Long way to go for POGOs

The proliferation of Philippine Offshore Gaming Operations, or POGOs for short, has literally taken us by storm. At the fast clip by which these online gaming operations were put up all over Metro Manila and in other parts of the country, we might soon find the Philippines becoming the hub of POGOs in this part of the world.

The worse part of this phenomenon is the undeniable influx of many Chinese nationals coming here in our country as tourists but ended up being hired as POGO workers.

At the height of its rising popularity – or unpopularity for that matter – President Rodrigo Duterte stepped into the picture and imposed a moratorium on the issuance of licenses to POGOs. The moratorium remains in effect since it was implemented since August last year.

We have nothing against new gaming business enterprises pouring in our country. However, there is not much value added in such online gaming business. On one hand, the service providers needed to support information technology (IT)-based skills that can generate job opportunities for Filipinos is fine, that’s true.

But by and large, the POGO operations here cater much to the gambling culture of the Chinese people. Since the main clientele or the market of POGOs are in China, Mandarin-speaking workers are thus required.

As of Feb. 21 this year, records submitted to the Senate public hearings on POGOs, there are 60 of such operators and 239 service providers in the government’s radar monitoring. But of this total, only 48 POGOs are actually operating. The rest are the ones causing much problems because these POGOs operate illegally.

The charter of the Philippine Amusement and Gaming Corp. (PAGCOR), as created by Presidential Decree (PD) 1869 empowered it, among others, to regulate all registered and licensed casinos all over the country. Such powers include regulation of POGOs. However, PAGCOR’s amended Charter under Republic Act (RA) 9487 cited exemptions from its authority and power such as “games of chance” like cockfighting and jai alai that were authorized, licensed, and regulated by other regulatory bodies.

Philippine laws, however, have failed to keep pace with the evolution of gambling and rapid technological change. Since the enactment of PD 1869 and RA 9487, advancements in telecommunications and the worldwide web have paved the way for remote and internet gambling. 

Prior to PAGCOR’s issuance of POGO licenses, most online gaming operators – which were operating under the licenses issued by the Economic Zones – only remitted more or less P56 million a year to the national government. This is not to mention taxes paid or not paid to the government.

Thus, PAGCOR crafted online gaming regulations in 2016 and started issuing provisional licenses the following year. An expressed condition is that licensed operators of POGOs are prohibited to take bets from Filipino citizens. Clearly, in the initial stage, the regulations were subject to change which maybe found disadvantageous to the government.

Under PAGCOR’s regulatory requirement, all POGO licensees must remit two percent of their gross gaming revenues as regulatory fees. As a result, PAGCOR’s reported income from POGO operations showed steady growth through the years. From P73.72 million in 2016, revenues from POGO increased significantly to P3.12 billion in 2017; P6.11 billion in 2018 and P5.73 billion in 2019. Also, from 2016 to 2019, PAGCOR reported revenues collected from POGOs – including application, processing and regulatory fees – already amounted to over P18 billion.

A Mutual Cooperation Agreement was signed in March last year between PAGCOR, the Philippine National Police (PNP), the Bureau of Immigration (BI) and the Office of Cybercrime under the Department of Justice (DOJ) to handle intelligence gathering, investigations and prosecutions of illegal online gaming activities. The inter-agency council was formed in response to Executive Order (EO) No. 13 issued by President Duterte in February 2017.

In EO No. 13, it clearly stated explicit instructions for gaming jurisdictions in how they should cooperate to fulfill the government’s mission in effectively stopping illegal gaming operations. Online operators that would like to offer gambling products outside of their applied jurisdiction must obtain licensing by the appropriate gaming agency.

This requirement applies to all gaming and licensing entities such as the Cagayan Economic Zone Authority; Aurora Pacific Economic Zone and Free Authority; Authority of the Freeport Area of Bataan; as well as the PAGCOR. 

Previous confusion and disregard for boundaries contributed to the proliferation of illegal gaming within the Philippines and online. These prohibitions have been imposed to stop the operation of online gaming outside of economic zones in which they obtained licensing as well as prohibits the sharing or transferring illegally these licenses to another party.

Since then, PAGCOR reported the POGOs – which take part in the production of casino games for offshore players – have been contributing significantly to the overall revenues of the state-run gaming agency.

However, the seamy sides of the POGOs are more dreadful than the additional revenues they generate.

These were manifested by the various forms of corruption and crimes from human trafficking, prostitution, kidnap-for-ransom, telecom frauds and other cyber-related crimes that involved POGO operators and workers either as victims or culprits. Just last Monday, two Chinese nationals were rescued from their compatriots who included a co-employee at a POGO company who kidnapped them in Clark, Pampanga. Since January, at least 26 Chinese nationals were arrested for allegedly kidnapping their compatriots.

A massive deportation of Chinese nationals is shaping up after China’s Ministry of Public Services reportedly sent notice to our government authorities of impending cancellation of passports of their nationals who have criminal records but got employed as POGO workers in the Philippines.

Just for pun, it’s still a long way to get POGOs out of here.