Malaysia vs the Philippines: How Two Southeast Asian iGaming Markets Developed Differently

Southeast Asia matters to digital entertainment because of its large population, wide internet coverage, high smartphone use and fast-growing online payments. But the same technology has not produced the same results everywhere. Malaysia and the Philippines show how governments and societies shape what happens to online gambling.

Malaysia has kept a restrictive approach rooted in law, religion and public policy. The Philippines went the other way, licensing online gambling and building an offshore gaming industry, before dramatically changing course.

It is worth remembering that lots of people gambling online is not the same as a formal iGaming market. How operators, payments, advertising and consumer protection are regulated decides how a market develops.

Malaysia: growth under strict restrictions

Online gambling in Malaysia is shaped by laws that permit only specific licensed forms of gambling. The two key acts are the Common Gaming Houses Act 1953 and the Betting Act 1953, which cover gaming houses, betting and related offences. Malaysian courts have also interpreted these laws in relation to online activity: in October 2023, the Court of Appeal held that online gambling can fall under the Common Gaming Houses Act.

Legal and regulatory environment

Malaysia has never had a broad licensing system for online casinos of the kind the Philippines once operated. Instead, it relies on prohibition. Some forms of gambling are allowed under licence, but that does not allow online gambling platforms to operate legally.

Islam shapes Malaysia's legal and social environment, and gambling is forbidden for Muslims. But Malaysia is home to people of many faiths, so religious law and national gambling law are not the same thing.

The role of offshore platforms

Despite these restrictions, Malaysians can still come across offshore gambling sites that reach them through websites, apps and online marketing without any permission to operate in Malaysia. That makes enforcement hard: the operators, payment services and infrastructure may all be abroad, blocking one website does not stop others, and foreign companies are difficult to investigate.

Online gambling in Malaysia is therefore not a licensed domestic industry. It is better understood as demand from Malaysian users being met by offshore operators.

The Philippines: building a formal online gaming framework

The Philippines took a very different route and built an official regulatory framework for online gambling. The Philippine Amusement and Gaming Corporation (PAGCOR) is central to it, acting both as regulator and as a state-owned gaming operator that earns revenue for the government.

That approach drew local and international companies, technology providers and workers into the Philippine gaming industry. Over time, though, its offshore side came under heavy criticism.

PAGCOR and the POGO boom

PAGCOR licensed Philippine Offshore Gaming Operators, known as POGOs: companies based in the Philippines that offered gambling to customers outside the country.

The model appealed to companies targeting international markets, especially countries where gambling is restricted. It created demand for office space, housing, IT services and other businesses, so its impact spread into real estate and the labour market.

But a licence did not guarantee lawful behaviour. In 2024, Philippine authorities raided and shut down illegal gaming hubs linked to fraud, human trafficking and kidnapping, cases widely reported by international media including Reuters.

The rise and fall of offshore gaming

Offshore operators grew by serving customers in countries with strict gambling laws. But concerns about crime, and the difficulty of supervising businesses operating across borders, steadily eroded the sector's credibility.

In July 2024, President Ferdinand Marcos Jr. announced a ban on POGOs in his State of the Nation Address. Executive Order No. 74, signed in November 2024, banned offshore gaming operations, covering both POGOs and internet gaming licensees serving offshore customers. PAGCOR cancelled the remaining offshore gaming licences, with operations required to end by the close of 2024.

That history is important for understanding the market today. The Philippines created a formal licensing system, then decided the risks of offshore gaming outweighed its benefits. The ban applies to offshore gaming; other licensed gambling in the Philippines continues.

Culture, religion and public attitudes

Culture and religion help explain why the two countries diverged. In Malaysia, Islam plays a significant role in public life and law, and gambling is forbidden for Muslims. Yet the country is religiously diverse, and its gambling laws cannot be explained by religion alone.

The Philippines has a long history of state-regulated gambling, which made licensed gambling a familiar part of life. But government regulation did not mean universal public support, and the POGO scandals showed that economic gains could not outweigh crime and abuse.

Both countries face the broader problem of gambling harm. Excessive gambling can cause financial, family and psychological damage, so regulators have to weigh social costs as well as economic value.

Technology, mobile access and player behaviour

Smartphones, mobile internet, digital advertising and electronic payments have made online gambling reachable across Southeast Asia without any need to visit a gambling venue.

That creates opportunities for digital businesses but makes regulation much harder. A company can host its website in one country, use service providers in another and target customers in several more, making it difficult to identify who is responsible and to enforce local law.

This is especially true for Malaysia, where online casinos remain reachable despite domestic prohibition. The Philippine experience showed the other side: even a legally established industry could shelter criminal organisations. In both countries, easier access does not mean legal authorisation or effective regulation.

Economic impact

The two approaches also had different economic effects.

In Malaysia, prohibition means no legitimate online gambling industry and no tax revenue from it, while unauthorised activity creates enforcement costs and risks for consumers, from fraud to unpaid winnings. Some argue there would be economic benefits from a legal online market, but any such case has to be weighed against social, political and legal concerns.

In the Philippines, the POGO sector created jobs and boosted demand for property, transport and services. But that contribution came with serious problems of crime and enforcement, and the government ultimately shut the offshore industry down and had to deal with the consequences.

The lesson for anyone looking at Southeast Asia is that market size alone does not make a market viable. Law, enforcement and social acceptance matter just as much.

Challenges and outlook

Malaysia

Malaysia's main challenge is enforcing its gambling laws in an increasingly digital world, as offshore sites switch domains, payment channels and online services. It will also have to decide whether and how to update its laws for new technology.

The Philippines

The Philippines has shifted from growing its online gaming market to dealing with the aftermath of the offshore ban and tightening supervision of its legal gaming industry. PAGCOR has also placed greater emphasis on responsible gaming, including measures to reduce harm and keep minors away from gambling.

Shared challenges

Both countries face cybercrime, criminal finance, data privacy, problem gambling and the need for international cooperation, and regulators must keep pace with changing technology. The future of iGaming in Southeast Asia will not be decided by smartphone growth and consumer demand alone. Policy, and how well it is enforced, will remain decisive.

Conclusion: different models, different outcomes

Malaysia and the Philippines show two very different approaches to online gambling. Malaysia's environment is defined by restrictive laws and continuous enforcement against unauthorised activity. The Philippines built a large offshore gaming industry, then banned it over crime and security concerns.

Together they show that technology alone does not determine how iGaming develops. Law, culture, economic priorities and government policy all shape its future, and anyone interested in the region needs to understand those differences.