The Philippines is dismantling its controversial offshore gaming industry for overseas gamblers. Philippine President Ferdinand "Bongbong" Marcos Jr. this week directed regulators to shut down all "POGO" websites and operations by the end of the year. There are growing concerns that these online casinos have become a front for criminal activities such as human trafficking, fraud and potential Chinese espionage.
POGO, short for Philippine Offshore Gaming Operator, is a company licensed by the government to operate online gambling sites for overseas players, especially in mainland China where such activities are illegal. While the POGO business generates billions of dollars in tax revenue, it is also a hotbed of illegal activity.
"Pretending to be legitimate entities, their operations have branched into illicit areas furthest from the game, such as financial fraud, money laundering, prostitution, human trafficking, kidnapping, brutal torture and even murder," Marcos said in his annual State of the Nation address this week.
He wasn't exaggerating. An ongoing Senate investigation has uncovered some very suspicious activity. The focus of the investigation was a mayor named Alice Leal Guo, who allegedly faked her Filipino citizenship and ran an illegal gambling empire with a doxing detention cell. Police rescued more than 800 victims from her fraud ring. Investigators said Guo's real name is Guo Huaping and he is a Chinese citizen.
POGOs have been a political hot potato for years, causing various economic and regulatory problems in addition to the nastiness factor. While only about 42 entities are currently officially licensed, more than 400 are said to be operating illegally.
At its peak a few years ago, POGO companies directly employed more than 300,000 Chinese citizens in the Philippines alone. In recent years, hundreds of POGO companies have had their licenses revoked and many operators arrested for tax evasion and hiring illegal foreign workers. Now, reports indicate that legal POGO gambling directly and indirectly employs approximately 23,000 foreigners and 40,000 Filipinos.
China has been pressuring the Philippines to shut down the industry, which it views as illegal cross-border gambling targeting its own citizens. Some analysts believe that Marcos' move can ease tensions with the Chinese government over territorial disputes in the South China Sea.
Clamping down on an entire semi-legal, multi-billion dollar industry is a major move that will have significant economic impacts, including an estimated $400 million annual tax shortfall. But officials say the social costs are too high. Planning Minister Arsenio Balisacan was tight-lipped about any losses, telling reporters that POGOs contributed only 0.5% to GDP anyway.
The big question now is what will happen to all these POGO employees. President Marcos vowed that his Labor Department would help these unemployed people find new jobs.
The move was welcomed by many as a victory in the fight against transnational cybercrime. The statement itself drew a standing ovation in Congress. But there are also concerns that darker POGO elements will go entirely underground, creating new illegal operations that are harder to track and regulate.