How Big Is the Philippines’ Online Gambling Problem?

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How Big Is the Philippines’ Online Gambling Problem?

Authorities say they are uncovering more illegal Philippine Online Gaming Corporations, or POGOs, but the overall size of the industry is harder to gauge.

How Big Is the Philippines’ Online Gambling Problem?
Credit: Photo 315510763 © Andrei Dzemidzenka |

The online gambling industry in the Philippines, which includes many companies known as Philippine Online Gaming Corporations (POGOs), took root and thrived during the administration of President Rodrigo Duterte. During Duterte’s 2016-2022 tenure, hundreds of gambling companies were officially registered, employing half a million foreign workers and supporting thousands of related businesses. POGOs are estimated to have contributed around $500 million annually to the Philippine government, employed many Filipinos, and generated significant indirect revenues.

The COVID-19 pandemic led to a significant decline in POGOs. While President Ferdinand Marcos Jr. has banned the establishment of new POGOs, the existing ones have been allowed to continue operating. However, the Presidential Anti-Organized Crime Commission (PAOCC) has recently discovered a growing number of new illegal “POGOs.” They have announced that there will be around 300 POGO outfits in total in 2024, an increase from the previous years. The Philippine government only allocated 50 licenses to POGO operations.

This suggests that the online gambling industry may have made a comeback under the Marcos administration, or that the firms never really left. Another possibility is that the industry is growing.

So, have POGOs really decreased under Marcos, and has the Marcos administration’s policy been effective in reducing online gambling operations?

This high number of “illegal” POGOs reported by the authorities should not be a major concern for a few reasons. The number of illegal POGOs is not an indication of failure, but a testament to the success of efforts to address the issue. While the presence of illegal operators may seem problematic, it reflects the ongoing efforts to identify and address non-compliant entities, which is a crucial step towards effective regulation and oversight.

First, the term “POGOs” is misleading, as it covers a range of activities, including online gambling, scams, and other shady operations. While online gambling may involve casino games, sports betting, or livestream wagers, the actual operations of these games are often predatory, designed to rip off players and get them hooked on gambling. These firms rig the games to make sure players lose, leading to millions in losses. Since the pandemic, these online gambling firms have transitioned into pig butchering scam operations.

PAOCC’s approach of lumping illegal POGOs of all sizes into a single category makes it difficult to accurately assess the status of POGO operations since Duterte’s administration. By simply counting the number of POGOs caught operating illegally, rather than considering factors like workforce size, operational nature, or financial capacity, PAOCC’s counting system introduces bias. This results in an appearance that POGO operations are larger than they actually are, as every illegal POGO caught is counted equally, whether it has 15 employees or 1,000.

Since the pandemic, these “illegal” POGOs are likely small-time setups in geographically confined places like condos, houses, or apartments, rather than the big, centralized POGO operations with thousands of employees per company that became common during the Duterte era. Plus, the syndicates behind these illegal POGOs often bribe the police to let them operate, only to set up shop and be caught somewhere else later. In other words, the apparent increase in the number of illegal POGOs may not reflect the reality, since there is no standard way to track, count, or quantify them.

In contrast, the POGO industry under Duterte was extremely consolidated, with hundreds of thousands of employees working in high-rise buildings in major cities and even rural areas. Some POGOs started branching out into scam operations as early as 2019, and it was difficult to distinguish them from legitimate operations because Philippine regulators lacked the skills and knowledge to tell the difference. The tools, strategies, and activities of online gambling and scamming are quite similar. Another issue was that many POGOs became “facilitation” companies during Duterte’s time, essentially renting out their licenses and legal status to other unregistered microgaming companies for a fee. These unregistered POGOs would then be set up within the registered legal POGOs. The current POGO operations and number of employees involved are likely much smaller compared to the situation under Duterte’s administration.

Second, experts and scholars studying Chinese cyber-fraud operations have found that Myanmar, Cambodia, and Laos have become the main hubs for these operations. During the COVID-19 pandemic, many Chinese crime syndicates decided to leave the Philippines. This was likely due to Duterte’s departure from office in 2022, the collapse of the Chinese online gambling market due to China’s tighter labor/financial regulations, and the general dissatisfaction of Filipinos with POGOs. These syndicates have since relocated to Myanmar, where they have partnered with both the military junta and ethnic armed groups, to Cambodia, where they have teamed up with the syndicates that hid during the Chinese crackdown in 2019, and to Laos, where the communist regime has become something of an organized protection racket.

The online gambling companies that remained in the Philippines during the pandemic are likely those with strong ties to the Marcos administration. For example, the family of the justice secretary, Jesus Crispin Remulla, sold 36 hectares of land to Oriental Game Ltd., a major Filipino-Chinese online gambling firm led by a Filipino-Chinese businessman named Kim Wong. Oriental Group General Manager Kevin Wong and Sparc Properties Development Corp. General Manager Kimberly Wong have sealed a deal with Meralco to develop a power station at Island Cove, presumably to provide energy to Oriental Game Ltd. and its POGO operations.

Remulla has ordered the National Bureau of Investigation to cease its investigations into some POGO firms. One of the biggest online gambling firms since the Duterte administration, Oriental Gaming also has undisclosed financiers and investors, which means Chinese crime syndicates might have become involved in its operations.

There is also an internal incentive for Chinese crime syndicates to keep certain countries off-limits to competitors. During the Duterte administration, the out-of-control POGO sector led to some major problems, such as government corruption, the use of armed bodyguards by POGO investors, triad operations, worker suicides, and various criminal activities, including sex work, smuggling, and drug trafficking. These issues caused a public backlash, which pushed the Duterte administration to rein in POGOs, at least to some degree. The remaining POGO firms therefore have an interest in keeping a low profile and avoiding public discontent, preventing government crackdowns, and limiting their competitors. In other words, existing POGO firms and criminal syndicates have an interest in keeping other criminal organizations out of the Philippines.

Third, the indicators that are often used to estimate illegal capital flows into the country are noticeably weak now, which is different from the situation during the Duterte administration. Foreign citizens working illegally in the Philippines pretend to be tourists, entering the country through visa-free privileges and tourist visas. Between 2015 and 2018, 205,218 Chinese citizens applied for special work permits. In 2019 and early 2020, 287,133 Chinese citizens applied for the same permit. Thousands of Japanese, Koreans, Indonesians, Malaysians, and Vietnamese also applied for these special work permits. This number doesn’t account for the hundreds of thousands of illegal workers in the sector. At the end of 2020 and early 2021, there was an outflow of Chinese and other foreign citizens leaving the Philippines. The number of workers with special work permits has fallen significantly since 2022, with Chinese workers with work permits now numbering between 100,000 and 150,000. The Department of Labor and Employment has also stopped issuing work permits to foreign POGO workers.

Another indicator is the number of new businesses with foreign investors in the Philippines. According to data from the Securities and Exchange Commission, 3,845 new companies with Chinese citizen investors were set up between 2016 and 2019, often in sectors like retail, wholesale, hospitality, and information technology. These companies serve as business partners, service providers, and supply chains for the POGOs, and they also help launder money for online gambling companies, similar to how scam setups have been laundering money in Thailand through expensive hotpot restaurants. Since 2022, there have been 934 new companies established with Chinese investors, a significant decline from the Duterte years.

In sum, PAOCC’s concern about illegal POGOs should not be overblown. The government’s policy of cracking down on POGOs is correct. There is even more of a need for the government to intensify its police operations and possibly consider shutting down the sector completely.