To kill a cash cow

It is interesting to see how the snowballing calls to ban POGOs, or Philippine Offshore Gaming Operators, will turn into reality. Ironically, the noise urging the government to ban the POGOs comes from a number of lawmakers who voted to tax them under a law that they themselves approved during the previous 18th Congress. This was Republic Act (RA) 11590, the only law that legitimized POGO operations. RA 11590, otherwise known as “An Act Taxing Philippine Offshore Gaming Operations,” was signed into law on Sept. 22, 2021 by then president Rodrigo Duterte. RA 11590 placed the POGOs under the jurisdiction of the Philippine Amusement and Gaming Corp. (Pagcor), which also supervises and regulates the operations of casinos and other state-authorized gambling operations all over the country.

The bad publicity generated by many reported POGO-related criminal activities prompted Pagcor to rebrand it as internet gaming licensees (IGLs). In the recent listing issued last month, Pagcor bared that it has also issued nine provincial licenses to offshore gaming operators. As of May 15, Pagcor has 40 regular IGLs and nine provisional IGLs. Of this total, three IGL licenses remain suspended. Whether POGOs or IGLs, there are veritable demands to outlaw them – by whatever names they are called.

According to Jun Alano, assistant vice president for external communications department of Pagcor, the IGLs remitted to Pagcor more than P5 billion last year. “We remit nearly 80 percent of gross revenues to the Treasury or approximately P5 billion from IGLs alone,” Alano cited.

Leading the demand to ban POGOs is Senator Sherwin Gatchalian, who first issued the call to President Ferdinand “Bongbong” Marcos Jr. (PBBM) to take executive action to outlaw immediately all POGOs. Gatchalian issued this call at my Kapihan sa Manila Bay news forum on May 29. On that same day, Gatchalian filed Senate Bill (SB) 2689. “Republic Act No. 11590 … is hereby repealed,” SB 2689 simply read.

Gatchalian practically pleaded to PBBM: “Ako ay nananawagan sa ating Pangulo na i-ban na ang POGO kaagad dahil palalim nang palalim yung ugat nitong POGO at ang kriminalidad ay palala nang palala.”

Gatchalian chaired the Senate ways and means committee during the 18th Congress. It is the committee that passes upon all revenue-raising and tax bills. Hence, he sponsored and shepherded the passage into law of RA 11590 that legitimized the POGOs through tax collections. “Yes, but the situation then is completely different today,” Gatchalian pointed out. But being still the present chairman of the Senate ways and means committee of the present 19th Congress, Gatchalian vows to repeal the same law.

Gatchalian conceded, however, it will take time if the proposed ban on POGO will go through the normal legislative mills of Congress. Both chambers of the 19th Congress have adjourned already and winded down their second regular session. Gatchalian instead asked PBBM to invoke his executive powers to outlaw the POGOs. Under our country’s Constitution, the President is authorized to amend tariff and tax laws whenever Congress is not in session.

“It (ban the POGOs) can be done because the regulator ay Pagcor, which is under the Office of President. Even if there is a law, the President can suspend them (POGOs),” Gatchalian argued.

The sentiments to ban POGO got groundswell support in the aftermath of the raid of a POGO hub in Bamban, Tarlac that turned out to be fronting for an online scam hub. The raiders led by the Presidential Anti-Organized Crime Commission (PAOCC) discovered other illicit and criminal activities.

In his bill, Gatchalian cited the raids on the following POGO hubs for criminal activities – Colorful and Leap Group in Clark Freeport Zone; Xinchuang Network Technology in Las Piñas; Smart Web Technology in Pasay and Zun Yuan Technology in Bamban, Tarlac. Since last year, Gatchalian filed, one after another, three of the five Senate resolutions that looked into these reported POGO illegal activities. In the on-going Senate public hearings, Bamban Mayor Alice Guo was grilled for not taking action against the POGO compound located and operating in the backyard of the Bamban municipal hall. The Office of the Ombudsman meted Mayor Guo a six-month suspension while they are investigating all the charges against her in the complaint subsequently filed by the Department of the Interior and Local Government (DILG). But even long before the Senate public hearings, our law enforcement authorities previously encountered POGO-related criminal activities, from human trafficking to kidnapping and illegal detention of POGO workers, who are mostly Chinese nationals who were found not having work permits.

These last few days, House lawmakers echoed Gatchalian’s call to ban POGOs. Veteran Congressmen Surigao del Norte Rep. Robert Ace Barbers and Cagayan de Oro Rep. Rufus Rodriguez now “regret” voting in favor of RA 11590. Barbers claimed he felt like “nabudol (tricked).”

As early as September 2022, former Department of Finance secretary Benjamin Diokno expressed strong “personal opinion” on the social costs and “reputational risks” to the Philippines if POGOs will be allowed to continue here. The DOF previously estimated POGOs could generate as much as P20 billion in tax collections per year. But actual collections in 2019 reached only P6 billion. Thus, a number of POGOs were shut down. Diokno’s successor, Finance Secretary Ralph Recto, also publicly declared he poses no objection to ban POGOs.

Gatchalian noted the cost-benefit analysis done by the DOF in 2022 that POGO operations generated economic benefits worth P133.7 billion against P144.5 billion lost annually due to foregone potential investments and tourism revenues, with costs to enforcement and immigration. This resulted in a net cost of P3.3 billion to P14 billion annually, equivalent to 0.01 percent to 0.06 percent of gross domestic product, respectively, Gatchalian added.

PAOCC chief Undersecretary Gilbert Cruz disclosed around 300 POGOs are illegal. Ban them? They will just go underground.

Are they ready to kill the so-called cash cow that reportedly earns P5 billion for the government? P5 billion could just be a drop in the bucket. But P5 billion is still P5 billion. So who will miss it, except perhaps only Pagcor?