This article first appeared in The Edge Malaysia Weekly, on January 16 - 22, 2017.

ACROSS the Causeway, the laws on online gambling have been relaxed. State-owned Singapore Pools started offering an online betting service in October last year while Singapore Turf Club (STC) went live with a new web and mobile app the following month.

This has caused many in Malaysia to wonder if the government will follow suit and allow online betting for four-digit and lotto games.

In Singapore, the move is expected to help boost the receipts of gaming tax revenue.

Singaporeans can now place bets on horse racing and popular lotto services such as 4D and Toto, as well as football matches, Formula 1 races and other sports events, under the new online gambling rules.

However, casino-style games such as poker are not allowed. Online gaming users are also required to go to a physical outlet to verify their identities and ensure they are over 21.

Gaming analysts in Malaysia say this is not entirely surprising given the extent to which technology has become part of our daily lives.

“Going online will help stop the leakages through the illegal gaming space and increased earnings for the legitimate players will result in more tax income for the government,” says one analyst.

Mobile apps could be a new channel for Malaysian number forecast operators (NFOs) to reach out to a wider number of punters. First though, they will need to obtain approval from the government, say industry observers.

Some people opine that online betting for number forecast games would encourage more people to gamble and lead to social ills.

But analysts say there is a strict vetting process. “Players first have to go to the outlets to register and be verified. This is to ensure a player is legitimate and above the legal age to gamble,” says an analyst with a bank-backed stockbroking firm.

On the home front, Pan Malaysia Pools Sdn Bhd (PMP) — one of the three NFOs — is already in the mobile space with a telephone and mobile betting service called dmcGO, formerly known as Telelink.

“They received approval for this many years ago under telephone betting …  and that covers mobile phones today. What is exciting now, compared to previously, is that the mobile app is commonly used,” says the analyst.

“Punters can place bets at their convenience anywhere rather than have to go to an outlet. In the case of dmcGO, the app has been around since 2015 but that was like a trial launch …  it is only recently that more people are learning about it.

“Telelink did not take off in a big way many years back ... the agents at the outlets were not as incentivised to push that initiative as they would lose their commission if the customers bypassed the outlets and bet via the phone.”

It is learnt that the agents will earn commission from the customers who sign up for mobile betting with an outlet. They are tagged to a particular agent, who will earn a commission when bets are placed through the mobile app,” he adds.

Apart from that, the timing may be better now. “Mobile phone users today are more savvy and use their devices for many things,” says an industry observer.

According to the dmcGO website, there has been a shift in buying behaviour and in line with the continuous growth and acceptance of mobile shopping, PMP is introducing a revamped mobile betting app.

Customers who open a dmcGO account can use the app to place bets on Da Ma Cai games virtually anywhere, anytime.

Would the other two local NFO players — Magnum Bhd and Berjaya Sports Toto Bhd (BToto) — want a similar app?

A gaming analyst with a foreign research house says the industry players are talking to the Ministry of Finance about this. The licences of gaming companies come under the purview of the ministry.

“We hear they are engaging with the ministry from time to time on this but it is unclear if the government will relax the rules. Online gaming is the way forward and will also help stem illegal betting revenue and tax leakages,” he says.

NFOs have been seeing declining ticket sales partly because of the growth of illegal betting, say operators and industry observers.

“The challenges faced by the NFO segment from illegal operators, weak consumer spending and the effect of recognising revenue net of Goods and Services Tax on Gaming Supply for nine months in 2016 versus six months from April 2015 (when GST started) has contributed to a drop in reported gaming sales,” Magnum notes in its financial report on Sept 30, 2016.

Without taking into account the effects of GST, Magnum’s gaming sales dropped RM61.8 million or 2.9% for the nine-month period ended Sept 30, 2016. “With the lower gaming sales and a higher payout in the current nine-month period, the gaming segment’s profit before tax declined to RM208 million when compared to RM271.1 million recorded in the previous year’s nine-month results,” it adds.

BToto, in its financial announcement for its six months ended Oct 31, 2016, notes: “The volatility of the global economic environment, weaker consumer sentiments and rising costs that affect consumer spending power as well as intense competition from illegal gaming activities continue to pose challenges to the businesses of the group.

“The directors expect the NFO business to be challenging for the remaining quarters of the financial year ending April 30, 2017. In spite of the above, the directors expect the group to maintain its market share in the NFO business.”

It adds that compared with the previous year corresponding period, Sports Toto reported a drop in revenue and pre-tax profit of 1.6% and 8.8% respectively for its six months ended Oct 31, 2016.

Kenanga Research, in a Jan 5 report, states: “The NFO players had mixed luck in 3QCY16 where Magnum rebounded strong by 152% sequentially in 3Q16 as prize payout ratio (EPPR) normalised to 65.9% from 73% in 2Q16 while BToto faced higher EPPR of 63.6% in 2Q17 from the already high payout of 62.0% in 1Q17, against the theoretical level of 60%.”

“On the other hand, we also noticed that both operators reported weaker year-to-date ticket sales on per draw basis by 3% for BToto and 6% for Magnum from last year although Magnum posted 1% growth sequentially while BToto still saw weakening NFO by 5% q-o-q.

“With the declining ticket sales coupled with vulnerable luck factor, the earnings outlooks for these two operators are at stake,” the research house says.

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