Philippine Offshore Gaming Operators (POGO), renamed Internet Gaming Licensees (IGL) in October 2023,[1] are firms operating in the Philippines that offer online gambling services to markets outside the country, with a significant portion catering to the Chinese market. POGOs began operating in the Philippines in 2003.
They have been regulated by the Philippine government since 2016, at the start of Rodrigo Duterte's presidency. During this period, the industry flourished and generated significant revenues for the Philippine government. POGOs were banned by President Bongbong Marcos in July 2024, during his third State of the Nation Address.[2]
Philippine Offshore Gaming Operators or POGOs are online gambling firms that operate in the Philippines but cater to customers outside the country. To operate legally, they must be licensed by the Philippine Amusement and Gaming Corporation (PAGCOR). They are obliged to restrict any individual in the Philippines, regardless of citizenship, Filipino citizens regardless of location, and potential patrons in countries and territories where offshore gambling is illegal, from availing their services. Failure to do so risks license revocation.[3]
In 2016, PAGCOR started the processing of license applications for POGOs, in an effort to boost its revenue, after it decided not to renew the license of local online gambling firm PhilWeb.[4]
There are three license categories. Category 1 involves services that have live streaming, with women online gambling dealers. Category 2 and 3 are sub-sectors of business process outsourcing (BPO), which provide back office support.[5]
However, the IT and Business Process Association of the Philippines (IBPAP), an umbrella industry group of BPOs, do not consider POGOs in general as BPOs. IBPAP's members are registered with either the Philippine Economic Zone Authority or the Board of Investments. POGOs get their license to operate from PAGCOR, a fact the group argues differentiate POGOs from BPOs.[6]
In 2003, POGO firms, mostly Chinese-backed and based in Metro Manila, began operations, and abruptly increased following the start of the presidency of Rodrigo Duterte in 2016.[7] According to PAGCOR, during its peak in 2019, there were almost 300 licensees. By the end of 2023, stricter regulations reduced the number of operating POGOs to about 75.[8] [9]
Since August 2019, PAGCOR has banned licenses for new firms.
KMC Savills Inc. projects that POGOs have utilized at least 800000sqm of office space.[3] While a significant portion of the Philippine offshore gambling industry cater to the Chinese, some serve the Korean and Vietnamese markets.[10]
In 2019, the industry rented more office space than business process outsourcing, purchasing 386000sqm within the first nine months, 34% of total demand. They became the biggest market for new office space in Metro Manila, with 12% of the stock. Annual rents cost for commercial, for residential.
Property consultancy firm Leechiu Property Consultants (LPC) reported that POGOs vacated a total of 630000sqm of office space from 2020, to the third quarter of 2022. In October 2022, LPC reported that POGOs still occupied 1000000sqm of office space. Their complete exit would result in an estimated in lost annual office rentals.
Since 2015, PAGCOR has been collecting license fees from POGOs, which represent 2% of the Philippine's gross gaming revenue.[11] Revenues from POGOs composed less than 5–6% of the PAGCOR's total income. In addition to license fees, since 2017, the Bureau of Internal Revenue (BIR) collects a 5% franchise tax on local providers, as well as income taxes on workers. Some firms were closed due to an alleged failure to pay.[12] Additional taxes on POGOs were imposed upon issuance of Republic Act No. 11590 (An Act Taxing POGOs) by President Rodrigo Duterte in September 2021.[13]
Department of Finance (DoF) data shows that combined taxes collected from POGOs from 2017 to October 2022 reached : by PAGCOR, while by the BIR, since 2018.[14]
In 2019, total collected taxes reached . POGO generated in license fees, according to PAGCOR. National Economic and Development Authority also reported that, at the same year, POGOs contributed —0.67% of the Philippine's gross domestic product.
However, revenue from POGOs declined thereafter, especially due to COVID-19 pandemic. By 2023, with decrease of the number of operators, POGO generated in license fees.
In mid-July 2024, DoF reported that the annual net cost of POGO operations is around ; while the estimated total economic benefits of the industry reach —an estimated directly. However, it noted a significantly high economic cost, at an estimated annually, which include the effects of negative reputational risks, impacting foreign direct investments.[15]
In October 2019, an estimated 470,000 people were employed in the POGO industry, with total annual payroll at . These might included more than a hundred thousand Chinese workers. The government had various reports on the number of Chinese working in the Philippines. In early December 2019, figures from the BIR, the Department of Labor and Employment (DOLE), and PAGCOR suggested that the number ranged from at least 44 to 93 thousand.
In May 2019, there were 138,000 foreigners employed by POGOs, with 83,760 of them holders of special work permits, allowing them to stay in the country for six months. Only 17 percent of those employed in POGOs are Filipino nationals.[16] Employment decreased significantly during the COVID-19 pandemic.[17]
In October 2022, the BIR reported that there were 16,736 Filipino workers employed by licensed POGOs, accounting for 48.87% of the total employment in the industry. This showed that there had been a gradual increase of Filipinos, from 14.19% in 2019, as against 17,509 foreign nationals.[18]
In another report by PAGCOR at the same time, there were some 41,855 accredited POGO workers: 19,671 (47%) were Filipinos; 7,534 (18%) were Chinese. In October 2022, The Association of Service Providers and POGO, said that there were 11,776 Filipino direct hires and 11,342, indirect, in POGOs.
Meanwhile, DOLE reported that the number of Filipino POGO workers increased, from 22,000 as revealed during a Senate hearing in October 2022, to 25,000 by January 2023.[19] By the end of 2023, there were reportedly 47,979 POGO workers, some 52.2% (or 25,064) of them local employees.[20]
In 2019, tourism arrivals from China ranked second, at 1.74 million tourists, behind first placed tourist source nation, South Korea. Due to the travel ban imposed by China during the COVID-19 pandemic, in 2021, Chinese visitors to the Philippines decreased to 6,615. At that time, China was enforcing a crackdown on gambling operations on its citizens and launched appeals to the Philippine government to stop POGOs.
The POGO industry has been criticized for being a symbol of state-backed Chinese investments in the Philippines. It was perceived that POGOs were promoted by the government at the expense of other industries.[21]
A 2019 Nikkei Asian Review report states that POGO owners are mostly anonymous. At that time, PAGCOR recorded 60 POGOs set up in the Philippines since 2016. Ten were registered in the Philippines, 43 in the British Virgin Islands, and the rest in six other countries, mostly where the identities of owners are kept secret.
Only 15 were registered with the BIR, 6 of them pay taxes. 16 were registered with the Securities and Exchange Commission.[22]
In late 2019, the Philippine Daily Inquirer reported that the government shut down nearly 200 illegally-operated POGOs that year. District representative Joey Salceda later claimed there were still at least 100.
At the time an estimated 70,000 Chinese workers in Metro Manila-based POGOs were reported in 2020, there were estimated to be at least 200 POGOs having no permit. Corruption in the processing of work permits was raised.
Meanwhile, illegal hubs in Central Luzon were reportedly dismantled. About 2,000 foreigners were later deported.
In 2019, POGO caused a diplomatic clash between the Philippines and China. China expressed its displeasure over its citizens' involvement, who comprise the majority of workers and players, as all forms of gambling is illegal in China while online casinos can only be played by those outside the Philippines. China, among others, warned that POGOs can worsen criminality, specifically money laundering. The Chinese government officially rejected POGOs, branding them "most dangerous tumor in modern society", disliked by all people worldwide.
In August 2019, following the Philippine government's move to suspend new POGO applications while addressing all concerns, the Chinese government urged the Philippines to halt local online gambling, requesting the punishment of POGOs illegally employing and mistreating their citizens, and to protect the victims. Chinese President Xi Jinping personally repeated the plea, addressing Philippine President Rodrigo Duterte, during their bilateral meeting in Beijing on August 29.
In September 2019, at a press briefing at Malacañang, Duterte declined the request, saying that POGO were beneficial for the Philippine's economy,[23] and that many people would lose jobs if POGOs were banned.[24]
Some locals criticized the influx of Chinese and other foreigners, who were believed to be taking jobs, and limiting the hiring of Filipinos, as evident after raids by immigration authorities on POGO offices. PAGCOR argued for a need for large numbers of native Mandarin speakers to serve mostly Chinese players. In 2020, the government denied that it is gave preferential treatment to the Chinese for the industry.
In 2019, there were reports that residents in Manila were forced to leave their apartment residences, in favor of Chinese tenants. In 2020, there were reports of medical facilities catering exclusively to POGO workers during the pandemic.
See also: Triad (organized crime). There were security issues reportedly linked to POGOs, including related criminal activities.[25] Authorities in the Philippines faced issues in dealing with these: POGOs illegally operating overnight, a rise in undocumented workers from China, and a weak response from government agencies. This was contributed further by the "visa upon arrival" program by the tourism department, which made it easier for the Chinese nationals to enter the Philippines, who ended up working for POGOs.
In 2019, watchdog Movement for the Restoration of Peace and Order said that the Philippines was becoming a haven for POGO-related crimes. The watchdog said that illegal workers were packed into condominiums, each unit having up to 40 people, in two or three shifts. Authorities arrested several illegal Chinese workers from raided POGOs, which were eventually deported.[26]
From January 2017 to June 2023, the Philippine National Police recorded a total of 4,355 victims of crimes, with 4,039 in the first half of 2023 alone, and 903 perpetrators. The majority of all individuals involved were Chinese nationals.[27] From November 2019 to March 2023, the National Bureau of Investigation revealed that there were 113 cases, with 65 of them involving human trafficking.
| Year | Number | Trial status | |
|---|---|---|---|
| 2019 | style=text-align:right | 9 | At least 35 cases have reached court; only one case led to a conviction. |
| 2020 | style=text-align:right | 11 | |
| 2021 | style=text-align:right | 42 | |
| 2022 | style=text-align:right | 40 | |
| Total | style=text-align:right | 102 | |
| Note: No any incidents were recorded in 2017 and 2018. Source: Philippine National Police[28] | |||
Incidents reported to the police were kidnap-for-ransom, kidnapping and illegal detention.[29] From 2017 until late 2019, the PNP Anti-kidnapping Group (AKG) reported 67 kidnappings. It was reported that some employees leaving companies were the victims, and policemen were helping the perpetrators, causing rescued victims to refuse cooperation with authorities.
Those POGO facilities had been involved in online scams and human trafficking. In 2023, raids on three separate hubs, in Pampanga, Las Piñas and Pasay, rescued almost five thousand victims. In Pasay, a torture den was discovered,[30] [31] which now serves as the temporary detention facility for future rescued foreigners.[32] At another facility in the city allegedly involved in scams, the police confiscated 28,000 registered SIM cards.[33]
Chinese nationals have been arrested for illegal possession of firearms, for petty crimes, and were reportedly involved in bribery. Prostitution dens were discovered.[34] It was revealed that some gambling syndicates employ Filipino policemen as protectors, as well as paying to corrupt immigration authorities and police.
These prompted PAGCOR to enforce strict regulation. In the last quarter of 2023, these firms were renamed as Internet Gaming Licensees with new rules and regulations for the industry being implemented, as PAGCOR stated that POGO "become too negative."
In October 2023, amid reports of involvement of Chinese citizens in fraudulent activities, China, through a statement from the Chinese Embassy in Manila, called on the Philippines to take strong measures in preventing POGO-related crimes.[35]
Following police raids in POGO hubs in Central Luzon in the first half of 2024, the leadership of PNP confirmed the "unreported killings" there.[36] Following President Bongbong Marcos' POGO ban in July, both the Presidential Anti-Organized Crime Commission (PAOCC) and PNP Anti-Cybercrime Group (ACG) reported a significant decrease of text scams. Data from PNP–ACG showed that from twenty in May, there were only two in July.[37]
POGO related tax evasion and a minimal contribution to the national economy have been raised.
Data from the Anti-Money Laundering Council showed (26%) of the worth of transactions from 2017 to 2019 were deemed suspicious. DoF, saying that POGO-related crimes may pose a risk to business and institutions, estimated that the Philippines may risk losing – in foreign direct investments.
PAGCOR reportedly failed to collect in unpaid dues from shuttered POGO firms. To avoid further losses to be incurred by the government, in 2023, PAGCOR announced its plan to privatize 45 casinos by the third quarter of 2025, with a revenue target at between and .[38]
The security threat posed by POGOs has been raised.
In 2020, environmentalists condemned the conversion of a mangrove area into a "POGO island" cluster in Cavite.
Even during lockdown due to pandemic, PAGCOR actively pushed for the resumption of POGO operations in Metro Manila. IT and Business Process Association of the Philippines later rejected the claim that POGOs, performing an "essential service," are part of their sector.
On February 1, 2023, authorities raided a POGO firm Hongsheng Gaming Technology, Inc., allegedly engaged in a cryptocurrency investment scam, in Bamban, Tarlac, through a warrant issued by the Tarlac City Regional Trial Court (RTC). Up to 851 workers—351 foreigners and 500 Filipinos—were held. Three other officers of the company were at large.[39] On July 7, PAGCOR ordered the company to stop all gaming activities following the raid.[40]
On March 13, 2024, authorities raided the same compound, serving two search warrants issued by the Malolos, Bulacan RTC against Zun Yuan Technology Inc., and rescuing more than 600 workers. Various firearms and alleged scamming paraphernalia were seized.[41]
Nine of the rescued Filipinos were considered as witnesses, as there were allegations of physical abuse and torture, as well as illegal activities in the POGO hub, including scams.[42] The foreigners were reportedly staying illegally in the country. Eight of them were charged with human trafficking and serious illegal detention at the Capas RTC.
Aside from offices and dormitories in the POGO compound, further search in the 7.9ha complex, which is owned by Baofu Land Development Inc. and located beside the municipal hall, revealed 36 structures including nine villas a swimming pool,[43] underground tunnels connecting the three villas, and 38 to 51 vehicles, and nine carts and heavy equipment. Almost in cash, cryptocurrency-related materials and documents, among other items, were found in 27 vaults.[44] In April, the Palace directed the Anti-Money Laundering Council to freeze and preserve the Zun Yuan compound and its other assets.[45]
In March 2024, Senator Win Gatchalian revealed municipal mayor Alice Guo's alleged links with the firm.[46] Guo, who was elected in 2022, had applied for the license of Hongsheng. In late 2020, the municipal council approved its establishment and operation. In 2022, Hongsheng had its license to operate canceled by the PAGCOR.[47] Following the 2023 raid, the POGO hub was renamed Zun Yuan.
In May, during a Senate inquiry, senators said that the POGO compound housed "mercenaries" allegedly involved in cybercrimes and surveillance activities, citing intelligence reports.[48] Meanwhile, Guo contradicted allegations against her, stating that she was the former landowner of the property, and her vehicle, found within the compound, was sold in 2020.[49] Guo admitted that being one of the incorporators of Baofu, she later sold her shares upon entering politics.[50] As Guo refused to participate further in the Senate investigation, the latter issued an arrest order in July; she has been at large since then.
Also in May, the Department of the Interior and Local Government (DILG) filed a complaint before the ombudsman against Guo, vice mayor Leonardo Asuncion, nine former and incumbent municipal councilors, and two other officials, in relation to her issuance of business permit to the POGO firm. The ombudsman later cited the investigation by the DILG which revealed that: Guo still having business interests in Baofu even after assuming her mayoral post; and that the POGO hub still having business permit after the first raid, as well despite their non-compliance with the Fire Code of the Philippines.
On May 31, Ombudsman Samuel Martires placed Guo under 6-month preventive suspension. In an August 12 decision, Martires ordered the dismissal of Guo for grave misconduct, and her perpetual disqualification from public office; while the rest were convicted of conduct prejudicial to the best interest of the service. DILG was ordered to look into the possibility of filing charges against Guo's predecessor Jose Antonio Feliciano.
On the other hand, the controversy revealed concerns surrounding Guo's nationality, resulting to a quo warranto petition filed before the Manila Regional Trial Court seeking nullification of her election victory, as well as charges of "material representation" in her candidacy, filed before the Commission on Elections.[51]
On June 4, 2024, joint operatives of the Criminal Investigation and Detection Group and the PAOCC raided a POGO firm, the Lucky South 99 Outsourcing Inc.'s 5.8ha complex, with 46 buildings, and other corporations at Grand Palazzo Royale complex at Porac, near its border with Angeles City.[52]
On June 4, Malolos Regional Trial Court Branch 14 issued a search warrant for violation of the Anti-Trafficking in Persons Act of 2003. The judge, however, issued a 3-page Order denying the Application, grounded on Rule No. 126 of the Revised Rules of Court, on June 5.[53] On June 7, RTC, San Fernando, Pampanga issued another Warrant. The Supreme Court is investigating the allegations regarding the withdrawal of the first warrant.
Initially, 190 individuals were arrested. 158 Chinese, Vietnamese and Malaysian citizens including 29 Filipinos, were rescued during the service of the warrant. “There seemed to be a leak prior to the operation. Chinese [nationals] supposedly escaped before PAOCC arrived,” Risa Hontiveros said. A criminal investigation on the alleged leak resulting into the "compromised" raid is currently ongoing, PAOCC spokesperson Winston John Casio said. "157 foreigners suspected to be POGO workers were caught leaving" before the operatives' "wellness check", Casio added.[54]
Only 140 suspects from 1,000 foreign nationals in the POGO buildings were found before the PAOCC team reached the site. Sherwin Gatchalian said Chinese syndicates had intelligence gathering, reaching into the judicial department. Lucky South 99 hired convicted pork barrel, Dennis Cunanan, in its operations.[55] Porac Mayor Jaime "Jing" V. Capil denied allegations of his participation. "No mayor's permit was issued to Lucky South for 2024," he added.[56] In September 2022, the POGO firm was previously raided and closed due to unlawful activities, but it continued operations thereafter without permit.[57]
In 2023, three petitions were filed by the Union for National Development and Good Governance Philippines, Anti-Trapo Movement of the Philippines, Inc., and lawyer Jovencio Evangelista, challenging the legality of the rules for POGOs, which had been approved by the PAGCOR in 2016.
The Supreme Court (en banc) unanimously dismissed the consolidated petitions, citing failure to observe the hierarchy of courts[58] and to meet the requirements for judicial review. The ruling, promulgated on April 25, 2023, was made public in March 2024.[59]
In 2023, President Marcos said that to outlaw all operations of POGOs, whose surrounding issues are caused by illegal operators, he needed a "good reason". That year, the Senate committee on ways and means filed a report, which proposed the permanent ban of POGOs nationwide to prevent crimes from these companies. Committee chairperson Senator Gatchalian is among the ten signatories.[60] [61]
In June 2024, Gatchalian filed a Senate bill aiming to repeal the taxability of POGOs, established under Republic Act No. 11590.[62]
In 2024, at least three House bills seeking bans were filed, in response to POGO-related crimes, and the government's apparent failure to address it. In February, the games and amusements committee approved two measures authored by district representatives Bienvenido Abante and Rufus Rodriguez.[63] Another was filed by Makabayan bloc, led by representative France Castro, in June,[64] paralleling the one in the Senate filed by Gatchalian.
Meanwhile, few local government units have prohibited POGO operation. At least two cities in Metro Manila have enforcing a ban, along with other forms of online gambling—Pasig in December 2022;[65] and Valenzuela in mid-2023, yet temporarily for five years.[66] [67] Bulacan,[68] Iloilo City,[69] and Batangas City,[70] followed suit since mid-2024.
On July 22, 2024, President Marcos announced the nationwide ban of POGOs in his State of the Nation Address.[71]