Timor-Leste Bets on Online Gambling

In 2023, the Virtual Gaming Association of Timor-Leste (VGA-TL) was established as an “independent administrative body aiming to promote and initiate an online gaming industry in East Timor (sic)”. VGA-TL proposes a draft licensing framework like those of Malta (under its Gaming Act and associated laws) or the Isle of Man (under its Online Gambling Regulatory Act and associated laws), which the United Nations Office on Drugs and Crime (UNODC) lists as centres of “white-label” services. Such services are akin to franchises: online gambling licensees offer the whole gamut from sub-licensing to establishing fully functional turnkey business operations. In theory, this development allows any gaming operator looking to base an online casino in Timor-Leste to do so by paying a fee to licensees.

Timor-Leste President José Ramos-Horta had indicated no interest in local casinos in a June 2024 interview with Macau’s public broadcaster. In September 2024, however, the local government of the Oecusse-Ambeno Special Administrative Region (SAR) confirmed the Oecusse Digital Centre (ODC) project, which promises infrastructural and service upgrades worth US$550 million to establish “the first fully flagged (sic) management and call centre solution provider in Timor-Leste’s online gaming sector”.

Historically, governments have allowed gambling businesses to operate where they are perceived as economically uplifting through other services co-offered on-site and wages for local employees. Such opportunities in underdeveloped regions offer a chance for positive spillovers on the wider economy. However, this is more often true of casino gambling (in-person) and not of online gambling. Many countries oppose online gambling because of negative externalities, including gambling addiction, financial vulnerability, unproductive spending, and crime.

Hosting online gambling operations is seen as a gateway for Timor-Leste to start providing business process outsourcing (BPO) services.

Timor-Leste needs new sources of revenue and economic growth aside from its Petroleum Fund, which Prime Minister Xanana Gusmão has suggested may run dry by 2034. Data from Timor-Leste’s National Accounts 2003-2022 illustrates this, with the oil component of GDP falling 51.9 per cent from US$1,194 million to US$574 million in 2022.

Hosting online gambling operations is seen as a gateway for Timor-Leste to start providing business process outsourcing (BPO) services. Capital Group Timor-Leste is building a call centre offering 150 jobs, of which at least 120 are linked to online gambling. BPO providers offer third-party services for some business processes that may be worth outsourcing, such as call centre support for small businesses. This dovetails perfectly with the white-label model of online gambling junket operations; the licensee can access the lower cost of outsourcing and package an array of business services with licence permissions for operators.  

One can view BPOs, and the export of services more generally, as potential impetus for Timor-Leste’s development and economic diversification. Scholars highlight a large base of skilled labour and advanced digital connectivity as helping countries gain a comparative advantage in BPOs. If Timor-Leste wishes to do this, it must rely mostly on the second factor given its lack of the first.

Figure 1. Certain Categories of Service Export, ASEAN and Timor-Leste, 2022

The Philippines is a common example of this but some ASEAN countries are shutting down online gambling as local addictions and other ills worsen. President Ferdinand Marcos Jr. blanket-banned Philippine Online Gambling Operators (POGOs) in November 2024. The state-owned Philippine Amusement and Gaming Corporation (PAGCOR), established in 1977, argued that some 40,000 Filipino BPO workers would be laid off. However, POGO workers are not a significant majority in a sector estimated by the IT & Business Process Association of the Philippines (IBPAP) to number 1.4 million in 2022, in a larger workforce of 50.19 million. According to IBPAP, BPO-related jobs contributed US$26.6 billion to the national economy but government officials have said that the Philippines “does not need” POGOs.

Similarly, in May 2024, Indonesia’s Ministry of Communications and Informatics announced that it had taken down more than 800,000 gambling websites in the second half of 2023. In November 2024, Indonesia estimated that total online gambling transactions in 2024 reached 981 trillion rupiah (US$61.6 billion). At his first cabinet meeting, President Prabowo Subianto declared a crackdown on online gambling alongside drug trafficking.

Presently, Timor-Leste’s Decree-Law 6/2016 provides a framework regulation on gambling activities and their licensing, which supports the VGA-TL’s proposal for a streamlined licensing framework. This relatively hands-off approach to identifying licensees as liable parties might help to mitigate gaps in capacity to enforce regulations, especially concerning cross-border activities.   

The strengthening of Timor-Leste’s services sector beyond tourism would be a great boost to its economy. Someday, Timor-Leste can perhaps be compared to other small island states that rely on similar financial and/or business services to punch above their weight, such as Antigua and Barbuda, or Malta. With ongoing crackdowns on online casino operators in Indonesia, the Philippines and Macau, Timor-Leste is well-placed to capture junkets taking flight.

2025/55