China’s online gambling problem

With rapid economic prosperity has come the epidemic of online gambling addiction that defies national borders. Recently, a spokesperson from the Chinese foreign ministry described this malady as “the most dangerous tumor in modern society.” China has appealed to two of its trusted allies in the Asean — Cambodia under Hun Sen and the Philippines under Rodrigo Duterte — to ban all online casinos. Cambodia promptly obliged. The Philippines, having earlier suspended the issuance of new licenses, promised to study the matter.

Given our problems with China, it would be easy to play deaf to its concerns about the proliferation of Philippine-based online casinos. The state-run Philippine Amusement and Gaming Corp. or Pagcor, which issues licenses to Philippine offshore gaming operators (Pogos), can say that these online casinos cater to all nationalities, and do not explicitly target Chinese citizens.

This is technically true. Casino operators accept all internationally tradable currencies. So long as money is deposited into a casino account, betting can instantly proceed. The operators don’t care where the money comes from or what passports the bettors carry. Money has no memory, and nowhere is this more true than in a casino.

But, anyone who is not playing deaf or blind would at once know what China has long known: that at least half of all online casino patrons are Chinese citizens. China, however, has no way of proving this. More importantly, it cannot dictate to another country what its policies on gambling should be.

Long before Pagcor began issuing offshore gaming licenses, online casinos have operated as locators in export-processing zones, taking advantage of the minimal regulatory environment found in these places. One of the early ones that hosted online casino operations was the Cagayan Economic Zone Authority. This picture changed almost overnight after President Duterte reversed his earlier pronouncement against online gaming, by designating Pagcor as the sole authority that would be responsible for issuing licenses to offshore gaming operators.

This opening led to the deluge of Mandarin-speaking young Chinese people who are recruited to work as online casino dealers or customer relations assistants. Initially entering the country on tourist visas, usually given upon arrival, they later obtain special working permits. The identities of operators, mostly from China, are protected by layers of proxy owners. They will be the first to say that their Chinese clients come from all over the world, and that possibly only a handful are from the mainland.

The increase in the number of Pogos from December 2016, when the new policy was announced, has been exponential. The rent on office buildings and condominium units shot up overnight, a lifesaver for a sector that was beginning to reel from the slowdown of the business process outsourcing industry. Today, there are at least 58 licensed Pogos. That figure does not include fly-by-night operators.

For a while, the government was content to charge only for the license to operate. Then, the Bureau of Internal Revenue decided it should collect taxes on the earnings of the tens of thousands of mostly Chinese employees in Philippine online casinos.

In 2018, Pogos paid P579 million in taxes. In the first half of 2019, they turned over P789 million to public coffers. Pogos have become a cash cow for a government that is hard-pressed to find new revenue sources to fund the salary increases of its soldiers and teachers, and the full subsidy for college education.

In the meantime, the ubiquitous presence of Chinese Pogo workers in our neighborhoods has fueled racial antagonism among long-time residents. They demand answers to questions like: Who are these people, and what type of work do they actually do? How do we know that they were not sent here to spy? They note the routines they keep: These Pogo workers descend on the local convenience stores every morning and leave behind them a trail of trash. They smoke and spit everywhere.

These suspicions, and the highlighting of cultural differences that undergird them, only exacerbate old racial prejudices. They take away the public’s focus on the more important issues of sovereignty and national self-respect.

I see these young Chinese workers as victims virtually chained to computers like modern slaves in galley ships. They cannot be very different from our own young people in aspiration. They all seek a way out of their stifling home environment.

We have many valid issues against China. In our anger, we may often wish the worst for the Chinese people. But profiting from the vices of other nations should never be a national policy. By all means, we should ban online gambling. In so doing, we may also earn the right to ask for help in stemming the flow of shabu from China to the Philippines.

In the mid-19th century, China was severely emasculated by the infamous opium trade from which British and American merchants built a fabulous fortune in silver. Smuggled into China mainly from colonial India where poppies were grown, opium reduced a large segment of the Chinese population to stupor. When the Qing dynasty viceroy Lin Zexu, in an act of self-defense, raided the foreign warehouses, confiscating opium chests laden with more than a thousand tons of the substance, the British took this as a provocation. The ensuing three-year Opium War led to China’s humiliating defeat, and to a historic settlement that, among other things, ceded Hong Kong to the British.

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