The compelling case against Pogos

If President Marcos were to dive into the cost-benefit analysis presented by business groups and a Senate panel, and listen to the recommendations of his own economic managers, he wouldn’t lose sleep over the decision to permanently shutter Philippine offshore gaming operators (Pogos), amid growing evidence of criminal activities linked to this Chinese-operated gambling industry.

A few days ago, Finance Secretary Ralph Recto disclosed that he had recommended to the President a total ban on Pogos because of the many problems and illegal activities associated with this enterprise. As early as last year, National Economic and Development Authority Secretary Arsenio Balisacan similarly stood for a ban on Pogos, saying the government should instead focus on encouraging legitimate businesses and creating quality jobs for Filipinos.

Ahead of the President’s third State of the Nation Address (Sona) on Monday, where he is pressed to make known his decision on this matter, the clamor to permanently close down Pogos has only become louder—and harder for Mr. Marcos to ignore.

On Wednesday, the Makati Business Club, Financial Executives Institute of the Philippines, the Management Association of the Philippines, the Foundation for Economic Freedom, the Justice Reform Initiative, and the University of the Philippines School of Economics Alumni Association issued a joint statement supporting a total ban on Pogos.

Crimes linked to Pogos

Contrary to glowing figures being cited by the Philippine Amusement and Gaming Corp. (Pagcor), the business groups noted that the Pogos’ economic contribution in 2023 amounted to only 0.2 percent of the Philippine gross domestic product. “Compare this to the social costs which have direct effects on economic growth,” the groups said in a joint statement. They said crimes linked to Pogos such as human trafficking, kidnapping, and money laundering “can hinder growth, affect investor perception, and potentially affect our bilateral and multilateral relations.”

The Senate committee on ways and means, which conducted hearings on the social costs of the Pogo industry last year, made a compelling case to ban Pogos.

“The Filipino people stand to lose more than they will gain from allowing Pogos to continue operating in the Philippines,” Sen. Sherwin Gatchalian said when he presented the committee report to the Senate in March 2023. Instead of the promised economic benefits, he pointed out that Pogos “have created new avenues for crime and corruption, damaging our country’s reputation among diplomatic allies, foreign investors, potential tourists, and even our own countrymen.”

Gatchalian said a cost-benefit analysis of Pogos in 2021 showed that social ills and economic fallout from crimes and illegal activities such as tax evasion, corruption, foregone foreign direct investments, and tourism losses were estimated at P143.30 billion, while economic benefits amounted to only P134.86 billion. The result is a negative net or loss of P8.44 billion.

Multibillion illegal Pogo hub

In recent months, the list of crimes attributed to Pogos has expanded—from cryptocurrency scams, human trafficking, killings, abductions, and torture of foreign nationals tricked into Pogo employment, to other far-reaching and sinister activities such as large-scale money laundering, espionage, and cyberattacks on Philippine government sites. Pogo money has also been used to subvert laws and corrupt officialdom—from airport and immigration personnel, to civil registrars and other agency personnel who have been found to have issued official Philippine documents—including birth certificates, passports, driver’s licenses, and real property titles—to dubious foreigners seeking privileges given only to Filipino citizens.

A clear example of how far these questionable Pogos can infiltrate our government is the mind-blowing case of Bamban, Tarlac Mayor Alice Guo, who is suspected of being behind a multibillion illegal Pogo hub in the province, and believed to be a Chinese national with fake Filipino citizenship documents.

Moral ascendancy

The President should also consider how he would lose moral ascendancy by allowing—and therefore abetting—the continued operations of Pogos despite the Chinese government’s repeated appeals for a ban on them. By offering online gambling to Chinese citizens from mainland China, Pogos circumvent Chinese laws against such vice.

To all these arguments pointing to a logical ban on this controversial sector, the President can only cite loss of government revenue and employment among thousands of Filipinos doing odd jobs for Chinese Pogo operators. According to Pagcor chair and CEO Alejandro Tengco, the government will lose some P20 billion a year should Pogos be banned.

Will the President risk the country’s peace, security, and social order for P20 billion? This is the question foremost in the minds of Filipinos as they listen to Mr. Marcos deliver his Sona on Monday, hoping he would not disappoint.