It is quite clear where we see this activity that resides in the number of society. So how does this in any way ennoble the activity? What it does do is that it sends a very clear signal on where we stand on the issue and gives us the wherewithal to deal with the problems.   

 

35.         This Bill neither condones nor encourages gambling; indeed that would be inconsistent with the prohibitive stance in this Bill and other existing gambling related legislation.The exemption provision that we have in this Bill must be seen for what it is – a tightly controlled exception within a regime that prohibits remote gambling, impedes access and payments, undertakes strict enforcement, and promotes awareness and personal responsibility through public education and engagement. In formulating policy and legislation, the Government has to take into account the diversity of views that are deeply held by our citizens from different segments of society, while addressing the larger public interest that pertains to law and order and concerns over social harm. That is what we have sought to achieve with this Bill.

 

Applications for certificate of exemption

36.         Several members have asked about the criteria for exemption and I want to spend some time going through the methodology because this is a matter of interest for members and we need to provide some clarity. So what is the criterion? Interested entities will first have to apply and thereafter be assessed to have met a set of strict criteria which is clearly legislated in the Bill before we will consider issuing them a certificate of exemption. It is a very tight sieve and only not-for-profit entities that return surpluses to the community can qualify. That limits the universe tremendously. Neither is it a foregone conclusion that STC or Pools will meet the criteria. 

 

37.         They will have to apply for exemption like anyone else, be assessed on individual merits according to the criteria, and be subject to strict conditions that will be applied. Minister Chan Chun Sing elaborated on some of them in terms of social safeguards.

 

38.         There is a suggestion that perhaps we were looking at it as a large revenue collection possibility. Let me be clear about this, if revenue collection were the motivation, the approach would be very different. There are other regimes in the world like France and the UK, which have many licensed remote gambling service providers offering a wide range of gambling products. France issued 31 licenses to 20 remote gambling service providers offering a wide variety of products in 2013. This is the contrast.

 

Types of conditions/products

 

39.         Even if exemptions are to be granted under the proposed legislation, we will impose strict conditions on the operator and the operations. The exempt operator will be required to put in place robust social safeguards and responsible gambling measures as well as measures to maintain gaming integrity and address law and order concerns. This will minimally include responsible gambling measures such as self-exclusion, employee training and patron education that already exists for terrestrial gambling. In addition, drawing from the best practices in other jurisdictions and our own experience, other control measures could be introduced and we will seriously examine this. For example, some of the suggestions that have come from members such as Mr Ang Wei Neng, but also in terms of the products that can be offered and specific social safeguards for potential customers.

 

40.         We will restrict the number and type of products that could be permitted. Casino-type games or poker will not be allowed. I want to emphasise that.We will curtail the range of options significantly.

 

41.         Additional social safeguards could include only allowing pre-registered account holders to access the service, imposing a minimum age requirement for registration and not granting betting on credit.Exemptions will be valid for a stipulated period of time and the exempt operators will be assessed on an on-going basis for compliance to the stringent conditions that will be imposed. The Bill already provides for a comprehensive list of regulatory sanctions ranging from letter of censure, variation of the condition of the certificate of exemption, financial penalties, restriction of business to revocation or suspension of the certificate of exemption. The option of renewal of Certificate of Exemption is not assured either.

 

Other Issues

 

42.         I have elaborated at length on our approach to the exempt operator and why we have embarked on it. I have clarified this because it is of material and important concern for all members and the wider Singapore society. This is not about trying to create a new and large channel for gaming online. Mr Yee Jenn Jong used the term “floodgates” – hardly I would say given the kind of constraints and conditions we are imposing. Fundamentally, it is a regime that is prohibitive with a comprehensive set of measures. The exempt operator, if any, would be subject to very stringent criteria. We expect few to qualify and their operations will be constrained, and it will be for a restrictive set of games. I do not see the need, given our consultation, the position that I have outlined and the provisions in the law for any referral to a select committee that some Members have asked. Before concluding, let me address some specific questions that Members had raised.

 

43.         Mr Ang Wei Neng and Mr Png Eng Huat had asked about clause 40 which allows the Minister to make specific exemptions. This provision is not intended to exempt persons from clause 8(1) where it is an offence to gamble remotely in Singapore, nor is it intended to allow the existing IR operators to offer online gambling. The IR operators will not meet the criteria set out in clause 26 to qualify for a certificate of exemption. The last I checked, they were firmly committed to the profit motive still.

 

44.         Instead, clause 40 is meant to provide ad hoc exemptions for very specific products that may be available for a short period of time. For example, these could include online lotteries or lucky draws organised by charities or businesses and they want to use an online platform because of the way they’ve conducted their business for that particular activity, and for the purposes of promoting the sales of their products. This is in some ways, no different from when we allow lucky draws and donation draws in the terrestrial world with our current legislation.  That is the focus of this clause.  

 

45.         Mr Yee Jenn Jong have asked about the operations of existing terrestrial operators.  Pools account holders can only place bets over the telephone, while STC account holders may do so through a mobile application as well. These services are available only to registered account holders. You must go through a registration process with certain information before you can be considered. Hence, one cannot simply pick up the phone or download an app and start gambling. That is not how it works. The turnover from these services accounts for less than 10% of STC and Pools’ total turnover. It is relatively modest in size and it is not something that has proliferated based on the experience of these two entities.

 

46.         Dr Benedict Tan asked how Pools can be compelled to level up its competitiveness and whether the IRs, STC and Pools will channel more funds for social causes. The objective of the Bill is to tackle the law and order and social concerns associated with remote gambling. With or without this Bill, the IRs, STC and Pools should be encouraged to contribute to social causes on an on-going basis. From a governance point of view, the Tote Board is under the Ministry of Finance and I will convey the Members’ sentiments to the Minister.

 

47.         Mr Vikram Nair suggested that an amendment be made to our anti-money laundering provisions to include offences under the Remote Gambling Act in the Second Schedule of the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act. It is the Ministry’s intention to do this after the Act is passed.

 

Conclusion

 

48.         Speaker, let me conclude. This Bill is consistent with our current prohibitive approach to gambling which is also reflected in existing gambling legislation. However, we must recognise that remote gambling is materially different from conventional terrestrial and casino gambling. The law and order issues and social concerns it poses are more challenging, given the rapidly evolving and transnational nature of this industry.  This is why we are adopting a multi-pronged strategy. We are introducing comprehensive legislation, stepping up enforcement, implementinga range of blocking measures and broadening public education and engagement. This is a significant change from the status quo where remote gambling is unregulated and unfettered. These measures will help us in no small way to deter illegal remote gambling operators with criminal associations from targeting Singapore. With the support of the community, we alsowant to raise awareness of the dangers of remote gambling, and emphasise the need for personal responsibility – for each individual to know his limits, act responsibly and seek help if necessary.

 

49.         I beg to move and I urge Members of the House to give your support to the Remote Gambling Bill.