Philippines to end online casinos, maybe scams too

The Philippines has decided to dismantle the worst of its offshored industries: the bits that run gambling and scam operations.

President Ferdinand “Bongbong” Marcos Jr on Monday Xeeeted instructions to the country’s gaming agency, Philippine Amusement and Gaming Corporation (PAGCOR), to “wind down and cease operations” of Philippine Offshore Gaming Operators (POGOs) by the end of the year.

POGOs are businesses licensed by the Philippine government to provide online gambling services to players outside the country – mostly mainland China, where gambling is illegal. The orgs have become more prominent and economically significant over the past decade, providing tax revenue, fees, and jobs for both Filipinos and foreign nationals – again, mainly from China.

“Disguising as legitimate entities, their operations have ventured into illicit areas.”

They’ve also generated controversy for alleged tax evasion, illegal employment of foreign workers, and allegations of being involved in criminal activities.

“Disguising as legitimate entities, their operations have ventured into illicit areas furthest from gaming such as financial scamming, money laundering, prostitution, human trafficking, kidnapping, brutal torture, even murder,” explained Marcos, in his annual State of the Nation address.

In March, police rescued 875 workers – 371 Filipinos, 432 Chinese, eight Malaysians, 57 Vietnamese nationals, three Taiwanese nationals, two Indonesians, and two Rwandans – from an operation in the province of Tarlac. According to state sponsored media, the raid followed a complaint lodged by an escaped worker and allegedly uncovered evidence of an operation conducting romance scams – plus firearms and mobile phones used in dodgy transactions.

Political pressure has built for a crackdown as the industry has created economic and regulatory challenges, as well as a legal cover for scam hubs.

China has itself long called on the Philippines to take action against POGOs. Its stance is that according to Chinese law, opening casinos to attract Chinese citizens as primary customers constitutes a crime.

Beijing is also known to be concerned about online scams targeting Chinese citizens, and has pressured nations that turn a blind eye to the gangs that run them.

The Philippine Department of Finance (DOF) estimated that the net cost of POGO operations amounts to PHP99.52 billion ($1.7 billion) annually, while the estimated tax and gaming revenue reached PHP166.49 billion ($2.8 billion) per year.

“Even if you totally banned them, you don’t necessarily take them out of the picture.”

DOF secretary Ralph Recto, however, alleged that the industry costs the Philippines PHP265.74 billion ($197.5 billion) annually when you take into account reputational risks and their impact on foreign direct investments.

There are 42 POGOs currently licensed directly with PAGCOR, and potentially over 400 more operating illegally. Licenses of 298 POGOs have previously been cancelled by the government.

Legal POGOs reportedly directly and indirectly employed around 40,000 Filipinos and 23,000 foreigners at the end of 2023.

President Marcos revealed the nation’s Department of Labor and Employment will assist in finding new jobs for displaced Filipino workers. He also acknowledged that banning POGOs would solve many – but not all – of the problems associated with the industry.

The Presidential Anti-Organized Crime Commission (PAOCC) has vowed to crack down on gaming operations that continue illegally, but as the agency’s spokesperson Dr Winston Casio puts it, “even if you totally banned them, you don’t necessarily take them out of the picture.”

After all, Casio observed of the already cancelled POGOs, “a good number of them have gone underground.” ®