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How Big Is the Philippines’ Online Gambling Problem?

Gambling in Philippines

Authorities are now unearthing illegal Philippine Online Gaming Corporations, or offshore gambling operations. Noch, it has grown difficult for them to ascertain the extent of the online gambling industry. While there are many legal companies in this field, quite a few operate under the radar. It gets complicated for the players whereby they can find themselves placing bets at some of the best casinos but also exposed to the risks attached to them being illegal or, simply put, unregulated.

The Boom of POGOs Under Duterte’s Administration

Rooted in and thriving during the administration of President Rodrigo Duterte were the online gambling industry with a wide range of operators called Philippine Online Gaming Corporations (POGOs). In the tenure of Duterte, hundreds of gambling companies became officially registered and employed around half a million foreign workers and supported thousands of related businesses. It is estimated that POGOs generated about $500 million as revenue every year for the Philippine government, employed many Filipinos, and indirectly generated huge revenues.

The pandemic of COVID-19 substantially reduced POGOs. President Ferdinand Marcos Jr. imposed a ban on the establishment of new POGOs, while those already in operation were allowed to carry on. Of late, the Presidential Anti-Organized Crime Commission rubbed off on the genesis of new illegal "POGOs," divulging hints of standing up to some 300 POGO operations by 2024, up from previous years. In only 2017, there were 50 licenses only for POGO operations approved by the Philippine government.

It shows possible restoration of the online gambling industry under the Marcos administration, or that they didn't really go anywhere. Another possibility is that it's still developing.

I hope to get clear-on the matter-were POGOs really cut down under Marcos, and was the Marcos administration policy really effective in decreasing online operations?

This is a misleading statistic that perhaps should not concern anyone involved for a few reasons. The illegal POGOs should not be considered a failure; rather, this is a reflection of the victory scored in trying to put a stop to it. Just as illegitimate operators sprinkled across POGOs may seem a concern, it still represents the fight to uncover and deal with noncompliance; this is actually what will tie in to help carry on effective management and oversight.

Firstly, the term "POGOs" is an umbrella term covering a range of activities-from online gaming to scams and other shady operations. Online gambling may involve casino games, sports betting, and live stream bets, but in reality, the actual operations of these games are very predatory to rip players off and get them addicted to gambling. These companies are rigged to ensure players always lose, leading to multimillion-dollar losses. These online gaming companies transitioned into pig butchering scam operations after the pandemic.

The PAOCC approach of lumping illegal POGOs of all sizes together makes it hard to credibly ascertain the true state of POGO operations since the administration of Duterte. The counting system used by PAOCC creates bias by counting only the number of arrested or caught illegally operating POGOs without regard for size of the workforce, the operational type, or financial capacity. Apparently, this makes the POGO operations look bigger than they are since every illegal POGO caught is ranked the same, whether it has 15 employees or 1,000.

POGOs in the Marcos Era: Growth, Decline, and Legal Challenges

The COVID-19 pandemic may have changed the whole structure of illegal POGOs, which were once centralized with thousands of employees per company during the Duterte administration, but now, they would appear to be small-scale operations confined to specific areas, such as condos, houses, or apartments. In addition to this, the syndicates behind such illegal POGOs also reportedly bribe the police so they can conduct operations only to pack and set up once again elsewhere at a later date and get incarcerated. To put it another way, the apparent rise or increase in the number of illegal POGOs may not reveal any truth at all, given that there is no standard way to track, count, or quantify them.

To the contrary, Duterte's POGO industry was densely packed together, as hundreds of thousands of employees of high-rise buildings in far-flung regions and major cities were employed. It was during this time that some POGOs found a new avenue by branching out into scam operations, which rend it hard for Philippine regulators to know which ones were legitimate. Tools, techniques, and activities in online gambling and scamming remain very close to one another. Another problem arose from the fact that many POGOs had become “facilitation” companies during Duterte’s administration, renting their licenses and legal statuses to other unregistered microgaming companies for a fee. Such pseudo-POGOs would then be set up within the registered legal POGOs. The current number of POGO operations and their respective employees is most likely dwarfed by what was there during Duterte's regime.

Second, numerous Chinese cyber-fraud experts and scholars strongly maintain that Myanmar, Cambodia, and Laos are the main operational centers for the same. Many Chinese crime syndicates left the Philippines during the COVID-19 pandemic probably due to the transition of President Duterte, the collapse of the Chinese online gambling industry due to tightened labor regulatory measures and finance by the Chinese authority, and general discontent of Filipinos against POGOs. These syndicates transported themselves-first to Myanmar, where they formed alliances with both the military junta and ethnic armed groups; to Cambodia, where they linked with the hideout crime syndicates during the Chinese crackdown; and to Laos, where communism has taken on characteristics of an organized protection racket.

Online gambling companies that hung on during the pandemic are most probably the ones very much supported by the Marcos administration. For instance, the family of justice secretary Jesus Crispin Remulla sold 36 hectares of land to Oriental Game Ltd., one of the largest Filipino-Chinese online gambling conglomerates owned by Filipino-Chinese businessman Kim Wong. Kevin Wong, general manager, Oriental Group; and Kimberly Wong, general manager, Sparc Properties Development Corp., have signed a deal with Meralco to develop a power station at Island Cove, allegedly to provide power to Oriental Game Ltd. and the rest of its POGO operations.

Remulla has commanded the National Bureau of Investigation to discontinue its investigations into certain POGO companies. Oriental Gaming, one of the largest online gambling companies since the Duterte administration, has undisclosed financiers and investors, which in turn suggests that Chinese crime syndicates may have become involved in its operations.

Some internal incentives, the nature of which is peculiar to them, make Chinese crime syndicates earnestly consider that there are certain countries closed to competition. During the administration of former President Duterte, the POGO allegedly went out of control, leading to a wide variety of issues such as bribery and corruption within the government, armed bodyguard employment by POGO investors, triad infiltration, suicide by employees, and criminal activities including sex work, smuggling, and drug trafficking. These issues caused some public ire, requiring the Duterte administration to soften towards POGOs, at least to some extent. The remaining POGO firms would thus secure their interests against exposure and public wide discontent that could occasion a government crackdown on them and create a free playing field for any competition. Simply put, the POGO firms and criminal syndicates operating within the Philippines have interests for the latter to stay out.

Thirdly, the indicators that are usually put to use for estimating the illegal inflow of capital into the country are now severely weak, a contrast from the case of the Duterte era. Foreign nationals, for instance, are in the Philippines illegally, but act like tourists, coming into the Philippines through visa-waived privileges and tourist visas. In a few years, a total of 205,218 Chinese citizens applied for special work permits, and in 2024, a further 287,133 Chinese citizens would apply for the same visa. Thousands of Japanese, Koreans, Indonesians, Malaysians, and Vietnamese have applied for these special work permits. This does not include the hundreds of thousands of illegal workers in the sector. There was an outflow in early 2024 and late 2024 of Chinese and other citizens out of the Philippines. The number of Chinese workers awarded special work permits is also said to have plummeted to between 100,000 and 150,000. The Department of Labor and Employment has also ceased issuing work permits for foreign POGO workers.

Another indicator is the number of new businesses created by foreign investors in the Philippines. In just two years, the Securities and Exchange Commission data suggest 3,845 new companies in this category were set up with Chinese citizens as investors, typically in retail, wholesale, hospitality, and information technology. They supply goods to the POGOs as business partners and service providers. Moreover, they have become operators that launder money for online gambling companies, just like the scams in Thailand, launder money through an expensive hotpot restaurant. In 2024, 934 are newly formed companies with Chinese investors, which is a huge decrease from the Duterte time.

To sum up, PAOCC's concern over illegal POGOs should not be magnified. The government's policy on the crackdown on POGOs is the correct policy direction. There is an even greater necessity for the government to step up operations on policing and possibly shutting the sector down completely.