The best solutions mean compromise

For the past three years, DigiPlus was the PSE’s foremost market darling, mounting a generational rise in an otherwise stale stock market where it has been difficult to make money.

From a mere P1.30 per share in June 2022, DigiPlus increased by a whopping 4,900 percent to a peak of P65 per share in June 2025 after leading an industry altering pivot to the easily accessible online gambling business patronized by many Filipinos through platforms BingoPlus, ArenaPlus and GameZone. The rise of DigiPlus to the top was not just driven by hype or manipulation either, as the stock price increase was supported by the company’s strong financial performance and fundamentals, with its net income of P686.6 million in 2022 soaring to a staggering P12.6 billion in 2024.

With the very scalable business model of DigiPlus, nobody knew when the stock price would settle or go down. A safe bet would have been that DigiPlus was set to continue its stock price surge into ad infinitum, primarily because nobody knew the bounds of the online gambling industry and the inclusion of DigiPlus in the next recalibration of the PSEi in August as well as planned expansions into Brazil and other countries giving the stock legs for its next run up. Last week, we finally got our answer. Numerous legislation bills filed to completely ban online gambling have sent the DigiPlus stock into a freefall, slashing the company’s value by half and trapping many investors who refused to sell or caught falling knives.

The social ills of online gambling

Make no mistake, the widespread concerns over online gambling are warranted. Anecdotes are rife about ordinary Filipinos spending whatever meager income they have into fueling their gambling addiction, with some stories even mentioning jeepney drivers and security guards placing bets while working on the job, posing an immediate danger to the safety of the very people they are responsible for.

If left unchecked, online gambling has the potential to destroy lives. The mentality of gambling addicts is that they can easily recoup whatever they lost with the next bet. Before they know it, however, they have already given up all their assets and even gone into a mountain of debt. The outstanding financial performance of DigiPlus is a testament to the oft-quoted adage that the house always wins while the bettors are just left in ruins.

The low barriers to participation fuel the popularity of online gambling platforms. Unlike physical casinos that require significantly more effort in getting people to come in and play, online gambling is available at the tip of the bettors’ fingers 24/7, enabling bettors to enjoy short thrills and satiate gambling needs should the itch appear. Online gambling outlets also offer small bet sizes, with some games going for as low as P0.25 per bet and the minimum bet for Blackjack being P100 compared to the minimum bet of P500 in physical casinos.

Threat to the capital markets

Inasmuch as the legislative bills are well-intended for the benefit of many, moves to ban or curtail business activity spook the business community, both local and foreign, because the inadvertent message that these recent developments send is that businesses can easily be terminated on a whim and anybody is fair game. The proposed bills to ban online gambling and its impact on listed stocks, particularly DigiPlus, Bloomberry and even Globe and PLDT due to the cash transfer mechanisms through GCash and Maya, are reminiscent of the stock price declines of Manila Water, ABS-CBN and PhilWeb as a result of government regulation. Exceptional stock price declines and wipeouts resulting from government intervention scare away investors and do not inspire confidence, especially in a stock market that is already suffering from declining volumes. After all, if investors can lose large amounts of money by investing in the stock market’s ultimate alpha stock, then what chance will they stand with other less prominent stocks.

Balancing the public’s and the state’s interests is challenging but doable

In life, all extremes are considered dangerous. This statement holds true for both the proponents and critics of online gambling, which is why the industry should be governed instead by tighter regulations rather than an outright ban. Several effective restrictions which can be implemented include the requirement of having a high financial capacity in order to play, increasing the amounts of minimum wagers, delinking e-wallets as a fund transfer mechanism, capping the maximum number of times a bettor can play in a particular period of time and increasing government-imposed taxes on the payouts.

A similar approach in regulating products or services that are considered deleterious to society was used in the Philippine government’s implementation and subsequent increase of the sin tax or excise tax to limit the consumption of both alcohol and cigarettes. Although the LT Group was probably the company hardest hit by the sin tax increase, the company diversified into other business lines and transformed into what is now one of the highest paying dividend stocks in the market. This is exactly just the resolution that DigiPlus and its shareholders deserve rather than an outright ban that would essentially end the company’s corporate existence.

From the government’s perspective, the implementation of the sin tax was very effective and achieved its intended objectives. The number of alcohol drinkers and smokers has indeed declined separately, while the government is still collecting estimated annual revenues of P270 billion from the sin tax. There is no reason to believe that the same incremental benefits will not occur from tighter regulations on online gambling, which would come on top of the estimated P60 billion non-replaceable annual revenues already derived from online gambling. Moreover, if online gambling is totally banned, online gambling firms are still expected to operate underground illegally, in which case the government will incur a net negative position after standing to lose a significant amount of revenues and even incurring added costs to strictly police such activities.

We hope to hear a favorable outcome on this issue as soon as possible to reduce the regulatory overhang on the industry, allowing affected companies to return to business as usual — with any final decision reflecting a much-needed compromise.

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Written by Eduardo Francisco and Andrew Poblete of BDO Capital & Investment Corp. To learn more about SharePHIL, visit https://bit.ly/m/sharephil