POGO Ban: A Developing Story

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The future of Philippine Offshore Gaming Operators (POGO) has turned into a national discussion as news about POGO receives almost daily updates. Philippine politicians and prominent figures in the investment and real estate sectors have also weighed in. 

Here, Lamudi has created a helpful timeline of the developing story to stay updated on the latest about the discussion surrounding POGO.

JANUARY 2020

January 14

President Duterte mulls over the regulation of the number of POGOs in the country.

Believing that gambling can breed crimes, he said in an exclusive interview with ABS-CBN that the move can help lessen incidents of corruption, extortion, and kidnapping, stemming from the operations. He said that it will be difficult to oversee the industry if additional players come. Adding that POGOs cannot be in every town and city, he floated the idea of regulating the number of industry players.

Based on the report from the PAGCOR, there are around 60 POGOs operating in the country.

DECEMBER 2019

December 17

POGO workers account for the increased number of foreign work permits issued in 2019. The Department of Labor and Employment said in a press briefing that they released more than 100,000 Alien Employment Permits (AEPs), almost five times the total of 2018 figures, which is 21,320. Secretary Silvestre H. Bello III revealed that 75 percent of these permits went to POGO-related businesses. 

Aside from the actual growth of the offshore gaming industry, the department attributed the growth to the improved enforcement of permit regulations on foreign nationals.

December 9

According to a report from Leechiu Property Consultants, offshore gaming firms lead the demand for office properties. They took over 738,000 sqm of space in 2019. The industry especially saw an uptick in transactions in the second and fourth quarters of the year, which fueled the need for commercial property.

In another report, the gaming sector pulled ahead of the information technology-business process management (IT-BPM) industry in the aspect of being the top office market. While POGOs became aggressive in occupying properties, experiencing a 67 percent increase in demand compared to 2018, the IT-BPM industry decreased 14 percent.

NOVEMBER 2019

November 19

In response to the statement from the Office of the Solicitor General, Malacañang asserted that the government can collect taxes from offshore gaming companies.

Presidential spokesperson Salvador Panelo said that POGOs considered as domestic corporations are covered by Section 23 (E), Chapter II of the National Internal Revenue Code. Their revenues are subject to Philippine taxes, regardless of whether income is derived from sources outside the country. Meanwhile, POGOs that are foreign corporations can be taxed as well, in accordance with Section 23 (F), Chapter II of the code. The difference is, they will be taxable only for income derived from sources within the Philippines.

Panelo also kept the stand on POGO workers’ compensation, salaries, or wages, that it is subject to tax under Section 23 (A) and (D).

Malacañang hopes that the Finance Department and the Bureau of Internal Revenue will assess the charters and operations of the gaming firms to put them under Philippine taxes pursuant to the law.

November 18

The House Committee on Ways and Means approved the proposed bill filed by Albay Representative Joey Salceda. Aimed at providing a “clear, definitive tax regime” for the POGO industry, House Bill 5267 requires franchise owners to pay a 5 percent tax of its gross receipts. The lawmaker said in a Facebook post that the tax regulation will generate P45 billion annually.

Also included in the bill is the imposed 15 percent tax on earnings for foreigners working in POGOs who are living in the country.

Meanwhile, the Office of the Solicitor General sent a letter to the House, saying that POGOs cannot be taxed since they only provide betting services only to foreign citizens physically outside of Philippine territory. The letter further explains that an offshore-based business will only be subject to Philippine taxes if its revenues come from sources within the country.

Senate Minority Leader Franklin Drilon expressed his opinion on the statement, asserting that the Bureau of Internal Revenue has the authority to interpret tax regulations. He advised the office to leave the matter to the tax agency and the Department of Finance.

OCTOBER 2019

Finance Secretary Carlos Dominguez III said that he supports Albay Representative Joey Salceda’s proposition of a bill imposing a 5 percent franchise tax on revenues generated by POGOs and their service providers. The latter also plans to add the following fees:

  • $100,000 gaming tax a month per table for a live set-up casino 
  • $5,000 gaming tax a month for random number generator-based games
  • $1,000 presumptive corporate income tax per seat

September 4

In a Malacanang press briefing, Duterte says POGO is “good for the country” and will therefore continue. “I decide we need it. Many will lose livelihood. It’s government-controlled,” the president adds.

Duterte’s announcement that POGO will continue to operate in the Philippines comes with a warning for POGO hubs to pay the right taxes if they do not want to be “shuttered.” 

SEPTEMBER 2019

The uncertainty surrounding the Philippine offshore gaming market starts to affect stocks. Elizabeth Ventura, CEO of Anchor Land, remains optimistic. In her blog, Ventura mentions that though POGO is a significant driver, it is only one segment of real estate. 


August 31

Joey Roi Bondoc, Senior Research Manager at Colliers International Philippines, says POGOs occupy 8% of total leasable space in Metro Manila. Bondoc says other demand drivers can occupy the vacancy void to be created by POGO shutdown, such as traditional, BPO, and non-BPO tenants. These include government agencies, engineering and construction firms, banks, flexible workspace operators. 

August 30

President Duterte discusses the nation’s growing online gaming industry with Chinese leader Xi Jinping. Finance Secretary Carlos Dominguez III reveals no specific request for a complete ban on the industry has been made. Dominguez says, “China respected the Philippines’ sovereignty over the government’s policy on gambling during President Rodrigo R. Duterte and Chinese President Xi Jinping’s meeting in Beijing.”

Also according to the Department of Finance statement, “The Chinese leader did not ask or request the Philippine Chief Executive to ban offshore gaming operations, which mostly employ Chinese nationals.”

August 29

In a televised press briefing from Beijing, Philippine Ambassador to China Jose Santiago L. Sta. Romana says China “can’t dictate” on the Philippines when it comes to the online gambling ban. Sta. Romana states, “That’s a sovereign decision. That is where we stand.”

The Bureau of Internal Revenue reveals it had collected P200 million in taxes from offshore gaming companies starting early August. 

The bureau started collecting taxes from foreign workers employed by POGO in early July and ordered the companies to remit withholding taxes from the workers starting Aug. 10.

Presidential spokesman Salvador Panelo mentions in a press briefing that President Duterte “is open to what the other side will say.”

Panelo adds, “If they declare all gambling to be illegal, then there would be no more online gambling.” 

The Bangko Sentral ng Pilipinas (BSP) and the Anti-Money Laundering Council (AMLC) prepares to study the impact of Philippine offshore gaming operations in the country. Senate Minority Leader Franklin Drilon and Senator Joey Villanueva show support for BSP and AMLC’s move. 

According to Villanueva, “Until last month, our revenue collection from the sector is minimal at best, considering that POGO firms only agreed to pay income taxes last month, nearly three years since operations went full blast in 2016.” 

August 28 

Opposition Senator Kiko Pangilinan expresses his opinion on the POGO ban, stating that the administration should revoke the licenses of POGOs in the Philippines. According to Pangilinan, “China is correct here. Cancel the POGO licenses on concerns of criminality and corruption. Gambling is illegal in China. This means that Chinese criminals run the POGOs here in the Philippines.” 

August 20 

Chinese Foreign Ministry Spokesperson Geng Shuang expresses appreciation of PAGCOR’s decision. Geng adds, “We hope the Philippines will go further and ban all online gambling.”

August 19

PAGCOR temporarily stops accepting applications for POGO licenses to address concerns. 

August 8

Megaworld Corp, the biggest lessor of office space to offshore gaming operators, released testament of the worst performance in the PSEi, dropping the most in two years. 

Belle Corp. and SM Prime Holdings Inc. also dropped. 

Ayala Land, Inc. states POGOs make up less than a tenth of their leasable office portfolio. 

DoubleDragon Properties Corp. Chairman and CEO Edgar J. Sia II said his company is relatively protected from developments hounding POGOs. 

AUGUST 2019

China’s crackdown on cross-border gambling starts after an alleged violation of the basic legal rights of its citizens. The Chinese embassy alleged that many of its nationals working in the Philippine offshore gaming industry were recruited illegally. Chinese embassy compares working conditions to “modern slavery.” 

PAGCOR plans to confine Chinese offshore gaming workers, employed by POGOs, to designated “hubs” or self-contained communities to limit interaction with Filipinos. 

Malacanang spokesperson Salvador S. Panelo said the Philippines will not allow the rights of Chinese citizens to be violated. Panelo encouraged China to file complaints against companies illegally employing Chinese citizens. 

Philippine authorities defend the plan to create hubs, stating these are places where Chinese citizens can “live, work, and play.” 

PAGCOR chair and CEO Andrea Domingo said these measures are the kind of protection the government expected Filipinos to receive abroad. 

PAGCOR approves two hubs: one in Clark Freeport and Special Economic Zone, which is already operational and spans 10 hectares. Another one is planned in Kawit, Cavite, which will measure 30 hectares.

Oriental Group, an operator licensed by PAGCOR, will build the hubs. 


JULY 2019

POGOs reported to be the leading consumer of office space in Metro Manila. Global real estate services firm Leechiu Property Consultants (LPC) say POGOs are expected to overtake the IT-BPM industry in terms of office demand. 

LPC reports POGO expansion to Laguna, Cebu, Pampanga, and Cavite.

The Bureau of Internal Revenue starts collecting taxes from foreign workers employed by POGO in the Philippines. 


June 17, 2019

President Duterte signs Administrative Order 18 urging for inter-agency efforts to strengthen ecozones in the country. Administrative Order 18 puts a moratorium on the processing of applications for ecozones in Metro Manila by the Philippine Economic Zone Authority (PEZA). 


DECEMBER 2018

PAGCOR approves more than 50 POGOs on record to operate in the country. 

POGOs populate the Bay Area, formerly known as Boulevard 2000, Manila Bay Freeport Zone and Bay City. POGOs are responsible for the robust rise in demand for residential properties and office space in the area. The entry of POGOs in the Bay Area created more jobs for Filipinos and has increased economic activity in Metro Manila. 

Bay Area is also home to casinos in the Philippines. 


SEPTEMBER 2018

Managing director Michael McCollough of KMC Savills Inc says POGOs are responsible for an office take-up of about 800,000 square meters. 


JULY 2018

Colliers International reports POGO office spaces take up 20% in Metro Manila after the second quarter of last year. Bay Area’s Gross Leasable Area (GLA) at the end of 2017 was already at 400,900 square meters, which is expected to further increase to 930,000 square meters by 2021. 

More space for POGOs could likely push the rental rates beyond the Php700 to Php1,500 per square meter mark.


2017

PAGCOR reports an income of 3.9 billion from POGO tax revenues. Chairwoman and CEO Andrea Domingo estimates this figure to double for 2018, making real estate sales and leased space undeniable contributors to the economic growth of the country.


August 2016

PAGCOR released its Rules and Regulations for Philippine Gaming Operations, paving the way for POGOs to set up their businesses in the country. License requirements include 10,000 square meters of leased office space. 

25 POGOs have initially received licenses.

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