Hopping Borders: The Controversial Rise of POGOs, or Philippine Offshore Gaming Operators
Despite gambling being blanketly illegal in the country since 1949, many Chinese people love to do it.
One only needs to look at the shining expanses of the Special Administrative Region of Macau’s super casino complexes or the proliferation of Chinese-language online casinos to see the truth there.
For a few years now, one of the biggest providers of offshore gambling venues for Chinese players has been the Philippines and its Offshore Gaming Operators, locally known as POGOs.
In one of the strangest cases of gambling law in the world today, the archipelago nation (which has fully legalized gambling for its own citizens) has licensed 60 online casino sites since 2016—but not one of them is allowed to admit Filipino players.
Instead, they all (illegally, from China’s perspective) cater almost exclusively to Chinese players, with only a couple facing other markets like Singapore or South Korea.
A Labor Force Problem—But We Need It
Highly controversial but locally popular President Rodrigo Duterte has repeatedly clashed with China over the issue.
Despite harsh warnings of legal consequences from Xi Jinping’s regime should the POGO’s remain open, Duterte told a press conference last year that he had ‘decided we need it.’
However, he did cave in to pressure from the Philippines Amusement and Gaming Corporation and imposed a moratorium on new POGO licenses.
Even with no new licenses since mid-2019, the industry collectively employs some 450,000 people across the nation.
However, the government has recently reported that up to 80% of those employed might be foreign nationals—mainly Chinese workers.
With an estimated yearly revenue of $11 billion, it’s not hard to see why thousands of skilled Chinese office workers, coders, designers, marketers, and live hosts are being enticed across the border.
Although local people might not be getting the jobs directly, there should be a boost to restaurateurs, shop owners, and other service providers near the many online gambling offices and studios that are springing up around Manila and other big Filipino cities.
This is partly a result of another strange condition of POGOs’ licensing—a minimum office floor space requirement of 10,000 square meters. Of course, many profitable companies have been snapping up fairly cheap Filipino real estate and building bigger offices than that.
One government report suggested that up to 20% of all office space in Manila may currently be used by online gambling companies.
As well as hefty real estate rentals, POGOs are required to pay no small sum when registering for a license (although it is suspected there may be 30 or more unlicensed POGOs doing business right now, too).
For example, the first and most basic application fee is $150,000—with no certainty of a license being issued.
That’s a lot of money coming into the Philippine economy, so you can see why Duterte might be a fan.
Layers of Offshore Accounts
However, the story isn’t as simple as that.
There’s growing evidence that many already offshore POGOs may not even be registered in the Philippines. Instead, the majority of them are based in the known tax havens of the British Virgin Islands, Seychelles, or Belize.
Aggressive anti-gambling campaigner and Duterte ally Senator Joel Villanueva has recently told regulators that only nine of the 60 POGOs have been paying their taxes and that the government is collectively owed over $900 million.
‘The data we have now is just the tip of the iceberg. It’s a grim picture… As for those who did not pay, the bureau intends to issue letters of authority to audit them,’ said Sixto Dy Jr. of the Bureau of Internal Revenue when the issue was discussed in the Senate.
They also discussed reports of human trafficking and other despicable practices at some of the illegal offshore POGOs, and lawmakers seemed determined to crack down on them.
These new reports might just be the last straw for Duterte, who, despite standing up for them against China, has since told the POGOs, ‘You will be shuttered if you commit a mistake.’
We’ll keep you updated on this interesting piece of the global gambling market as any new developments occur over the coming months. For more interesting stories from the iGaming industry, see our news feed.