POGOs: What’s at stake?

PHILIPPINES - In Brief 03 Oct 2022 by Romeo Bernardo

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We momentarily turn our eyes away from the turmoil in financial markets and take a look at the uproar in the online gambling industry. Called POGOs, short for Philippine offshore gaming operators, the industry is akin to business process outsourcing (BPO) in that firms set up bases in the Philippines that provide services to foreign markets, in this case, internet gambling. However, POGOs have attracted a lot of unwanted attention because of the following: Unlike BPOs, POGOs employ mostly foreign nationals as it needs workers who could speak the native languages of target markets, most prominently China where gambling is illegal. Regulatory oversight[1] is weak resulting in monitoring[2] and taxation issues. The Philippine Amusement and Gaming Corporation (PAGCOR), which is in charge of licensing POGOs, has conflicting mandates as regulator and casino operator that has yet to be addressed.[3] Clearer tax regulations were put in place only in September 2021 through Republic Act 11590,[4] spelling out applicable tax rates on gaming revenues and incomes of foreign workers. Additionally, there have been enforcement issues related to immigration and security forces.[5] Another major concern is monitoring of money laundering risks.[6] In its risk assessments of POGOs, the country’s Anti-money Laundering Council (AMLC) found “a low level of AML/CTF awareness and regulation; an increasing level of threat to money laundering and other fraudulent activities; a high number of unregulated or unsupervised service providers (SPs); and a low level of beneficial ownership identification.”[7]Rising crime associated with the industry, particularly kidnap-for-ransom resulting from disput...