In little more than two weeks, all Philippine online gaming operators, or “POGOs” offering online gaming to markets outside the country, are to close, leaving behind them allegations of serious crimes including human trafficking and financial scams – if they are really gone, which is open to considerable debate. Illegal gaming operations are an epidemic that has spread across Southeast Asia and, among other things in the Philippines, damaged the reputation of former President Rodrigo R. Duterte, who allowed the exponential expansion of their numbers as a lucrative source of tax revenue and real estate revenue that is now a convenient tool being used by the forces of President Ferdinand Marcos Jr in the increasingly bitter political squabble between the two factions. Duterte’s former spokesman Harry Roque is on the run in Dubai after he was found to be involved with an illegal POGO called Lucky South 99, a hub in Porac, Pampanga. Duterte’s former special assistant and head of the Presidential Management Staff Christopher Lawrence "Bong" Tesoro Go, now a member of the Philippine Senate, previously expressed support for POGOs before turning against them publicly and is alleged to have had ties to POGO money during Duterte’s war on drugs, which Go has denied. In July, the National Bureau of Investigation announced it had opened an investigation into more than 1,200 birth certificates issued to Chinese nationals in Davao del Sur, Duterte’s home territory, from 2016 to 2019. From a high of 298 online gambling hubs operating legally in the Philippines, the number had fallen to 13 as of November 30. “By December 15, we expect to have zero POGOs remaining,” Alejandro Tengco, who heads the Philippine Amusement and Gaming Corporation, told a forum last week, adding that any still operating after January 1 including those located in provincial areas will be classified as illegal. Some 30,000-odd Chinese workers have left the country, with more to follow, echoing what happened in Sihanoukville in Cambodia when then-Prime Minister Hun Sen ordered authorities to end all online and arcade gambling by the end of 2019, and in Myanmar’s notorious border hubs after an angry Chinese President Xi Jinping ordered them closed because of the cyber-scamming, online gambling and human trafficking that have plagued millions of mainland Chinese lured onto the Internet to gamble away their savings. An additional 40,000 jobs are disappearing for Filipinos working in and around the industry, according to a source in a local country risk firm in Manila. With the situation in Cambodia and Myanmar, Chinese authorities were reported by the state news agency Xinhua to be working closely with the Philippines to remove the mainlanders involved in gaming. “We are talking about maybe 1 percent or less of total economic activity in Metro Manila,” he said. “At the national scale that is closer to 0.2 percent or less of GDP. There will be pronounced effects in specific sectors -- real estate, both office and residential, groceries, bars, transportation services, etc. that cater specifically to Chinese Pogo workers – and perhaps very pronounced in individual neighborhoods and buildings.” Officials have already warned that it’s unlikely they will disappear completely, as they haven’t disappeared completely from Cambodia, Laos, Myanmar, or the Marshall Islands. Senator Risa Hontiveros, who has been a key force investigating the movement, said some POGOs are already “breaking into smaller groups” to evade enforcement. Several in Parañaque in Metro Manila, Hontiveros said, are disguising themselves. She questioned whether the practice is limited to Metro Manila or if it has expanded to other regions such as Luzon and the Visayas. These are outer Philippine islands where the government is unsophisticated and law enforcement officials are malleable. Some are disguised as Business Process Outsourcing (BPO) operations and other business concerns, sources including some in Philippine law enforcement say. One official said many passengers on flights from Luzon to the Visayas are former POGO employees. The problem is that there is a river of money going into the hands of organized crime that isn’t going to stop, as exemplified by a US$2 billion money-laundering scandal in Singapore in 2023 in which police arrested nine men and one woman, all originating from Fujian province in China, several of whom were tied to a POGO in Tarlac. The value of assets seized and frozen amounted to S$2.8 billion (US$2 billion), including 152 properties and 62 vehicles with a value of more than S$1.24 billion and bank accounts containing more than S$1.45 billion resulting in a dramatic tightening of Singaporean banking laws to guard against money-laundering. A 2023 report by the Asian Gaming Federation found that “These operations, which are run by individuals with long histories of involvement in illegal betting and organized crime across Asia, are estimated to make at least US$40 to 100 billion a year in illicit profits from such activity.” The success of such gaming operations, the report said, “has been an enormous financial boon to organized crime, for whom cyber scams and illegal betting are just two of many illicit business lines that include money laundering as a service, illicit wildlife trafficking and production and distribution of methamphetamine and heroin. The vast profits from such operations have provided plentiful ammunition to corrupt local authorities, and the operations in this group are frequently protected by powerful politicians and/or armed militias. Global attention on the issue has not eliminated this activity, just displaced it into even more vulnerable jurisdictions, leading some to fear the industry could lead to geopolitical instability.” “The country lacks the ability to ensure proper law enforcement,” said a knowledgeable gaming source in Macau. “Therefore, POGO-like operations will likely continue in some form.” There will remain sufficient incentive and regulatory or enforcement gaps to allow some form of the industry to persist underground, said another source. “This will also likely mean that the economic impacts from this policy shift will materialize incrementally.” The more significant economic factor for the Philippines is likely to be the overall loss of Chinese tourists into the country since COVID-19. Since many POGO workers were actually in the country on tourist visas, it might be a more useful gauge encompassing issues above and beyond POGOs. In any case, Chinese tourists were 20 percent plus of arrivals in 2019 and probably around 5 percent in 2024, unlikely to rebound to pre-COVID levels any time soon. In 2023, South Korea was the largest market with 1.44 million visitors, followed by the United States with about 900,000. China was fifth with 263,836 visitors, or 4.8 percent of the 5.45 million visitors. How many of those “tourists” were POGO employees is open to question. The Philippines’ decision to shut down its POGO industry “has not resolved the issue but has merely pushed operators to seek more conducive environments,” according to the Macau-based trade publication Asia Gaming Brief. These operators, the publication said, “will likely migrate to jurisdictions where they already have established networks or infrastructure. Past disruptions, such as in 2016, saw the rise of illegal betting operations in countries like Laos, Cambodia, and Myanmar. These regions have become known for cyber-scam activities and organized crime syndicates that continue to operate with little oversight.” This is among the stories/excerpts we choose to make widely available.If you wish to get the full Asia Sentinel experience and access more exclusive content, please do subscribe to us for US$10/month or US$100/year.
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