MANILA, Philippines – The Marcos administration has been branded as a continuity government of former president Rodrigo Duterte. 

A departure from this narrative is the likely shunning of online gambling – a contentious industry that flourished under Duterte – under President Ferdinand Marcos Jr.

During the budget briefing of the Development Budget Coordination Committee at the Senate on Thursday, September 15, Finance Secretary Benjamin Diokno expressed the need to discontinue Philippine Offshore Gaming Operators (POGOs) due to its “social cost.”

“In fact, China has discontinued POGO. Even Cambodia. It also has reputational risk. People will ask, ‘Why are they going to the Philippines, it is discontinued in China. Why are they going to the Philippines?’ Maybe because we are loose, we are not strict on our rules,” said Diokno, who had served as Duterte’s budget chief and central bank governor.

Should POGOs totally exit the Philippines under the Marcos administration, a web of business relationships may likely take the hit.

Economic gains

Since POGOs were allowed to expand in Manila in 2016, businesses like properties, fintech, transportation, and restaurants got a massive dose of steroids through gambling money. In effect, banks where real estate companies borrowed funds also benefited from the rise of POGOs.

Industry estimates show that POGOs bring in a whopping P551 billion in revenues to the economy yearly. Businesses around POGO sites have also become somewhat dependent on them for income.

However, POGOs were forced to shut down in March 2020 amid the coronavirus pandemic, with their workers returning to China. (READ: Manila office vacancy to reach peak since global financial crisis)

During the pandemic, POGOs have vacated a total of 454,000 square meters (sqm) of office space, resulting in a steep drop in rental rates.

Property experts earlier expected that POGOs will have a “revenge” comeback as borders opened up, but data from Leechiu Property Consultants showed that online gambling companies’ office take up was almost zero from the first quarter of 2020 to the last quarter of 2021. 

POGO office take up only reached 21,000 sqm as of the second quarter of 2022. This pales in comparison to outsourcing companies, with 114,000 sqm in the same period.

Latest figures of Leechiu Property Consultants showed that economic activity will drive the office market back to 2016’s pre-POGO and pre-pandemic state. 

Companies like Eton Properties said that it is “experiencing a demand on its office developments for the second half of the year” as POGOs reemerge to set up new expansion offices in the Philippines.

Eton Properties, which is under the Lucio Tan group of companies, has sealed the deal with one of the “biggest” POGO companies from Southeast Asia, to lease more than 6,000 square meters of office space or two floors of its eWestPod building located inside mixed-use development Eton WestEnd Square near the Makati Central Business District.

“With the perceived stability and confidence of a new administration and the market starting to normalize, Eton Properties gradually felt an increase in the demand for leasing spaces this second half of the year. One of the primary effects we see is the confidence of POGOs to return to the Philippines. These operators are not just from China, but within our neighboring countries in Southeast Asia as well,” said Eton Properties executive director Kyle Tan. (READ: What the POGO exodus means for the Philippine economy)

Taxing headache

Diokno pointed out that POGO revenues plunged to P3.9 billion in 2021 from P7.2 billion in 2020.

POGOs need to pay their host government so much more.

Former finance secretary Carlos Dominguez III had repeatedly said that POGOs and their workers were evading taxes. An inter-agency effort to padlock these POGOs were spearheaded by Dominguez himself.

Despite scathing remarks of former Cabinet members, Duterte went on to encourage the industry.

POGOs owe Pagcor P1.36 billion, says COA

Social, political costs

Gambling is illegal in China and is heavily opposed by the communist government. Authorities have intensified crackdowns to serve as a stern warning.

To skirt this obstacle, gambling companies operate outside the mainland to countries like the Philippines. (READ: A Chinese online gambling worker’s plight in Manila)

POGOs were also found to confiscate passports of their employees, who had little idea that they were working for gambling companies.

With their passports gone and syndicates and immigration officers teaming up for the scheme, Chinese nationals are forced to work in the Philippines and can’t go to the Chinese embassy for fears of persecution.

The sudden surge of Chinese workers in central business districts like Makati and Parañaque has led to friction between the foreigners and locals. POGO workers were also driving up rent in these areas, easing out locals.

To resolve the friction, the Philippine Amusement and Gaming Corporation proposed to move Chinese workers to “self-contained” hubs. China opposed this.

The Philippine National Police also found kidnapping incidents involving POGOs. Prostitution dens targeting POGO clients also sprung up in Manila. (READ: Hontiveros sees link between influx of POGO workers, rise of sex trafficking in Manila)

Meanwhile, former defense chief Delfin Lorenzana had said that POGO workers could “easily shift” to espionage.

Due to these incidents, the Chinese embassy urged Duterte to put an end to POGOs, yet the former president did not budge.  

Simultaneous probes by the House and Senate also had findings on the social costs of POGO money. –Rappler.com