Over the years, the Philippine Amusement and Gaming Corporation (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.
The truth about POGO: A Primer
In 2016, PAGCOR took bolder steps to enforce stricter gaming regulatory policies in its aim to curtail the proliferation of illegal online gaming activities and to ensure that they are properly regulated.
These online gaming operations, it was later discovered, have existed since 2003, almost 13 years before the current administration took over. They were illegally employing approximately 80,000 overseas workers.
To safeguard the welfare of the Filipinos and at the same time meet the agency’s revenue targets to help fund the government’s nation-building programs and socio-civic projects, PAGCOR took over the licensing of online gaming operations in 2016.
Prior to PAGCOR’s take over, the majority of online gaming operations in the country were illegal, with the legal operations contributing only very minimal income to government coffers.
A big chunk of the rightful income and taxes for the country were being funneled by these illegal operators to the pockets of corrupt individuals who agreed to turn a blind eye to their illegal activities.
WHAT IS POGO?
The internet has dramatically opened the doors to online transactions. Because of its offer of convenience and accessibility, industries now offer and accept transactions online so as not to be left out by their competition. Online shopping, online banking, online booking, and online food deliveries are now a part of our daily lives.
POGO is no different — it is basically online gaming which allows players to play casino games, without being physically present in a casino.
The peculiar feature, however, of POGO is it only allows foreigners who are based abroad to play. Betting and payouts can only be made abroad using electronic transactions through financial institutions.
This feature was purposely adopted by PAGCOR to ensure that gamblers and gambling are not within our soil, thereby protecting Filipinos and our society from the effects of problem gambling and potential money laundering.
POGOs are not bit coin and/or crypto currency operations.
What are POGO service providers?
POGO service providers are corporations that are registered in the Philippines that provide support to the operations of licensed operators in various areas of operations including customer relations, strategic support, IT support, gaming software platform providers, and live studio and streaming providers. They are classified under business process outsourcing (BPO).
Who are allowed to play?
Authorized players of these offshore gaming offerings must be foreigners based in another country. Foreign nationals who are staying in the Philippines and Filipinos, even those residing abroad, are not allowed to take part in the online gaming activity. Likewise, individuals who are under 21 years old are not allowed to play.
WHAT IS NOT POGO?
POGO is NOT prostitution
Earlier this year, Senate hearings have linked prostitution to POGO as it allegedly brought an influx of Chinese workers and apparently, together with them came sex workers.
However, these hearings did not address the deeper issues behind prostitution in the Philippines. To begin with, they did not even touch upon the prostitution of Filipinos – whether by other nationalities or by fellow Filipinos.
The number of Filipino prostitutes is calculated at 800,000, including 100,000 children according to UNICEF. This figure translates to more than five million, or 19 percent of Filipinos patronizing prostitution. It is estimated that the sex industry in the Philippines amounts to US$6 billion.
POGO is NOT criminality
PAGCOR is working closely with the Chinese embassy in the Philippines on the crackdown of Chinese nationals with criminal records, but are illegally working or doing business in the country.
Since January 15, 2020, at least 2,000 or three percent of Chinese nationals who were illegally working in POGOs and in other fraudulent offshore operations have been repatriated to their country.
PAGCOR will also continue to cooperate closely with the Chinese embassy and other law enforcement agencies to help arrest illegal aliens and penalize employers who are coddling fugitives from their country.
Foreigners, be they workers or tourists, Chinese or other nationalities, are the favorite victims of criminal elements in our society, because they belong to the vulnerable sector of our community. Let us not blame the victims, let us hunt the criminals.
POGO is NOT a spy network
Recently, Senate hearings revealed information that approximately 2,000 to 3,000 members of China’s People’s Liberation Army are in the Philippines. However, it was clarified that since the source seems reliable, this was brought up. It was also said that the information is not verified.
However, upon checking with the Bureau of Immigration (BI), the Philippine consulate in China, and some law enforcement agencies, PAGCOR also found out that these reports were unverified. There was no record of any member of the Red Army entering the Philippines for immersion in the country.
HOW DO POGOs BENEFIT THE PHILIPPINE ECONOMY?
Increased revenues for the government
Since over 50 per cent of PAGCOR’s total gaming revenues are remitted to the national government and other mandated beneficiaries, the state-run gaming firm can generate more revenues for its various nation-building projects – such as provision of better health services for indigent Filipinos, relief response to communities in times of calamities, among other notable endeavors that will help uplift the lives of marginalized Filipinos.
Prior to PAGCOR’s issuance of POGO licenses, most online gaming operators, which were operating under licenses issued by the Economic Zone Authorities, were only remitting more or less P56 million a year to the national government; in some years, they remitted nothing.
Under PAGCOR’s regulatory requirement, all POGO licensees must remit 2 percent of their gross gaming revenues as regulatory fees.
Because of proper regulations in place, income from POGO operations showed steady growth through the years. From P73.72 million in 2016, revenues from POGO increased significantly to P3.12 billion in 2017, P6.11 billion in 2018, and P5.73 billion in 2019.
In the first quarter of 2020, POGOs have already contributed P1.8 billion in regulatory fees alone.
Also, from 2016 to March 2020, revenues collected from POGOs – including application, processing, and regulatory fees – have amounted to P20.83 billion.
These revenues are over and above the other fees and taxes imposed by other agencies such as the BIR (Bureau of Internal Revenue) for their corporate taxes and the employees’ income tax, the BI (Bureau of Immigration) for their visa fees, the LGUs (local government units) for their local taxes, and such other taxes and fees imposed by other agencies.
In 2019 alone, the government collected a total of P14.28 billion taxes from POGO operations. Of this amount, P6.42 billion came from direct POGO taxes. Other amounts collected came from value added tax (VAT) from rent (P2.84 billion), VAT from workers’ consumption (P3.55 billion), and excise taxes (P1.48 billion).
Likewise, POGOs create ripples in economic activity, such as the real estate industry which has earned approximately P25 billion on leaseholds and rentals alone, as POGOs occupy one million square meters of office space.
Over and above the mandatory fees, POGOs recently donated P150 million worth of relief goods and medical supplies to augment government’s efforts to fight the COVID-19 pandemic.
There is a misconception that POGOs mainly employ foreign nationals. But while POGOs cater to foreign customers and employ foreign customer service representatives who could effectively address their concerns, other areas such as IT support, live studio, and gaming platform providers employ local workers.
Currently, there are 31,556 Filipinos who are employed in POGOs. This number does not include employees in the ancillary industries such as real estate, transportation, and retail.
The employment of Filipinos in POGO will continue to rise as more and more Filipinos are able to learn and qualify for the jobs offered in the industry.
As for the present foreign employees, they are now being required to undergo mandatory courses for them to learn the laws and proper behavior while in the Philippines.
Can POGO be used for money laundering?
POGO is not an attractive venue to launder dirty money due to the absence of cash transactions, and all players and their betting histories/records are identified through the operator’s database.
And the bets are small. To further emphasize, no betting occurs in the Philippines as bets are done offshore, outside our country.
Also, all POGO operators are required to be registered with the Anti-Money Laundering Council as covered persons under Republic Act No. 10927. The registration procedures require that all documents relevant to their corporation’s structure are to be submitted.
Influx of Chinese workers
The influx of Chinese nationals seeking to work in the Philippines has been repeatedly sensationalized. However, as regards legal POGO workers, PAGCOR closely monitors their entry to the country through the issuance of Offshore Gaming Employment License (OGEL), a pre-employment and continuing requirement for employment.
To overcome the stigma that cultural/racial differences caused by foreign workers in the country, PAGCOR is now in the process of accrediting learning institutions to offer the necessary courses to offshore workers.
The PAGCOR management has likewise endorsed the establishment of POGO hubs. These are one-stop shop venues that will cater to the office and residential needs of foreign POGO workers while ensuring their safety and security, as well as living conveniences.
POGO and gaming in general
PAGCOR believes that all forms of gaming have a corresponding social cost.
Therefore, while casino gaming is the main end product of offshore gaming and falls within the regulatory powers of PAGCOR, the other components of operations entail activities which are also subject to regulation by other concerned agencies, such as the BI, BIR, Department of Labor and Employment, Department of Justice, Philippine National Police, National Bureau of Investigation, and the Securities and Exchange Commission.
PAGCOR believes that while gaming contributes significantly to government revenues, it must not be used as a vehicle for abuse and social injustice. As the country’s gaming regulator, we will ensure that the local gaming industry will not only maintain the integrity of its operations, but also protect the well-being of Filipinos.
After all, the very reason of PAGCOR’s existence is to ensure that with proper regulatory measures, the benefits of gaming will be greater than its social costs.