On 22 July 2024, Philippines President Ferdinand Marcos Jr. introduced a ban on all Philippine offshore gaming operators (POGOs) by the end of the year. The announcement was made during Marcos’ State of the Nation Address (SONA).
In his speech, Marcos said: “Effective today, all POGOs are banned. I hereby instruct PAGCOR to wind down and cease the operations of POGOs by the end of the year.”
What are POGOs?
The phrase 'POGO' is commonly used abbreviation for a Philippine offshore gaming operator. These are online gambling operators based in the Philippines that offer services to customers outside the country.
While POGOs began their operations in the Philippines in 2003, their operations increased in 2016 when the administration of then-President Rodrigo Duterte relaxed the country’s internet gambling policies, with the aim of creating more jobs for locals and increasing the country’s revenue.
POGOs, prior to the ban, were licensed and regulated by the Philippine Amusement and Gaming Corporation (PAGCOR), until the rebranding of POGO into an Internet Gaming Licensee (IGL) on 12 July 2023. Only 43 of the existing POGOs at the time were allowed to continue operations as IGLs. Previously, POGOs persistently drew controversy for reported violations committed by different operators.
PAGCOR and its role
PAGCOR was the main licence issuer for POGOs. It has a legal mandate to license games of chance, card games and number games, to generate revenue for the Philippines Government’s socio-civic and national development programs, as well as helping promote tourism.
There are two main types of offshore gaming licensee in the Philippines:
Philippine-based POGO licensees or Foreign-based POGO Licensees. Foreign-based POGO licensees must have an appointed local agent which has to be PAGCOR-accredited.PAGCOR also regulated POGOs. Their sites must comply with PAGCOR’s rules, such as having a maximum floor area of 25,000 square metres and not being set in residential areas.
On 22 September 2021, RA No. 11590, the Act Taxing Philippine Offshore Gaming Operations, was signed into law, amending the Tax Code to include sections on taxing POGOs. Notable provisions included the corporate income tax of 25% on non-gaming revenue, the final withholding tax of 25% on the gross income of alien employees and gaming tax of 5% of their gaming income.
PAGCOR vs CEZA
In the past, freeport authorities like the Cagayan Economic Zone Authority (CEZA), the Aurora Pacific Economic Zone and Freeport Authority (APECO) and the Authority of the Freeport Area of Bataan (AFAB) were granted, under their respective charters, the power to operate or approve licences to operate gambling businesses, including POGOs. However, this power has since been curbed by RA No. 11590.
CEZA
CEZA is an economic zone with the power to issue fiscal incentives to locators. It is also a body that acts as a regulator of the gaming jurisdiction, with the power to licence interactive gaming and land-based gaming activities without needing to secure prior licence or approval from PAGCOR. This was established by the Republic Act 7922 or the Cagayan Special Economic Zone Act of 1995.
“Our key difference in CEZA is that our online casinos do not handle bets. We are purely regulators, not operators – as it should be,” said General Secretary Katrina Ponce Enrile, Cagayan Economic Zone Authority CEO and Administrator.
More details about CEZA can be found in this interview with the General Secretary.
What drove the POGO ban?
The POGO ban was driven by several groups calling for an end to POGO operations in the wake of a number scandals over the years.
In March and May 2024 respectively, the Criminal Investigation and Detection Group (CIDG) with the Presidential Anti-Organized Crime Group (PAOCC) raided two suspicious compounds that were later identified as POGO hubs in Bamban, Tarlac and Porac, Pampanga respectively.
The first raid rescued 800 employees, including around 500 foreigners, with 427 being Chinese nationals. Said hub was allegedly involved in surveillance activities and the hacking of government websites. It was subjected to a Senate probe, where now-suspended Bamban Mayor Alice Guo was investigated for alleged links to the hub and its owners. Guo was eventually expelled from the NPC party and charged with human trafficking.
The second raid saw 186 foreign and Filipino workers apprehended, including four individuals who claimed to be victims of kidnapping.
After the two major raids, voices calling to ban POGOs increased, despite PAGCOR’s defence of its legitimate IGLs. Some senators also called for bans on all forms of online gambling together with POGOs.
On 22 July 2024, President Ferdinand Marcos Jr. announced the ban on POGOs during his SONA speech.
What happened after the POGO ban?
– Foreign workers, especially those working under POGOs, were given 60 days from 26 July 2024 to leave the country. This was later extended until the end of the year for both foreign and local employees.
– Companies involved in online gaming services, such as DigiPlus for online bingo and RGB for gaming machines, have come out to reassure stakeholders that their businesses remain unaffected by the ban.
– Senators have requested the repeal of RA No. 11590 regarding the POGO tax.
– PAGCOR requested the Government spare BPOs providing services for US and UK-based operators.
– Multi-committee panel House Resolution 1880 was formed to investigate possible links between former Philippines President Rodrigo Duterte’s anti-illegal drugs campaign and POGOs.
– The Indonesian Embassy requested the POGO hub in Lapu-Lapu City to be raided following reports of several Indonesian people being held at the site. A total of 162 foreign nationals, including minors, were rescued.
– A mass grave was found within a compound of a previously raided POGO hub in Porac Pampanga. The former owners of the compound, Lucky South 99 and Whirlwind Corporation, had already been charged with trafficking.
– The Philippines' Department of Labour and Employment (DOLE) held a job fair at the Ayala Mall Manila Bay in Parañaque for ex-POGO employees with around 70 employers in attendance.
– In early November, President Marcos reiterated that all POGO and offshore operations were required to cease activities by 31 December 2024.
– One of the largest POGOs, Island Cove, was officially closed. The compound featured 57 buildings across 33 hectares and employed 30,000 workers at its peak.
Reactions from overseas and locals
– China’s embassy had sent its praises to the Philippines upon news of the POGO ban.
– Many senators have also shown their support regarding the ban.
– National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan stated that the ban will have "very little" impact on the country's economic growth.
– Surigao del Norte 2nd District Representative Robert Ace Barbers urged the Philippines people to flush out illegal POGO workers in hiding;
– Deputy Speaker David Suarez claimed that a number of SMS scams decreased drastically after the ban, while Senator Joel Villanueva sought to repeal the law taxing POGOs.
– PAGCOR has voiced concerns over the effect of the ban, stating that the potential loss of national revenue and the increased obstacles in keeping track of existing POGOs, most of which would have gone underground after the ban was announced.
– Senator Win Gatchalian came out in support of the ban, citing public safety concerns and abusive practices in many of the POGOs.
Is CEZA affected by the POGO ban?
After the POGO ban, both Chief Presidential Legal Counsel Juan Ponce Enrile and his daughter, Chief Executive Officer Katrina Ponce Enrile of the Cagayan Economic Zone Authority, released a statement that said President Ferdinand Marcos, Jr.’s decision to ban Philippine Offshore Gaming Operators (POGOs) should not affect CEZA operations.
As Secretary Enrile affirmed shortly after the ban was announced: “There are no POGOs in the Cagayan special economic zone and freeport. There never was and never will be.”
They both affirmed that the foreign iGaming operators licensed by CEZA all operate legally and are prohibited from soliciting and accepting bets from the Philippines and other countries where gambling is prohibited.
Conclusion
The POGO ban had support from the Philippines’ people and most of its senators. It was agreed that the ill effects from POGOs far outweighed any potential revenue they could bring in.
However, PAGCOR has mentioned being open to replacing POGOs with new, improved and better versions of online gaming operations, especially if it could fill the revenue void left by POGOs.
This has yet to come into effect, however.
