Closure of POGOs to bring more harm—solon

THE chairman of the House Committee on Appropriations has opposed the proposal to close down all Philippine Offshore Gaming Operations (POGO) in the country, saying it will only create an entire underground sector.

Albay Rep. Joey Sarte Salceda made a statement following calls to ban POGOs amid the recent spate of kidnappings, and other illegal activities involving Chinese working in the online gaming industry.

“Of course, we should enforce against illegal gaming operations. That’s the function of law enforcement. But our policy cannot be to give an entire industry up just because there are bad actors. All industries have bad actors,” he said.  “There is a blanket ban on kidnapping. There is a blanket ban on illegal POGOs. All kidnapping is wrong, and all gambling without a permit is wrong. My stand is for the government to wield the full weight of the law,” he added.

Currently, Salceda said legitimate POGOs occupy some 1.1 million square meters of office space.

“That provides developers with a steady stream of income that they can use to create new office space and housing. The janitors, security guards, and administrative and support staff, and other workers in such office spaces are Filipinos. A sudden downturn in office occupancy at this point will kill jobs and at least P18.9 billion in rental income from offices, and 28.6 billion in housing rent,” he said.

“POGOs also actually hire Filipinos directly. So, we stand to lose 70,000 Filipino jobs that are directly hired by POGOs at least. POGO employees also spend around P950 million daily in Philippine stores. Their commissaries spend P11.4 billion annually from Filipino caterers,” he added.

Also, the House leader said a blanket ban on a specific sector, when there are laws that already exist to prevent abuses in any kind of business, will be seen as arbitrary.

“That will hurt our reputation with investors not just in the gaming sector. We will be known as a country that burns down houses just to kill the rat inside,” he said.  Salceda said the government can still generate revenue at least P5 billion from the POGOs.

“I foresee growth in government income from POGOs. I think a total tax take of at least P5 billion this year is possible, up from P1.2 billion from last year,” he said.

“The BIR commissioner has made a similar observation of industry growth during Congressional hearings as well. It’s definitely worth keeping legal, fully-compliant companies. Whether it’s worth it is already a settled policy question: we always want legal businesses and we always hate illegal businesses. I will definitely not advocate for a position of banning an entire legal industry because of the illegals who are also hurting the legal industry participants,” he added.

Salceda said when Singapore was debating on the merits of keeping its petroleum refining industry, due to concerns about pollution and other effects, its policy response was to keep refining within special refining zones isolated from much of the city-state and these are called “scheduled premises.”

“The analogy and the solution will probably be similar here. POGOs do not extract natural resources or revenues from our country. They can be kept within controlled and heavily regulated spaces. And we have a potential global advantage in that we recognize them as taxable entities, unlike other countries that consider them a gray area,” he said.

Salceda said his proposal is to keep POGO operations within POGO-specific zones that are ringfenced from the rest of the country.

“New licenses will be in these zones, and existing licenses will be allowed only to complete their leases. Any offshore gaming that operates outside such zones will be considered illegal and offshore gaming outside these premises can be arrested in flagrante delicto—without need for much further investigation. That way, we also limit needless interaction with the sector, and can keep its clientele as exclusively foreign,” he added.

Ill effects

FOR his part, Surigao del Norte Rep. Robert Ace Barbers said there now exist indications that online gambling operations have undermined the government’s war against illegal drugs, graft and corruption, money laundering and alarming gambling-related crimes.

Barbers, chairman of the House Committee on Dangerous Drugs, had denounced in a privilege speech in November 2019 or in the 18th Congress that the loosely-regulated influx of large number of Chinese tourists-turned POGO workers in the country would only create social and security concerns for the country.

“I had long held that, prior to the spread of Covid-19 virus in March 2020, that there are serious effects on the POGOs online gambling operations [on] our war against money laundering, criminality, graft and corruption and illegal drugs,” he said.

As early as November 2019,  Barbers said the PNP Anti-Kidnapping Group’s data indicated 31 KFR cases involving Chinese nationals from 2017 to 2019, and most of the cases transpired in the vicinity of the so-called “Entertainment City” where casinos and on-line gaming are located.

Aside from abduction cases, crimes such as murder,  he added prostitution, torture, extortion, usurious loan-shark, suicide, and illegal drug trafficking involving Chinese nationals transpired in said period.

Very recently, Barbers said, an alarming rise in cases of kidnapping, murder, torture and extortion between and among “captive” Chinese POGO workers and their employer-handlers was reported.

He said the kidnappings and other forms of criminality are allegedly being perpetrated by private protective agents employed by private security firms or by rogue but active law enforcement agents that are said to be under the employ of some POGO firms in the country.

The solon from Mindanao said there had been indications in the past that Chinese drug syndicates are utilizing online gambling facilities as “fronts” for their illegal trade based on police reports. The danger of online gambling on the other hand, Barbers said, is founded by its potential capacity to “revolutionize” or re-invent the money laundering processes that undoubtedly promotes illegal drug trade and other organized crime activities.

“This is because the nature of the Internet, including other Apps such as the Dark Net, allows transactions to occur almost instantaneously and with anonymity, thereby allowing the criminal launderer to avoid detection. The online gambling being operated by POGOs may even be worse than the traditional casino gambling operations,” he said.

In 2019, Barbers said Pagcor records indicate there were only 12 POGO firms that were given franchises.  But these firms allegedly illegally “farmed-out” their franchises to other firms resulting to the mushrooming Chinese POGO firms and workers in the country, he said.

Barbers said Pagcor justified POGOs presence and operations by saying and projecting that said firms could generate more than P37 billion annually to finance local infrastructure and socio-civic development projects.

However, latest reports said that this year, the government, through the BIR, was only able to collect P3 billion from the POGO operations.

For its part, the DOJ is currently investigating the presence of some 200 POGO firms illegally operating in the country.

POGO or similar online gaming operations is strictly prohibited or banned in China.