Philippines to start winding down operations of offshore gaming hubs

The Philippines gaming regulator will cancel the licenses of offshore gambling firms, most of them Chinese owned, and will work with law enforcement agencies to completely stamp out these operators, according to a statement by the regulatory authority’s chief.

President Ferdinand Marcos has given the regulator until the end of the year to shut down Philippine Offshore Gaming Operators (POGOs), whose alleged ties with criminal activities are under investigation.

“No problem in closing down POGOs because I can invoke national security and the president’s order,” Alejandro Tengco, chairman of the Philippine Amusement and Gaming Corp (PAGCOR), an agency attached to the president’s office, told Reuters.

The online gaming industry emerged in the Philippines in 2016 and grew exponentially as operators capitalised on liberal laws to target customers in China, where gambling is banned.

At their peak, there were 300 POGOs, but the pandemic and tighter tax rules forced many to relocate or go underground. Now only 42 firms operate with a license, directly and indirectly employing around 63,000 Filipino and foreign workers.

The challenge for law enforcers is to now prevent these firms from going underground, Tengco said, adding the government stood to lose around 23 billion pesos ($400 million) a year from license fees and taxes on the POGOs.

Economic Planning Secretary Arsenio Balisacan, however, told reporters the POGOs contribute less than 0.5 per cent to GDP, adding: “The benefits of banning POGOs outweigh the costs.”

China has urged the Philippines to ban online gaming to support its own crackdown on cross-border gambling.

The Chinese Embassy in Manila did not respond to a request for comment. Some analysts said the ban might help ease tensions with Beijing over the disputed South China Sea.

“This might lead to an improvement in Philippine and China relations,” said Renato Cruz De Castro, an international affairs analyst at De La Salle University in Manila.

A separate crackdown on hundreds of illegal POGOs, involved in crimes such as scams and human trafficking, will continue, the Presidential Anti-Organized Crime Commission said.

Realtors are likely to take a hit from the exit of POGOs. Leechiu Property Consultants CEO David Leechiu said the closure of POGOs will increase office vacancies to 4 million square metres (sqm) from 3.1 million now.

($1 = 58.4150 Philippine pesos)