Wikipedia

Philippine Offshore Gaming Operator

Not to be confused with Pogo stick.

Philippine Offshore Gaming Operators (POGOs) is the official designation for firms operating in the Philippines which offer online gambling services to markets outside the Philippines.

Building complex in San Rafael, Bulacan which has a POGO as its tenant.

Background edit

Philippine Offshore Gaming Operators or POGOs are online gambling firms that operate in the Philippines but cater to customers outside the country. To operate legally, they must be licensed by the Philippine Amusement and Gaming Corporation (PAGCOR). They are obliged to restrict any individual in the Philippines, regardless of citizenship, Filipino citizens regardless of location, and potential patrons in countries and territories where offshore gambling is illegal from availing their services; failure to do so risks license revocation.[1]

PAGCOR started the processing of license applications for POGOs in 2016 after it decided not to renew the license of local online gambling firm PhilWeb in an effort to boost its revenue.[2]

There are three license categories. Category 1 involves services that have live streaming with women online gambling dealers. Category 2 and 3 are sub-sectors of business process outsourcing (BPO) which provide back office support.[3]

However, the IT and Business Process Association of the Philippines (IBPAP), an umbrella industry group of BPOs, do not consider POGOs in general as BPOs. IBPAP's members are registered with either the Philippine Economic Zone Authority or the Board of Investments while POGOs get their license to operate from PAGCOR, a fact the group argues differentiate POGOs from BPOs.[4]

Prevalence edit

POGO firms, mostly Chinese-backed and based in Metro Manila, suddenly increased following the start of the presidency of Rodrigo Duterte in 2016.[5] According to PAGCOR, during its peak in 2019, there were almost 300 licensees; stricter regulations reduced the number of operating POGOs to about 75 by the end of 2023.[6][7]

Since August 2019, PAGCOR has banned licenses for new firms.[5]

KMC Savills Inc. projects that POGOs have utilized at least 800,000 square meters (8,600,000 sq ft) of office space.[1] While a significant portion of the Philippine offshore gambling industry cater to the Chinese, some serve the Korean and Vietnamese markets.[8]

By 2019, the industry rents more office space than business process outsourcing, purchasing 386,000 square meters (4,150,000 sq ft) within the first nine months, 34% of total demand; as well became the biggest market for new office space in Metro Manila with 12% of the stock. Annual rents cost $219 million for commercial, $680 million for residential.[9]

Property consultancy firm Leechiu Property Consultants (LPC) reported that POGOs vacated a total of 630,000 square meters (6,800,000 sq ft) of office space from 2020 to third quarter of 2022. LPC reported that POGOs still occupy 1,000,000 square meters (11,000,000 sq ft) of office space as of October 2022; its complete exit would result in estimated ₱18.9 billion in lost annual office rentals.[10]

Impact edit

Economy edit

Department of Finance (DoF) data shows that combined taxes collected from POGOs from 2017 to October 2022 reached ₱53.8 billion: ₱30 billion by PAGCOR, while ₱23.8 billion by the Bureau of Internal Revenue (BIR) (since 2018).[10]

In 2019, total collected taxes reached ₱14.44 billion.[10] POGO generated ₱7 billion in license fees, according to PAGCOR.[6] National Economic and Development Authority also reported that, at the same year, POGOs contributed ₱104.5 billion—0.67% of the country's gross domestic product.[10]

However, all of these declined thereafter,[10] especially due to COVID-19 pandemic.[7] By 2023, with decrease of the number of operators, POGO still generated ₱5.2 billion in license fees.[6]

Since 2015, PAGCOR has been collecting fees from POGOs, which represent 2% of the country's gross gaming revenue.[11] Revenues from POGOs composed less than 5–6% of the PAGCOR's total income.[6]

In addition to license fees, BIR collects a 5% franchise tax on local providers since 2017, as well as income taxes on workers; some firms were closed due to alleged failure to pay such.[12] Additional taxes on POGOs were imposed upon issuance of Republic Act No. 11590 (An Act Taxing POGOs) by President Rodrigo Duterte in September 2021.[13]

Employment edit

It was reported as of October 2019 that 470,000 people were employed in the POGO industry, with total annual payroll at $9 billion.[9] These might included more than a hundred thousand Chinese workers.[14] The government though had various reports on the Chinese working in the country; by early December, figures from the BIR, the Department of Labor and Employment (DOLE), and PAGCOR suggested that the number ranged from at least 44 to 93 thousand.[15]

There are 138,000 foreigners employed by POGOs as of May 2019, with 83,760 of them holders of special work permits allowing them to stay in the country for at most six months. Only 17 percent of those employed in POGOs are Filipino nationals.[16] Employment decreased significantly during the COVID-19 pandemic.[17]

BIR reported in October 2022 that there were 16,736 Filipino workers employed by licensed POGOs, accounting for 48.87% of the total employment in the industry; showing that there had been a gradual increase of Filipinos, from 14.19% in 2019, as against 17,509 foreign nationals.[18]

In another report by PAGCOR at the same time, there were some 41,855 accredited POGO workers: 19,671 (47%) were Filipinos; 7,534 (18%) were Chinese. The Association of Service Providers and POGO, on the other hand, said there were 11,776 Filipino direct hires and 11,342, indirect, in POGOs.[10]

Meanwhile, DOLE reported that the number of Filipino POGO workers increased, from 22,000 as revealed during a Senate hearing in October 2022, to 25,000 by January 2023.[19]

Tourism edit

According to the Department of Tourism, in 2019, China ranked second, behind South Korea, in the number of tourist arrivals at 1.74 million. Due to travel ban imposed by China during the COVID-19 pandemic, Chinese visitors in the Philippines decreased significantly, falling to 6,615 in 2021. At that time, China has enforcing a crackdown on gambling operations on its citizens and launched appeals to the Philippine government to stop POGOs.[10]

Issues and controversies edit

The POGO industry had been criticized for being a symbol of state-backed Chinese investments in the country. It was perceived that POGOs were promoted by the government at the expense of other industries.[20]

Ownership and registration edit

A 2019 Nikkei Asian Review report states that POGO owners are mostly anonymous. At that time, PAGCOR recorded 60 POGOs set up in the country since 2016; ten are registered in the Philippines itself, while 43 in the British Virgin Islands, and the rest in six other countries, mostly where the identities of owners are kept secret.[9]

Only 15 are registered with the BIR, 6 of them pay taxes; while 16 are registered with the Securities and Exchange Commission.[9]

In late 2019, the Philippine Daily Inquirer reported that the government shut down nearly 200 illegally-operated POGOs that year, as district representative Joey Salceda later claimed there were still at least 100.[15]

At the time an estimated 70,000 Chinese workers in Metro Manila-based POGOs were reported in 2020, there were estimated to be at least 200 POGOs having no permit. Corruption in the processing of work permits was also raised.[20]

Meanwhile, illegal hubs in Central Luzon were reportedly dismantled; as about 2,000 foreigners were later deported.[21]

Effect in Philippines–China relations edit

POGO caused a diplomatic clash between the Philippines and China.[9] The latter expressed its displeasure[9] over its citizens' involvement, which comprise majority of workers and players,[20][5] as all forms of gambling remain illegal in China[14] while online casinos can only be played by those outside the Philippines.[9] China, among others, warned that POGOs can worsen criminality, specifically money laundering.[14] The Chinese government officially rejected POGOs[20] which was branded the "most dangerous tumor in modern society" disliked by all people worldwide.[9]

Following the Philippine government's move to suspend new POGO applications while addressing all concerns,[14][22] on August 21, 2019, the Chinese government urged the former to halt online gambling,[22] requesting as well through its statement to punish POGOs illegally employing and mistreating their citizens and to protect the victims.[5][15] Chinese President Xi Jinping personally repeated the plea, addressing Philippine President Rodrigo Duterte, during their bilateral meeting in Beijing on August 29.[22]

On September 4, 2019, at a press briefing at Malacañang, Duterte defied the request, saying that POGO is beneficial for the country[14] and many people would lose jobs if POGOs will be banned.[22]

Employment and residency of foreigners edit

Some locals criticized as well the influx of Chinese, among other foreigners which were believed taking jobs,[11] and limited hiring of Filipinos,[20] as it is evident with raids by immigration authorities on POGO offices. PAGCOR argued the need for large numbers of native Mandarin speakers to serve mostly Chinese players.[11] The government denied that it is giving preferential treatment to the Chinese for the industry.[20]

There were also reports that residents in Manila were forced to leave their residences in apartments in favor of Chinese tenants;[5] as well as medical facilities catering exclusively to POGO workers during the pandemic.[20]

Security issues edit

There were security issues reportedly linked to POGOs, including related criminal activities.[7][21] Authorities in the Philippines face issues on dealing with these: POGOs illegally operating overnight; rise in undocumented workers from China; and weak response from government agencies. This was contributed further by the "visa upon arrival" program by the tourism department, which makes it easier for the Chinese nationals to enter the Philippines, ending up working for POGOs.[15]

In 2019, watchdog Movement for the Restoration of Peace and Order said that the Philippines is becoming a haven for POGO-related crimes. The watchdog also said that illegal workers were packed into condominiums, each unit having up to 40 people in two or three shifts. Authorities had arrested several illegal Chinese workers from raided POGOs, which were eventually deported.[15]

Data from Philippine National Police recorded a total of 4,355 victims to crimes (4,039 in the first half of 2023),[23] and 903 perpetrators, from January 2017 to June 2023;[24] majority of all individuals involved were Chinese nationals.[25] The National Bureau of Investigation also revealed that from November 2019 to March 2023, there were 113 cases, 65 of these involved human trafficking.[21]

POGO-related crimes
Year Number Trial status
2019 9 At least 35 cases have reached court; only one case led to a conviction.
2020 11
2021 42
2022 40
Total 102
Note: No any incidents were recorded in 2017 and 2018.
Source: Philippine National Police[26]

Incidents reported to the police were kidnap-for-ransom, kidnapping and illegal detention.[26][27] From 2017 until late 2019, the PNP Anti-kidnapping Group (AKG) reported 67 kidnappings. It was reported that some employees leaving companies were the victims, and policemen were helping the perpetrators; thus, causing rescued victims to refuse cooperation with authorities.[15]

Those POGO facilities had been involved in online scams and human trafficking. In 2023, raids in three separate hubs alone, in Pampanga, Las Piñas and Pasay, resulted to the rescue of almost five thousand victims,[24] the third wherein a torture den was discovered;[28] while the police confiscated 28,000 registered SIM cards at another facility in Pasay allegedly involved in scams.[24]

There had been Chinese nationals also arrested for illegal possession of firearms,[24] even on petty crimes;[5] they were reportedly involved also in bribery.[5] Prostitution dens were also discovered.[5][20] It was also revealed that some gambling syndicates employ Filipino policemen as protectors, as well as corruption of the immigration and police.[5]

These prompted PAGCOR to enforce strict regulation; during the last quarter of 2023, these firms were renamed as Internet Gaming Licensees with new rules and regulations for the industry being implemented, as PAGCOR stated that POGO "become too negative."[6]

Amid reports of involvement of their citizens in fraudulent activities, in October 2023, China, through a statement from the Chinese Embassy in Manila, called on the Philippines to take strong measures in preventing POGO-related crimes.[29]

Finance edit

Issues on POGOs including reports of tax evasion and minimal contribution to the national economy were also raised.[20]

Data from the Anti-Money Laundering Council showed ₱14 billion (26%) of the ₱54 billion worth of transactions from 2017 to 2019 were deemed suspicious. DoF, saying that POGO-related crimes may pose a risk to business and institutions, estimated that the Philippines may risk losing ₱16.7 billion–₱26.2 billion in foreign direct investments.[10]

PAGCOR reportedly failed to collect ₱2.2 billion in unpaid dues from shuttered POGO firms. To avoid further losses to be incurred by the government, in 2023, PAGCOR announced its plan to privatize 45 casinos by the third quarter of 2025, with a revenue target at between ₱60 billion and ₱80 billion.[23]

Other issues edit

Also raised was the security threat posed by the POGOs.[20]

Environmentalists condemned the conversion of mangrove area into a "POGO island" cluster in Cavite.[20]

Even during lockdown due to pandemic, PAGCOR actively pushed for the resumption of POGO operations in Metro Manila. IT and Business Process Association of the Philippines later rejected the claim that POGOs, performing an "essential service," are part of their sector.[20]

In a 24-page En banc judgment penned by Jhosep Lopez promulgated on April 25, 2023, the High Tribunal dismissed 3 petitions in G.R. Nos. 228234, 228315 and 230080 filed by Jovencio H. Evangelista, Union for National Development and Good Governance Philippines by Miguel Daniel C. Cruz, and Anti-Trapo Movement of the Philippines, Inc. that challenged the constitutionality of the 2016 rules and regulations of the Philippine Amusement and Gaming Corporation for POGOs.[30]

Bans edit

In 2023, President Bongbong Marcos said that to outlaw all operations of POGOs, whose surrounding issues are caused by illegal operators, he needed a "good reason".[31] That year, the Senate committee on ways and means filed a report which proposed the permanent ban of POGOs nationwide to prevent crimes from these companies. Committee chairperson Senator Win Gatchalian was among the ten signatories.[32][33]

In February 2024, the House games and amusements committee approved two measures seeking for such ban. Authors, district representatives Bienvenido Abante and Rufus Rodriguez, said that the government had apparently failed to address POGO-related crimes in the past five years.[31]

Meanwhile, at the local level, at least two cities in Metro Manila currently enforcing a ban on POGOs. In December 2022, Pasig banned POGOs and other forms of online gambling.[34] In February 2024, the local government ordered the shutdown of establishments which still violating the ordinance.[35]

In mid-2023, Valenzuela temporarily banned POGOs, online gambling and Small Town Lottery, for five years within its jurisdiction.[36][37]

See also edit

External links edit

References edit

  1. ^ a b Ichimura, Anri (July 19, 2019). "Are We Playing Our Cards Right? Breaking Down Philippine Offshore Gaming Operators". Esquire. Retrieved September 5, 2019.
  2. ^ "PAGCOR now processing offshore gaming licenses". GMA News. September 14, 2016. Retrieved September 5, 2019.
  3. ^ Gonzales, Iris (November 7, 2017). "Is POGO good for the country?". Philippine Star. Retrieved September 5, 2019.
  4. ^ "POGOs are not BPO firms, industry group says". CNN Philippines. May 2, 2020. Archived from the original on May 7, 2020. Retrieved May 6, 2020.
  5. ^ a b c d e f g h i Robles, Alan (November 25, 2019). "Duterte played China over online gambling. The house won". South China Morning Post. Retrieved February 16, 2024.
  6. ^ a b c d e Andrade, Jeannette (February 13, 2024). "House panel OKs 2 measures on Pogo ban". Philippine Daily Inquirer. Retrieved February 14, 2024.
  7. ^ a b c Barro, Dexter II (February 12, 2024). "House panel OKs measures banning POGO in PH". Manila Bulletin. Retrieved February 14, 2024.
  8. ^ Gonzales, Iris (August 29, 2019). "Inside a Philippine offshore gaming company". Philippine Star. Retrieved September 5, 2019.
  9. ^ a b c d e f g h Venzon, Cliff (October 15, 2019). "Shadowy operators power Duterte's offshore gaming boom". Nikkei Asia. Retrieved February 15, 2024.
  10. ^ a b c d e f g h Rivas, Ralf (October 19, 2022). "IN NUMBERS: Risks, benefits of POGO operations". Rappler. Retrieved February 15, 2024.
  11. ^ a b c Venzon, Cliff (July 29, 2019). "Duterte hits the jackpot as China fuels online gambling boom". Nikkei Asia. Retrieved February 16, 2024.
  12. ^ Cigaral, Ian Nicolas (July 8, 2021). "Duterte, in about-face, wants POGOs back to augment pandemic war chest". Philstar.com. Retrieved February 15, 2024.
  13. ^ Gita–Carlos, Ruth Abbey (September 23, 2021). "Duterte signs law taxing POGOs". Philippine News Agency. Retrieved February 16, 2024.
  14. ^ a b c d e Romero, Alexis (September 5, 2019). "Duterte won't abolish POGO: We need it". The Philippine Star. Retrieved February 17, 2024.
  15. ^ a b c d e f Robles, Alan (December 27, 2019). "A Chinese crime wave hits Duterte's Philippines as Pogos grow unchecked". South China Morning Post. Retrieved February 16, 2024.
  16. ^ Yee, Jovic (May 2, 2019). "Foreigners can get work permits only in 15 job categories". Philippine Daily Inquirer. Retrieved September 5, 2019.
  17. ^ "Tax take down as POGO workers flee COVID-19". September 21, 2020.
  18. ^ Torregoza, Hannah (October 6, 2022). "Number of Filipino workers in POGOs rising, BIR tells Senate". Manila Bulletin. Retrieved February 15, 2024.
  19. ^ Medenilla, Samuel (January 26, 2023). "DOLE: 25K Filipino workers in POGOs could be affected by closure". BusinessMirror. Retrieved February 15, 2024.
  20. ^ a b c d e f g h i j k l Palatino, Mong (June 1, 2020). "China's Clandestine Gamble in the Philippines". The Diplomat. Retrieved February 15, 2024.
  21. ^ a b c Panti, Llanesca (February 12, 2024). "House committee approves bill banning POGO in PH". GMA News Online. Retrieved February 14, 2024.
  22. ^ a b c d Lopez, Virgil (September 4, 2019). "Duterte: PHL needs POGOs". GMA News Online. Retrieved February 17, 2024.
  23. ^ a b Ordoñez, John Victor (October 4, 2023). "POGO victims hit 4,039 — PNP". BusinessWorld. Retrieved February 15, 2024.
  24. ^ a b c d "Gatchalian warned of POGO-related crime surge". Philippine News Agency. August 9, 2023. Retrieved February 15, 2024.
  25. ^ Romero, Paolo (February 1, 2023). "Over 300 victims in 102 POGO-related crimes". The Philippine Star. Retrieved February 15, 2024.
  26. ^ a b Chi, Cristina (January 31, 2023). "PNP recorded four times more POGO-related crimes in 2022 than 2019". Philstar.com. Retrieved February 15, 2024.
  27. ^ Caliwan, Christopher Lloyd (January 12, 2021). "POGO-linked kidnap cases rise amid pandemic". Philippine News Agency. Retrieved February 15, 2024.
  28. ^ Torres-Tupas, Tetch (November 6, 2023). "DOJ chief cites reported involvement of law enforcers in Pogo-linked crimes". Inquirer.net. Retrieved February 15, 2024.
  29. ^ Pedrajas, Joseph (October 11, 2023). "China prods PH to crack down on POGO-related crimes". Manila Bulletin. Retrieved February 14, 2024.
  30. ^ Galvez, Dapne (March 7, 2024). "SC junks petition challenging legality of POGOs". The Philippine Star. Retrieved March 7, 2024.
  31. ^ a b Chi, Cristina (February 12, 2024). "House panel OKs bill banning all POGO operations". Philstar.com. Retrieved February 14, 2024.
  32. ^ Abarca, Charie (September 20, 2023). "Senate panel recommends Pogo ban". Inquirer.net. Retrieved February 14, 2024.
  33. ^ Abarca, Charie (September 20, 2023). "Senators explain vote on Pogo ban". Inquirer.net. Retrieved February 14, 2024.
  34. ^ Reyes, Demspey (July 5, 2023). "Valenzuela bans Pogos, other forms of online gambling". Philippine Daily Inquirer. Retrieved February 14, 2024.
  35. ^ Rivas, Ralf (February 13, 2024). "Pasig City shuts down online gambling outlets over addiction, human trafficking". Rappler. Retrieved February 14, 2024.
  36. ^ Rita, Joviland (July 4, 2023). "Valenzuela City bans POGO operations". GMA News Online. Retrieved July 6, 2023.
  37. ^ Cruz, James Patrick (July 4, 2023). "Valenzuela City bans POGOs, gambling activities". Rappler. Retrieved July 6, 2023.
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