A close look at PAGCOR and its efforts to crackdown on illegal POGOs

Shirley Pulis Xerxen 1 year ago
A close look at PAGCOR and its efforts to crackdown on illegal POGOs

PAGCOR’s mission

PAGCOR (Philippine Amusement and Gaming Corporation) is a state-owned gaming firm and regulator created by virtue of Presidential Decree (PD) 1067-A. The Decree was issued to put a stop to the growing proliferation of illegal casino operations in various parts of the country.

PAGCOR’s functions

The Decree was passed into law in 1977 and thus made PAGCOR the government agency in charge of regulating the gambling industry in the Philippines. The government agency was empowered to:

  • generate sources of revenue to fund infrastructure,
  • provide aid during times of natural disasters,
  • promote the Philippine tourism industry,
  • eradicate illegal gambling activities.

PAGCOR’s reign was extended in 2007 by the Republic Act 9487. The government agency was given another 25 years to control the gambling industry and provide funds for the Philippine government.

PAGCOR posted an impressive P58.96 billion (€0.97 billion) in revenues in 2022, up 66.16% from P35.48 billion (€0.59 billion) in 2021.

POGOs – PAGCOR licenced or illegal

Philippine Offshore Gaming Operators or POGOs are foreign-facing online gambling firms that operate in the Philippines. As such, they cater to customers outside of the Philippines. To operate legally, they must be licensed by PAGCOR. As of June 2023, there are 33 licensed POGOs listed by PAGCOR. Without such a licence, POGOs are deemed illegal.

POGOs – to be or not to be?

A total ban on illegal POGOs is an argument that few, if any, would object to. However, the existence of properly sanctioned, fully licenced POGOs is not without controversy. Several lawmakers have pleaded for a total ban on POGOs, citing a myriad of reasons, from an unfavourable perception of the country to prospective investors, to the social and moral impact, and even illegal POGOs being an avenue for criminal activities including human trafficking, drug smuggling and prostitution.

POGO activity banned in some jurisdictions

Recently, Valenzuela City passed an ordinance to ban all POGOs within its jurisdiction. A similar ban on POGOs and other forms of online gambling also took effect in Pasig City in December of last year and others exist.

POGO’s contribution to the Philippine economy

Lawmakers believe that a total ban on POGOs is not the solution. Weighing in on the topic, Philippines House, Ways & Means Committee Chairman, Senator Joey Salceda, argues that “the solution to illegal POGO is not to close down all POGOs. If anything, that will only create an entire underground sector,” he cautioned.  Additionally, the contribution that POGOs make to the Philippine economy is crucial. Table 1 shows tax collected from POGOs in 2019.

Tax losses from POGOs

A total ban on POGOs could also spell disaster to the real estate industry. Empty offices would lead to the closure of small to medium sized property business and push rental rates back to the levels in the early 2000s.

Estimated annual losses

The table below represents estimated losses incurred if POGOs ceased to operate, based on industry data collected by Property constancy firm Leechiu Property Consultants, Inc. (LPC).

Revenue lost POGOs

The Role of PAGCOR

Since its inception, PAGCOR has been at the forefront of ensuring fair play and competition in all gaming venues and platforms by having stringent measures or policies that will curtail the prevalence of illegal online gaming in the country. In 2016, PAGCOR took further steps to enforce stricter gaming regulatory policies in its aim to rein in illegal online gaming activities and to ensure that they are properly regulated. These illegal online gaming operations, it was later discovered, have existed since 2003. They were illegally employing approximately 80,000 overseas workers.

In August of 2020, PAGCOR issued a press release (PAGCOR welcomes apprehension of illegal POGOs) welcoming the nation’s authorities’ efforts to crackdown on illegal POGOs.  A year earlier, PAGCOR entered into a cooperation agreement with the Philippine National Police (PNP), National Bureau of Investigation (NBI), Bureau of Immigration (BI) and the Office of Cybercrime (OOC) under the Department of Justice (DOJ).

Highlights from recent crackdown on illegal POGOs

In 2021 the Department of Labor and Employment in the Philippines issued a news release warning the public against illegal POGOs and the threats they pose to potential employees lured by false promises and attractive salary packages. The risks include significantly lower wages to what was promised and possible abduction if the work is refused, followed by requests for ransom to the victims’ families.

In October 2022, the visa cancellation of close to 50,000 POGO workers was underway by the competent authorities in the Philippines. This was a result of the revocation of operating licenses by PAGCOR.

On 26 June 2023, the Philippines National Police’s Anti-Cybercrime Group raided POGO Xinchuang’s premises in Las Piñas City after a month-long surveillance operation. The police said that they rescued over 2,500 people in the raid suspected of being victims of trafficking. This included 1,534 Filipinos and over 1,000 foreign nationals from countries such as China, Thailand, Malaysia and Singapore.

Following the raid, PAGCOR handed Xinchuang Network Technology Inc. a show cause order. The Show Cause Order requires the said provider to respond to the allegations being faced by the company and why PAGCOR should not cancel its Certificate of Accreditation and Authority to Operate. Additionally, PAGCOR ordered the company to cease all offshore gaming activities pending the completion of the investigation being conducted by the PNP.

The raid is just the latest in a string by the Filipino authorities.

On May 4, the police raided the offices of gaming service provider CGC Technologies, which is accused of several serious offenses including credit card fraud and human trafficking. PAGCOR suspended their licence pending further investigation.

In a welcome move, last month, a number of Filipino state agencies including PAGCOR joined the newly founded Clark Security Advisory Council to better coordinate work combating illegal POGO activities.

Alejandro H Tengco, Chairman and CEO of PAGCOR

In his first sit-down interview, given exclusively to SiGMA news since taking the helm of PAGCOR, Alejandro H Tengco reiterated the commitment to curb illegal POGOs. He said that PAGCOR has,

“strengthened collaboration with various government agencies a month after we took office last year…… There have been no reported criminal activities or kidnapping-related incidents of workers in the offshore licensing industry since.” Alejandro H Tengco

Safeguarding PAGCOR integrity

According to Tengco, maintaining and safeguarding the integrity of the POGO industry is crucial.  PAGCOR will continue to monitor the lawfulness of the activities of our accredited licensees and service providers. We will amend contracts that need to be amended. Should our licensees and service providers be found guilty of engaging in criminal acts, we will not hesitate to impose sanctions and penalties, as provided by the law, and even cancel permits if so warranted.

“With the help of the latest digital trends that will be showcased in SiGMA’s expo, the Philippine gaming industry will have the chance to explore new technologies and tap potential new markets both here and abroad — provided that our regulatory policies are in place, and our business operations maintain their transparency”.  Alejandro H Tengco, speaking to SiGMA News

Tengco’s interview is the cover story of the latest edition of SiGMA Magazine. Pick up your copy at the Asia Summit in Manila or visit our archive page for all previous editions.

PAGCOR’s Alejandro Tengco confirmed to headline SiGMA Asia summit

PAGCOR Chairman and CEO Alejandro H. Tengco will deliver the opening keynote address at the upcoming SiGMA Asia conference in Manila taking place from the 19th to the 22nd of July.

Join us! SiGMA is coming to Manila, The Philippines

Join us in Manila from the 19 -22 July for the SiGMA Asia International summit. The event is endorsed by PAGCOR and will take place at the SMX, Manila’s largest expo centre.

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