UP law alumni seek ban on POGOs catering to Chinese mainland

MANILA, Philippines — Alumni of the University of the Philippines (UP) College of Law, led by retired Supreme Court (SC) Senior Associate Justice Antonio Carpio, are urging President Marcos to order the cancellation of licenses of all Philippine offshore gaming operators (POGOs) catering to the Chinese mainland market as it supposedly violates the charter of the Philippine Amusement and Gaming Corp. (PAGCOR).

In an open letter dated July 15, the UP Law alumni noted that under Chinese law, any form of gambling, including online gambling and overseas gambling by Chinese citizens, is illegal.

Under PAGCOR rules, POGOs are not allowed to give access to their registered website in territories where online gaming is prohibited.

The alumni said PAGCOR requires POGOs to operate only in a foreign country where gambling is allowed.

“Clearly, no POGO can operate legally in mainland China which bans all kinds of gambling. Thus, PAGCOR cannot, and should not, issue a license to any POGO that caters to the mainland Chinese market. Any such license is void ab initio under PAGCOR’s own regulations,” the open letter read.

They also noted that Chinese POGOs, as shown by recent developments, are “mostly operated by criminal syndicates,” where they have torture chambers, illegal firearms, fake documents and engage in sex trafficking.

“There is no legal, moral, economic or social justification to allow such POGOs to operate in the Philippines. We, therefore, implore the President to direct PAGCOR to cancel immediately all licenses of POGOs that cater to the mainland Chinese market,” the UP Law alumni said.

PAGCOR bucks ban

PAGCOR is against bills seeking a total ban of online gaming sites, PAGCOR chair Alejandro Tengco said yesterday at the Senate ways and means committee hearing tackling three proposals seeking to prohibit all forms of online gaming and betting.

Tengco was the lone voice opposed to the ban among the government agency representatives, who said they are supportive of the bills cracking down on online wagers and POGOs because of their contribution to social ills – like gaming addiction in the case of online casinos and slot machines, and kidnapping and human trafficking for illegal POGO hubs.

Tengco said a total ban would be unfair to the legitimate online gaming and POGO hubs, which pay taxes and contribute to the government’s revenue collection. He noted the government stands to lose up to P40 billion if the total ban on online games and POGO becomes a law.

“In these difficult times that everyone is facing today, I believe P40 billion is a big amount if we will forgo that said amount,” Tengco told the Senate panel.

PAGCOR raised P56 billion in gross gaming revenue (GGR) from online games in 2023, of which P13.7 billion was collected by PAGCOR to perform its mandate, Tengco said.

PAGCOR generated P17.5 billion in the first half of 2024 from online games, with the agency projected to generate up to P42 billion by year-end due to collection of license fees, Tengco added.

Instead of banning online games, Tengco hoped to regulate the online gaming sector and encourage illegal gaming sites to register with PAGCOR.

Putting into the fold of the law these illegal gaming sites would generate an additional P200 billion to P250 billion in revenues for the government, Tengco said.

While he is for regulation of POGOs, Tengco said he would not oppose a ban if the Marcos administration chooses to kick out offshore gaming hubs because of their involvement in crimes.

Sen. Sherwin Gatchalian said that he led the hearing to shed light on the possible social ills of online gaming, such as addiction to betting in casinos, slot machines, bingo and other forms of virtual numbers games.

He said there is a need to look into digital online betting platforms in the aftermath of the kidnapping and enforced disappearances of cockfight aficionados who got hooked in e-sabong.

The senator maintained that POGOs should be totally banned because of involvement in human trafficking, hacking, torture, scams and other heinous crimes.

DOF pushes ban

Allowing POGOs to continue will cost the government at least P100 billion annually as the Department of Finance (DOF) formally recommends banning the industry.

During the Senate committee on ways and means hearing on Tuesday, Finance Undersecretary Karlo Adriano said the DOF supports the prohibition of POGO operations due to the social costs and reputational risks they entail.

Based on the cost-benefit analysis done by the DOF, the net cost of allowing POGOs is around P99.52 billion annually.

Data showed that direct economic benefits of POGOs are estimated at P60.68 billion, while indirect economic benefits are about P105.81 billion, for a total of roughly P166.49 billion per year.

However, the DOF’s cost-benefit analysis revealed that the cost of POGOs is significantly higher at an aggregate of P265.74 billion annually.

Broken down, the direct economic cost is at P84.74 billion. This covers P55.36 billion in impact to investments, P29.01 billion in impact to tourism and another P500 million in extra costs for law enforcement. Indirect cost, however, is much higher at P180.87 billion due to reputational risks.

“This includes forgone investments due to crimes and forgone revenues in tourism due to the negative picture of having POGO activities in the Philippines,” Adriano said.

The analysis did not cover the social cost which the DOF deems unquantifiable. “The social cost covers loss of life, physical and psychological harm to victims and impact on the communities, as well as increased sense of fear and anxiety due to POGO activities,” Adriano said.

Given that the analysis yielded a net cost of P99.52 billion annually, the DOF maintained that the government can live without POGOs.

“The cost is definitely higher than the benefits. Although we are forgoing some tax revenues, that can be compensated if there will be more investment coming in,” Adriano said.

Porac Mayor Jaime Capil has expressed his full support to the Senate probe into illegal POGOs in the country, reiterating his call for a total ban against online gaming operations.

“We at the Sangguniang Bayan of Porac supports the probe being led by Sen. Risa Hontiveros and Sen. Gatchalian against illegal POGOs. We at the Porac LGU also support the proposals to ban POGOs to put a stop to illegal activities,” Capil affirmed.