The ban on Philippine Offshore Gaming Operators (POGOs), announced in July with immediate effect, has sent shockwaves through the gambling industry.
With the government mandating that all POGOs wind down operations by the end of the year, an exodus of offshore operators now seems imminent.
In comments to AGB, gaming expert Daniel Li emphasizes that this pivotal moment in the offshore gambling landscape compels operators to navigate a complex web of regulatory challenges and legal risks, which will ultimately influence their relocation decisions.
Li notes that for those operators seeking to legitimize their businesses under a new regulatory framework, “relocation outside ASEAN, particularly to more mature European jurisdictions where offshore gaming licenses are well-established, may be necessary.”
This is due to Europe offering a stable and well-regulated environment, providing a clearer legal pathway for these businesses.
In addition to Europe, Li mentions emerging countries in the Asia-Pacific region, such as Timor-Leste, Vanuatu, and Papua New Guinea, as potential relocation targets.
“These countries have nascent gaming regulations and, although underdeveloped, offer an opportunity for offshore operators to establish themselves in a new market.” However, challenges remain, including a lack of robust regulatory bodies, well-defined legal frameworks, and adequate infrastructure.
“If these countries manage to implement comprehensive regulations, the benefits could be substantial, including increased infrastructure investment, job creation, and enhanced tax revenues from licensing fees, duties, and other levies. However, building the necessary regulatory capacity will be crucial to ensure these benefits are realized,” Li emphasizes.
While the proximity of these emerging markets may seem appealing, they also pose significant risks. Li cautions that “many ASEAN nations continue to prohibit online gambling,” which could result in legal repercussions for operators who relocate there.
Despite improvements in enforcement efforts in the Philippines, Thailand, and Cambodia, the sophisticated nature of operators complicates compliance. “Operators have become increasingly mobile and sophisticated, using advanced technologies to evade detection,” Li notes, underscoring the ongoing challenges in regulatory enforcement.
Earlier this month, Philippines Justice Secretary Jesus Crispin Remulla issued a warning to Timor-Leste regarding the potential relocation of offshore gaming operations to their country. Meanwhile, some reports claim that Cambodia, as well as Vietnam and Laos, may be the next stops for POGOs.
Philippines’ unique position in offshore gambling
From the beginning, the offshore gaming industry has achieved prominence due to various factors, including the COVID-19 pandemic, which significantly boosted online activities, as well as the friendly legal framework in the country.
Li notes, “The Philippines was, until recently, the only country in ASEAN to officially license offshore gambling operations through its Philippine Offshore Gaming Operator (POGO) scheme.” This regulatory framework attracted both legitimate global operators and those seeking to exploit the system for illegal activities.
Consequently, the Philippines emerged as a regional hub for online gambling, drawing an influx of operators. However, this unique position also led to regulatory circumvention, prompting the government to reconsider its stance on POGOs.
As the government moves to phase out POGOs, the consequences are becoming increasingly apparent. “An exodus of offshore operators seems inevitable,” Li states, emphasizing the urgency for operators to reevaluate their business strategies in light of the ban.
Ban order follow-up
Although the POGO ban was announced with immediate effect, Winston John Casio, spokesperson for the Philippines’ Presidential Anti-Organized Crime Commission (PAOCC), updated on October 20th that 38 POGOs are still legally operating in the country.
The Bureau of Immigration reported that over 12,000 foreign workers from discontinued POGOs have applied to downgrade their working visas, a figure that represents less than half of the 30,000 foreign workers previously employed in the sector.
Some unemployed foreign POGO workers are reportedly trying to find alternatives to extend their stay, despite the country now reiterating that there are no exceptions for departures.
The Philippines’ gaming regulator, the Philippine Amusement and Gaming Corporation (PAGCOR), is also being requested to assist in facilitating the return of foreign POGO workers.
Additionally, there may still be more than 100 illegal POGO hubs operating underground throughout the country. Meanwhile, some Filipinos, primarily former POGO workers, have been found managing independent scam farms. This situation also creates new challenges for the authorities as they attempt to resolve the complicated issues surrounding POGOs.
Estimates suggest that nearly 20,000 Filipino workers were employed in the POGO industry and are now facing unemployment or have already lost their jobs following the ban.
