Industry

Are We Playing Our Cards Right? Breaking Down Philippine Offshore Gaming Operators

What you need to know about Philippine Offshore Gaming Operators or POGOs
ILLUSTRATOR ROLAND MAE TANGLAO
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If you're wondering why there are so so many mainland Chinese nationals taking up residence all over the Philippines these days, it's because many of them have been brought here by Philippine offshore gaming operators (POGOs), the online casino industry that may soon overtake the business outsource processing (BPO) sector. 

Since the influx of Chinese workers in the metro and beyond has been increasing, social media has seen viral post after viral post criticizing the foreign nationals for alleged rude behavior and exclusivity bordering on discrimination. There are now reports of “Chinese-only” restaurants and Chinese signage popping up all over the city.

The entire debate over the proliferation of Chinese workers in the Philippines has only grown more heated over time, but at the root of issue is the reason they’re here in the first place: POGOs. We break down everything you need to know about the industry that, by the looks of things, is here to stay:

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What are POGOs and what do they do?

Philippine offshore gaming operators are companies that provide online gambling services to foreigners. Think Poker, Blackjack, and Roulette, only they're all facilitated via an online medium, with a virtual dealer often being played by a woman dressed in skimpy clothes on the screen. The woman and the large team of tech support behind the screen make up the POGO.

Philippine offshore gaming operators must be registered and licensed by the Philippine Amusement and Gaming Corporation (PAGCOR). Any POGOs that are operating without a PAGCOR-issued license are considered illegal, and their workers, as well. As of June 9, 2019, there are 56 licensed POGOs in the country that employ an estimated 100,000 to 250,000 Chinese nationals. Yet the number of illegal POGOs is estimated to be at around 30.

So POGOs are essentially online casinos operating out of the Philippines—only Filipinos make up a slim percentage of their workforce. 

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Photo by UNSPLASH.

But why the Philippines?

Because online gambling is illegal in China.

The closest and cheapest alternative destination is the Philippines, where online gambling is legal and now regulated by PAGCOR.

While it’s been around for a while, online gambling has been quietly growing for years and is expected to double in global market value from $45 billion in 2017 to $94 billion in 2024. For players, it’s a way to act on their vice. For the people behind the screen, it’s an easy and in-demand way of earning big money. 

One public job listing on Jobstreet posted a P80,000 to P130,000 per month job opening as a data analyst for a licensed POGO. The job listing, written in Chinese, is open to Chinese nationals who will also receive benefits such as free accommodation or rental allowance, free meals or meal allowance, and full reimbursements of airplane tickets to China and back while on vacation.

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With an offer like that, it’s clear why so many Chinese nationals snap up the chance to work at these companies. 

What are the rules of POGOs?

In order for Philippine offshore gaming operators to operate in the Philippines, they have to follow the strict rules laid down by the POGO regulating body, PAGCOR.

One of the most important rules that Philippine offshore gaming operators must abide by is the prohibition of Filipino citizens to play on their gaming platform. As per Regulation 1 of PAGCOR’s Offshore Gaming Regulatory Manual, authorized players refer to “any individual who is physically in a country other than the Philippines; this excludes Filipino citizens even if abroad and individuals in territories where online gaming is prohibited.”

Even if a Filipino citizen wants to participate in POGO sites, he wouldn’t be able to. All POGO gaming websites are blocked in the Philippines (or they should be). The rules are clear in Section 3 of Regulation 2 that the operator “shall not allow its gaming website to be accessed within the territory of the Philippines or in territories where online gaming is prohibited” and “shall not allow placing of bets and paying of winnings to occur within the territorial jurisdiction of the Philippines.”

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Any violation of the rules and regulations set by PAGCOR will result in POGOs having their licenses revoked.

It’s hard to not spot the irony of the entire situation: These POGOs are allowed to operate in the Philippines yet their services can’t be accessed in the country and are forbidden to Filipino citizens. 

If Filipinos aren’t allowed to play on their platform and we can’t even access their sites, why do we let them stay?

Because they make us money, and lots of it.

PAGCOR reported that, in their first year under the regulated body, Philippine offshore gaming operators contributed P657 million in 2016. The agency's revenues shot up by 497.26 percent in 2017 when POGOs hit P3.924 billion. In 2018, POGOs contributed P7.365 billion, increasing 87.69 percent from the previous year. This year, PAGCOR chairperson and CEO Andrea Domingo stated that it expects POGO revenues to reach the P8 billion mark. If that happens, it would mean that the industry would contribute P20 billion pesos to the economy within the span of just three years.

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To PAGCOR alone, POGOs are contributing a hefty sum in fees. Aside from registering with the Securities and Exchange Commission, a POGO must cough up $150,000 in application and processing fees, $200,000 in licensing fees, and $300,000 in security bond fees. That’s P33 million required to set up just one POGO.

Meanwhile, the Bureau of Internal Revenue recently announced its plan to start collecting withholding taxes from POGO workers starting this month. This means that if everyone in the industry paid the correct amount, the government will be able to collect P2 billion in one month, and P24 billion in one year. POGO workers will also need to pay their dues to the Social Security System and Pag-IBIG Fund.

The profitability of POGOs is not lost on corporations like PhilWeb Corporation and DFNN Inc., local tech companies that recently acquired a number of gaming sites between them. 

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Photo by WIKIPEDIA.

Are POGOs the reason why real estate prices have gone up?

The short answer is yes. The real winners in this situation are the government and the real estate market.

One of the regulations of PAGCOR is that each Philippine offshore gaming operators must have an office space of a minimum of 10,000 square meters. With 56 registered POGOs in the country, that’s an estimated 560,000 square meters of commercial space rented out by these online gaming offices. But this is at bare minimum. KMC Savills Inc. projected that the POGOs have taken up 800,000 square meters of office space, and Colliers International report that POGOs account for 20 percent of office space in Metro Manila.

Leechiu Property Consultants CEO David Leechiu predicts that by the end of 2019, POGOs will overtake BPOs as the number one office tenant in the country.

The increased demand—and rates—of commercial spaces has spilled over into the residential market as rental rates have surged in the POGO hotspots: the Bay Area, Makati, and Pasig. According to Leechiu, rental rates in the Bay Area have spiked 80 percent from three years ago. Studio units that were once priced at P18,000 are now P32,000 per unit.

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Condominium units aren’t the only residential spaces that have been occupied by POGO workers. Even Makati’s most exclusive residential villages have experienced a proliferation of staff houses that violate the deed restrictions as single-family dwellings.

Soon enough, urban areas outside Manila will join the mix as a 20-hectare “POGO island” is being developed just off the coast of Cavite. This POGO hub plans to hire and accommodate over 20,000 workers. 

What does this all mean?

That’s the big question. By the looks of things, it looks like Philippine offshore gaming operators are here to stay—at least for now. With the amount that they’ve contributed to our economy and the amount that the government and the real estate market has invested in POGOs, we may be at a loss if they suddenly pull out of the Philippines.

But it would be prudent to remember that the boom in the POGO industry is reliant on one big factor: the Chinese-Philippine relations that this administration is bent on keeping amiable. Yet politics is a fickle thing, and there’s no guarantee that these close relations will continue after the current president’s term. In the event that they don’t, all the investment gone into real estate and POGO operations could be wasted. But given the exclusionary nature of the industry that doesn’t hire or cater to Filipino citizens despite using the Philippines as its base, it begs the question if all this investment was worth it in the first place.

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The bottom line is, we’re playing a risky game with our economy and real estate market. And until we can hedge against losses, all bets are off.

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About The Author
Anri Ichimura
Staff Writer, Esquire Philippines
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