To ban or regulate?

Torture chambers. Uniforms with the markings of the Chinese People’s Liberation Army. Foreign employees escaping from their workplaces, complaining of physical and sexual abuse apart from exploitative labor practices.

With the growing list of criminal activities attributed to Philippine offshore gaming operator firms, the Philippine Amusement and Gaming Corp. (PAGCOR) is starting to sound like a voice in the wilderness in opposing a total ban on POGOs.

I give PAGCOR chair and CEO Alejandro Tengco an A for effort in preventing a total ban not just on POGOs, but even (as suggested by some senators) on the internet gaming license or IGL scheme that was launched last year by the agency, which critics say is the same dog with a different collar.

Facing One News’ “Storycon” last Thursday, Tengco argued that only illegal POGOs are engaged in criminal activities. By illegal, he means these are operating without licenses from PAGCOR. He said there are 46 duly licensed POGOs doing legit business and providing billions in earnings to the government, so why should these be penalized?

I’m no gambling fan and I support a ban on POGOs, but I wanted to hear out PAGCOR.

Tengco maintains that contrary to what critics are saying, PAGCOR has not been remiss in its duties as gaming regulator, and other government agencies bear the onus of preventing the criminal activities attributed to POGOs.

PAGCOR began issuing gaming licenses to POGOs in November 2016, at the start of the Duterte administration, although the agency says offshore gaming has been around in the country since 2003.

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As everyone knows, POGOs became increasingly associated with illegal business practices and cyberscams, corruption particularly in the Bureau of Immigration as well as other criminal activities.

The latest worrisome development is that the Chinese-run POGOs are inspiring Filipino copycats. According to the Presidential Anti-Organized Crime Commission, the scam operations being conducted by the Pinoy copycats are currently small-scale. But with the huge profits involved, we can be sure it will quickly leapfrog to the massive size of the illegal POGO hubs raided by the PAOCC in the past weeks.

Chinese POGO workers have been arrested for offenses including murder, kidnapping for ransom, rape, torture, human trafficking and drug deals. The victims have been mostly Chinese from the mainland. This point has been raised by Beijing in its repeated appeals to the Philippine government (the latest aired last Friday) to shut down POGOs.

Tengco told Storycon that “nearly 50 percent” of POGO clients are Chinese from the mainland. It’s unclear how PAGCOR came up with that figure. The difficulty of tracking online transactions, which makes it tough to collect proper taxes, has been one of the factors raised by those who say that POGOs are more trouble than they’re worth.

The Senate is also pursuing suspicions that some POGOs might be spying for China. Beijing and key members of the Tsinoy community find this suspicion silly. China can spy on and hack the websites of hostile foreign governments, or sabotage critical infrastructure and the monetary system, from the safety of the mainland. Beijing does not need to outsource such sensitive, high-security operations to unreliable criminal enterprises overseas that it wants banned.

Even if those uniforms of the Chinese People’s Liberation Army, allegedly found at the POGO hub that was raided recently in Porac, Pampanga, are the genuine article, these could have been used as “props” to scare the workers. This is according to the head of the raiders himself, PAOCC executive director Gilbert Cruz.

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Tengco says that when he took over PAGCOR in 2022, he noted all the criminal and other illegal activities attributed to the POGOs that were issued licenses in the previous administration.

In September last year, he placed those licenses under probationary status, and required all POGOs to re-apply, subject to PAGCOR assessment.

Of 298 POGOs at the time, only 46 were given new licenses. The remaining 252 are now considered illegal, with their applications rejected; several did not bother re-applying.

The POGO in Porac had no license from Day One, Tengco says. As for the one in Bamban, Tarlac, which is being linked to controversial Mayor Alice Guo, Tengco said the original one that was shut down for various violations was built on the left side of the compound while the new one is located on the “far right.”

Guo will reportedly be indicted for offenses that will not allow bail.

Authorities are still trying to identify the beneficial owners of the POGOs that were raided in Bamban and Porac, although Cruz told Storycon that PAOCC already has “persons of interest.”

From the 46 licensed POGOs, Tengco says PAGCOR collected P5.3 billion in license fees last year. Compare this, he says, with just over P7 billion in fees collected from those 298 POGOs in the previous administration.

“So it’s very clear, when it comes to efficiency, we’re collecting more compared to the past administration of PAGCOR,” he said. “Why penalize people who do business legally?”

He estimates that together with tax collections of the Bureau of Internal Revenue, the government earned nearly P22 billion from POGOs in 2023.

Tengco maintains that all the criminal activities being attributed to POGOs are perpetrated only by the illegal establishments. He says this has been facilitated by LGU weaknesses, lapses and perhaps corruption.

He is in favor of proposals to strip PAGCOR of its dual role as gaming operator and regulator, preferring to keep the agency as a regulatory body.

Tengco’s argument boils down to this: even if offshore gaming is banned, they would continue operating illegally, so why not just regulate them?

Sen. Sherwin Gatchalian, a vocal opponent of POGOs, has a counter-argument: regulatory failure.

The POGOs have been around for several years now, Gatchalian points out, and their regulator is PAGCOR. So why does the country find itself in this mess?