Keeping gambling out of the boardroom

In his latest podcast, “Sa Likod ng SoNA,” President Ferdinand R. Marcos Jr. confronted a growing national concern: online gambling. “We still have to form a policy on what we are going to do about online gambling. And to this end, I have already started to organize, to convene a conference of all the stakeholders,” the President said.

The rise of online gambling is more than just a legal issue; it is a social crisis. Fueled by the rapid digitalization of gambling platforms, online betting has become disturbingly easy and alarmingly pervasive. What was once confined to casinos and betting stations is now available 24/7 in the palm of one’s hand.

Digital wallets, originally designed for payments and remittances, are now seamlessly linked to gambling features, allowing users to wager their savings instantly, with the same tap used to pay for groceries and utility bills.

Gambling addiction drains family savings, keeps children from school, and tears households apart. The accessibility of these platforms makes them particularly dangerous to vulnerable groups, youth, low-income earners, and those already susceptible to addiction. The surge in online gambling in recent years reflects not just the changing technology but also gaps in regulation and enforcement.

The Securities and Exchange Commission (SEC) has an important role to play in addressing this issue. Under the Revised Corporation Code (RCC), publicly listed companies must have at least 20-percent independent directors who, apart from shareholdings and fees received from the corporation, are independent of management and free of any business or other relationship which could, or could reasonably, be perceived to materially interfere with the exercise of independent judgment in carrying out their responsibilities as a director.

The RCC empowers the SEC to set qualifications, disqualifications, voting rules, term limits, and other requirements to strengthen the independence and integrity of boards. This mandate positions the SEC to confront a critical governance concern.

Independent directors of corporations engaged in the gambling industry should not be allowed to sit on the boards or be part of the management of publicly listed companies in any sector.

Allowing directors from the gambling sector to hold management positions and board seats in publicly listed companies sends the wrong signal. It sends a signal that our capital markets are indifferent to the moral and social weight of corporate governance. Hence, drawing a firm line would show that public corporations are not only stewards of investor capital but also guardians of public trust.

Independent directors are responsible for safeguarding shareholder value and promoting sustainable strategies. The gambling industry, however, thrives on consumer losses and faces regulatory volatility, reputational risks, and social harm concerns. A director with gambling ties might, even unintentionally, influence decisions that normalize or expand gambling-related activities beyond their proper boundaries. Independent directors are supposed to be impartial watchdogs.

President Marcos’s plan to convene a multi-sectoral conference, bringing together regulators, industry leaders, advocacy groups, and social welfare organizations, offers a chance to craft a policy that is both economically rational and socially responsible.

The SEC must fulfill its mandate of protecting the investing public and developing the capital markets even if it may involve imposing stringent regulations on independent directors such as the prohibition on independent directors of gambling companies.