Readings on POGOs, the Philippines, and Beijing

As China grapples with a slowing economy, a turn inwards is pressuring even the super-wealthy to toe the party line in a conspicuous manner.

I. Backgrounder: All politics is local

November 22, 2017: Mixing the sand into the hardened soil, in Inquirer Opinion (my column):

Writing in the London Review of Books on Nov. 16, Qi Gua suggests that the “first task will be to bring the tech giants to heel” for the next five years of Xi’s rule. A month before the Communist Party congress that resulted in Xi being elevated to the status of Mao Zedong and Deng Xiaoping, Tencent, Baidu and Weibo were fined by the Cyberspace Administration of China. Tencent game Honour of Kings was accused of “dragging Chinese youth into a mass gaming addiction,” and government criticism led to shares plunging 4 percent; the company tried to mollify the government by releasing a game, Applaud for Xi Jinping. Gua says Beijing has proposed to increase its holdings in Alibaba (1.3 percent), Tencent (0.8 percent) and Baidu by an additional 1 percent each: “The objective is to penetrate the two companies and oversee every key decision they make.” Foreign companies operating in China may also be required to report their earnings precisely so that dues owed the Communist Party for membership (calculated on the basis of corporate earnings) can be charged and spent on party activities.

July 23, 2019: China’s Xi Jinping is not a god and the backlash against him is building, by Peter Hartcher in Sydney Morning Herald:

Is Xi going to face a backlash? This is the critical question that Australia’s Richard McGregor poses in an absorbing new essay for the Lowy Institute. In his view, the backlash is already building. And the title commonly bestowed on Xi by foreign commentators – China’s “ruler for life” – is most unlikely to be fulfilled, he augurs.

Not that he thinks Xi’s power is at imminent risk: “To be sure, Xi is in no danger of being toppled from his perch. As long as China’s economy remains reasonably healthy, he can count on sufficient support to retain his hold on the system.

“But the anger towards Xi is potent nonetheless,” writes McGregor, a veteran foreign correspondent and former China reporter for The Financial Times. “In July 2018, I spent two weeks in Beijing during which officials and scholars, party members and non-party members spoke unprompted about their fury at Xi and the direction he was taking the country.

“They complained about how he had stifled criticism, built up a cult of personality and mishandled relations with Washington. Initially, the critics kept their complaints underground. Later in 2018, some started to speak in public.”

This is a topic rarely discussed in the media and difficult to cover knowledgeably, but vital to grasp. The history of the Chinese government since the Communist Party took power in 1949 is a long series of intense internal party convulsions…

How long can Xi last? McGregor doesn’t hazard a guess but does venture this scenario: “Just as it is difficult to anticipate where any challenge will come from, it is equally hard to see how Xi’s supremacy in domestic politics can be sustained.

“Other factors that remain out of Xi’s control will also weigh against him. China’s slowing economy and rapidly declining demographics can obviously be leveraged to argue in favour of maintaining tight authoritarian controls.

“But they are much more likely to work against Xi in future. The same applies to China’s tightening fiscal situation. Beijing’s ability to throw money at every problem, such as bailing out cash-strapped local governments, will only get harder. By the time of the next party congress, due in late 2022, the issue of succession should return with a vengeance.”

July 19, 2019: What’s Really Behind China’s Falling GDP, Wharton University:

More generally, the graph of China’s economic growth has sloped downward since 2009, Meyer notes. The last quarter’s number was related to internal problems. Three of the most important in his view are the following: (1) demographics, “China is getting older” and the workforce is beginning to shrink; (2) “regression to the mean” – countries that grow quickly “almost always encounter … very rapid deceleration in growth at some point;” and (3) “excessive reliance on capital investment,” particularly in infrastructure.

Added to overspending on infrastructure, China also is boosting consumer and industrial spending by expanding available credit, Dasher says. “They are really very debt-ridden.” He found it interesting that financial markets did not react “too unfavorably” to the very low GDP growth rate “because consumer spending is up over 9% (in part due to recent tax cuts). And industrial investments are higher than GDP growth. The only way you can do that is through extending more credit.” And officials have done that by giving banks a lot of funds to lend out…

But the most fundamental — and crucial — issue for China’s economic future is lagging productivity, according to Meyer. Productivity – “the amount of output we get per level of input” – is the most important driver of GDP in the long run for every economy and it has been low in China. In most industrial sectors, “some economists say it has been negative since as early as 2007. And certainly, I would say with a little more certainty since, say, 2012, 2013.”

In the meantime, the country has been piling up debt – by consumers and local governments in particular. “Who’s going to repay that debt? No one knows,” Meyer says. To repay it China will have to increase productivity, which almost certainly means moving up the value chain into “leading-edge industries.” Related to that, China analysts have long said that the nation must move from investment-led growth to consumption-led growth as a way to avoid the so-called middle-income trap.

August 2, 2019: The Gambling Investigation Scrutinizing Xi Jinping’s High-Rolling Cousin,
by Damien Cave and Alexandra Stevenson in the New York Times.

II. Policy evolution, China: State-mandated Crackdown

Gaming in China: overview, by Yap Wai-Ming and Cindy Pan, Morgan Lewis Stamford LLC, in Thomson Reuters Practical Law. See also: The Legalization of Casino Gambling in Mainland China, by Xi Liu
University of Nevada, Las Vegas.

September 15, 2011: What Happened at The Beijing News?, in China Media Project:

The biggest media story in China so far this September is the takeover of The Beijing News and the Beijing Times, two of the country’s leading commercial newspapers, by Beijing’s municipal propaganda department. The story, which deals with the highly sensitive issue of press control, cannot be openly addressed in domestic Chinese media. English-language coverage of the story, meanwhile, has been a knot of confusion.

Everyone knows, or senses, that the move is fundamentally about press control, and not, as the Beijing city leadership has said, about addressing things like resource scattering (????) and homogenized competition (?????) in the Beijing newspaper market — whatever those are.

September 3, 2013:  Chinese Gambling — by the Numbers, in Foreign Policy:

Projected size of Asia-Pacific casino gaming market by 2015: $80 billion

Size of Asia-Pacific casino gaming market in 2010: $34 billion

Year when Asia-Pacific will surpass the U.S. as the largest regional casino gaming market in the world: 2013

September 10, 2013: China’s gambling addiction could prove tempting to Beijing, by Isaac Stone Fish in Sydney Morning Herald:

China, where no vice is legal but every vice is tolerated, has a complicated history with gambling. Like opium, it was rife in the early 20th century. General Chiang Kai-shek, the country’s nominal leader in the 1930s and 1940s, saw gambling as a threat to his army’s morale and unsuccessfully tried to curtail it. After Chiang and his supporters made a run for Taiwan and Matsu in 1949, Mao Zedong took power in China and swiftly outlawed gambling, as well as other vices. But in the years following his death in 1976, drugs and prostitution re-emerged, and by the 1980s and 1990s, Chinese people could be found betting on everything from horse racing to soccer matches to cricket fighting.

Today, signs of gambling are nearly ubiquitous in mainland China. Tables for the rummy-like game of mahjong dot street corners around the country, while more serious wagering takes place in parlours that, like Chinese brothels hiding behind foot-massage signs and barber chairs, make little attempt to hide their purpose. “If you don’t play for a profit motive, it’s legal – but if you play to make money, that’s illegal,” explains Chen Haiping, a researcher at Beijing Normal University’s lottery research centre. But there are also much, much bigger games: In June, 17 people were indicted in Shanghai for the crime of opening an online casino into which they allegedly funnelled $US13 billion in bets.

There’s a rich Chinese tradition of legitimising morally questionable behaviour like gambling – you just call it something else. In the sixth century BC, Confucius established his theory of the “rectification of names”. He believed that social disorder stemmed from the failure to accurately perceive reality, and the solution was describing things as they are. Ever since then, the Chinese have tried to subvert Confucius’s dictum: Feet shaped by the excruciatingly painful process of foot-binding, for example, were called “golden lotuses”. The communists under Mao were notoriously good at euphemisms. The famine caused by the collectivist government program known as the Great Leap Forward, which killed tens of millions of people, is referred to as “the three years of natural disasters.” And euphemism remains the key to vice in China. Because a percentage of state lottery proceeds accrue to the Ministry of Civil Affairs, the lottery is not considered gambling but a legal, even beneficial, “social welfare” project.

Foreign gaming companies have tried to use this trick in their fitful efforts to penetrate the Chinese market. In 1993, for example, a Malaysian company opened a slot machine parlour in the dreary northeast city of Harbin, but because it paid out “gifts,” not cash, it was licensed for “entertainment”, not gambling, according to Hong Kong’s South China Morning Post. Harbin tolerated foreign slot machines for a little while – a 2010 article in a provincial newspaper described 1994 and 1995 as “the craziest era for gambling” in the city – until it formally banned the machines in January 1996.

In 1993, another Malaysian company said it had obtained a licence to operate “electronic and electrical entertainment machines” in the nearby city of Dalian – an experiment that appears to have fared worse. Soon after the company announced the agreement, the city’s then-mayor, Bo Xilai – now best known for a 2012 political scandal involving coup rumours, attempted defections and murder – said he was not aware of any such deal. He added that gambling was strictly prohibited and disapproved of by the central communist government, according to a report in the Straits Times, a Singaporean newspaper. “If a club with betting machines should open its doors in Dalian, it would be immediately closed, and you can consider that an official statement,” a Bo aide said in July 1993.

Why doesn’t China, with its growing wealth, consumption-driven economy, and huge unmet demand, take advantage of its own gaming market?

That doesn’t mean that people in Dalian and Harbin actually stopped gambling or that enterprising businesspeople stopped providing them with illicit opportunities to do so. As China’s economy has grown, however, the stakes have gotten higher. In 2003, the disposable income of the average urban resident was about $US1000; in 2012, it was roughly $US4000. Chinese with the means to scratch the gambling itch go overseas; last year, Chinese people took 83 million trips abroad, on which they spent more than $US100 billion. “The Chinese are now the partygoer everyone wants to invite,” says Ben Lee, managing partner at IGamiX, a gambling consultancy in Macau.

Macau has laid out the red carpet – nearly 90 per cent of its visitors are Chinese, says Martin Williams, Asia editor of GamblingCompliance, a market analysis firm. The tiny former Portuguese colony borders southern China’s Guangdong province; with the right travel permit, it is an easy ferry, rail, or plane trip from the mainland or Hong Kong. Once a sleepy backwater, Macau allowed foreign companies to open casinos in 2002. In just a decade it has become the world’s undisputed gaming capital, with revenue six times greater than Las Vegas. On the day that the Sands Macao, that territory’s first Las Vegas-style casino, opened in 2004, more than 20,000 people swept in, literally ripping the doors off their hinges. Over the next three years, gaming companies will build at least six more casino resorts in Macau, at a cost of $US20 billion.

Most countries that abut China have built casinos to cater to the country’s legion of gamblers. Myanmar, Vietnam, and Laos host gaming resorts near the border “that exist just because of China”, says Andrew Klebanow, co-founder of the consultancy Gaming Market Advisors. Singapore, which only allowed casinos to open in 2010, already hosts the world’s two most profitable, with 2012 gaming revenues of $US5.9 billion driven by Chinese punters – just under the combined haul of all of Las Vegas’s dozens of casinos. Even Kazakhstan has gotten in on the game. The Astoria Club, for example, a gambling resort in a lakeside town outside Almaty, provides “a Chinese-language book of rules and tutorials”, says the casino’s event manager, who asked to go by his first name, Batikhan. “Chinese visitors are welcome here, for sure!”…

But officials worry about the downside. Throughout Chinese history, there has been a fear that the central government will not be able to maintain its grip on power and that the provinces might go their own way (a sentiment captured by the centuries-old expression “The mountains are high and the emperor is distant”). Legalising casinos would help provincial officials not only increase local tax revenues but also strengthen their power bases – something Beijing doesn’t want.

What’s more, high-ranking Communist Party officials are ardent students of their own history. Gambling was a major social disruption in the 19th and early 20th centuries – causing bankruptcies, breaking up families, and spurring other vices like opium use – and they fear that legalising gambling would revive those problems. “The government’s main concern is its potential to disturb social stability and harmony,” says Li. “It is a very sensitive subject.” The Communist Party is also aware that casinos often attract organised crime – as they did in Macau, as well as Las Vegas, which for decades was controlled by the mob.

Teresa Du, a communications manager at MGM Grand Sanya, doubts there will be any “significant policy changes” for at least the next five years, which is “frustrating”, she said. “Everyone knows MGM specialises in operating casinos, but the only thing we can do is send petitions to the government.” (A spokesman for MGM Resorts International said Du’s comments “don’t accurately reflect the company’s views”.) For investors, then, the key may be “to put your chips where they’re supposed to be,” says Desmond Lam, a marketing professor and gambling expert at the University of Macau. That way, if gambling is legalised in China, “they are in a good place”.

William Weidner appears to be taking the other side of that bet. “We think the likelihood of China allowing casinos, even in Hainan, is very low,” says Jennifer Lee, vice president of Weidner Resorts Taiwan. But Matsu has its own complications. Although relations are much better than in the past, tensions between Taiwan and mainland China still flare up occasionally. In June, Taipei deployed a multiple-launch rocket system in Matsu to fend off a potential Chinese amphibious landing. The irony, one imagines, is not lost on Weidner, who’s hoping for a different sort of Chinese invasion.

Other obstacles stand in the way of this flood of tourists. Unlike travelling to Hong Kong and Macau, it’s actually not that easy for Chinese to travel to Taiwan. And in February, testy Chinese officials in nearby Fujian province suggested they might ban residents from visiting the Matsu casino. (Lee said such comments are standard and not cause for concern.) Yang, the magistrate for Matsu, admitted that officials are still trying to work out the visa situation.

July 11, 2017: China adds more digital bricks to its ‘great firewall’, in CalvinAyre.com:

In January, China’s Ministry of Industry and Information announced a new crackdown on “disordered” internet activity in a bid to make it even more difficult for China’s netizens to access content the government views unkindly (including internationally licensed online gambling sites).

The crackdown, which included restrictions on the use of unauthorized virtual private networks (VPN), appears to be ramping up. Late last month, popular VPN service provider Green abruptly informed its customers that it would “cease our service on July 1st, 2017” after having “received notice from the higher authorities.” Meanwhile, a host of other VPN providers’ apps have been slowly vanishing from Android and iOS stores.

On Monday, Bloomberg reported that all Chinese state-run telecom carriers have been ordered to block VPN services by February 1, 2018. That timeline is slightly ahead of the 14-month implementation the government envisioned when it first announced its crackdown.

It’s estimated that between 1%-3% of China’s vast internet user base have made use of technologies such as VPN in a bid to dodge the small army of online censors that Beijing employs to keep Chinese citizens from (a) hearing anything other than the official Party line on any given subject, and (b) enjoying access to activities on which the government frowns, including online gambling.

February 2, 2018: China Considers Legal Gambling on Hainan Island, in Bloomberg

August 8, 2018: Gambling legalisation in China: the view from Beijing, in MacauBusiness:

As a former head of the Chinese Academy of Fiscal Sciences, Jia Kang is more influential than most. The Academy is a think tank with China’s Ministry of Finance, which overseas the nation’s economic policy and annual budget. He believes that the problem is pressing.

“In China we get all of the problems associated with gambling, brought back by our gamblers from their overseas trips” he says. “But we don’t get any of the benefits.”

Within the Mainland’s borders, state-run lotteries – or caipiao???) – raked in more than 400 billion yuan last year, a large share of which went into the government’s coffers. But prohibition of other kinds of gambling has driven it underground, where it acts as a motor for organised crime and police corruption.

If China were to build and tightly regulate integrated resorts, Jia believes, billions of dollars that now go to gangsters, foreign casinos or foreign concessionaires could instead be funnelled into developing the Mainland’s tourism industry. A well managed gaming industry could become a rock solid source of government revenue. As a good example, he points to Hong Kong’s racing monopoly, the Jockey Club, popularly referred to as ‘the government’s ATM’.

“All of these considerations demand a far-reaching and comprehensive evaluation,” says Jian. “But in China for many years it has been an issue that nobody dares talk about. There is no indication that this will change.”

Communist propaganda has traditionally condemned the three evils – prostitution, drugs and gambling. Under the concept of caipiao, Jia says some flexibility is allowed. But contemplating the wider issue of gambling legalisation is still completely out of bounds. “I have never heard of China’s leaders formally discussing the problem of the outflow and how liberalisation might address it,” he says. “There is absolutely no willingness to do so.”

So, while Jia recommends China study well disciplined examples of legalisation, such as Singapore, he also says nobody in the top leadership is ready to countenance such advice…

The tropical island of Hainan was a pilot for Deng’s reforms in the early 1980s as one of China’s five original Special Economic Zones. Unlike other SEZs such as Shenzhen and Zhuhai it never really prospered from its liberal privileges. The chief effect was perhaps a property bubble that burst and ruined a lot of people. Thus, in 2009 the central government had another go, designating it as a special zone for the development of international tourism.

The State Council directive that went with the new status – ‘Suggestions for the Development of Hainan as an International Tourism Island’ – was a 28-paragraph list of economic activities to explore. The first paragraph emphasised Socialism with Chinese Characteristics, Deng Xiaoping Thought, and Jiang Zemin’s ‘Three Represents’ as the project’s guiding standards.

The 12th paragraph concerned culture, sport, and conferences and exhibitions. In addition to activities such as golf and filmmaking, it also identified two forms of parimutuel caipiao gambling: betting on major international sports fixtures and ‘sports lotteries of a guessing nature.’ The latter could be taken to mean things like football pools and complex accumulator betting on races.

According to Jia Kang, Hainan’s leaders subsequently did absolutely nothing to act upon the dispensation they had been granted: in fact, “they never dared to move,” he says….

 

August 15, 2018: Report: Chinese in Philippines Forced to Work in Gambling Dens, by Liang Chenyu, in Sixth Tone:

Thousands of Chinese migrants working as promoters at a gambling conglomerate in the Philippines are subject to slave-like conditions in a strictly controlled facility, an investigative report by The Beijing News revealed Monday.

The Chinese workers at the Pearl Plaza in metro Manila gave grueling testimonies of their jobs, which consist of 12-hour shifts and seven-day work weeks with only one day off per month, according to the investigation. The Chinese workers also said that Oriental Group — a gaming operator with offices in the Pearl Plaza — seized their passports and crammed up to a dozen people in a single dorm room. Male workers also described having to pretend they were women during online chats in order to tease money out of customers. The conditions are so bad that the employees refer to the Pearl Plaza as the “Oriental Prison.”

December 4, 2018: China sentences online gambling ringleaders to life in prison, in CalivnAyre.com:

On Tuesday, Chinese state-run media outlet Xinhua reported that the Intermediate People’s Court in the city of Baishan in the eastern province of Jilin had handed down life sentences for the two organizers of an illegal online lottery operation that police rumbled in July 2017.

The ring had bases of operation in China’s Guangdong province, as well as in Indonesia and Fiji. Some 77 members of the ring were repatriated from Fiji as part of the 2017 crackdown.

The scam, which was operational for around 15 months, involved contacting unsuspecting marks via online messaging platforms such as QQ and WeChat and encouraging them to purchase lottery products from an online operation that didn’t actually exist. Roughly RMB153m (US$22m) was stolen from the ring’s victims in this manner before the whip came down.

In addition to the two life sentences, the ring’s 280-odd other members were given custodial terms of six months to 15 years. A lucky eight members were spared any sentence based on their minimal involvement in the scam.

April 10, 2019: China’s “Hardcore Reporter” Online Casino Investigation, in Cambodia News English (translation of a blog by a writer known as “Hardcore Reporter”):

Online gambling is called “spinach” (the homonym of gambling) in the slang of practitioners, while practitioners call themselves “vegetable farmers”…

If you think that the spinach is very low and the bookmakers are growing wildly, you can be wrong. In fact, on the technical level, the professionalism of bookmakers is comparable to that of domestic internet companies. There are management system, employee incentives, and God-like pyramid schemes.

Gaming practitioners are broadly divided into four major types of customer service, personnel, promotion and development. In the development of this category is divided into UI design, website development and maintenance, Android and IOS front-end backend. A reader who is working on the development of gaming sites told me that their company is learning the style of Xiaomi.Gaming websites must be beautiful, generous and good-looking in order to increase trust. Icons, fonts and typography are very particular…

Such a crazy phenomenon can not help but ask questions, why is the scale of the overseas gaming industry so large? Who has fed this group of people? It is said that there is a market for demand, and this principle is equally applicable in the gambling industry.

“China has more than one billion people, the population base is too big, and there are many people who want to gamble. I estimate that there are at least 40 million gambling dogs.” A man who has been engaged in the gaming industry for more than half a year told me, ” The average vegetable farmers who promotes well has hundreds of customers, although the customer has duplicates, but hundreds of thousands of farmers, you count yourself.”

The man was promoted last year at a gaming company in Sihanoukville. He has a total of less than 100 promoters, but the number of customers exceeds 10,000, and the monthly betting flow reaches more than 100 million yuan ( $14,887,500). If you use this to calculate the turnover of all the gaming companies in Southeast Asia, it will be an astronomical number…

Chinese law prohibits gambling, including online gambling, so investors turn their attention to overseas, especially in corrupt Southeast Asian countries.

They are willing to accept the Chinese gaming industry. The government collects heavy taxes and officials receive red packets (bribes). Anyway, they earn Chinese money. Vegetable farmers can also stimulate local consumption. To put it bluntly, the Chinese gaming industry uses the money earned from the Chinese to honor the government of Southeast Asian countries…

Gaming is harmful, but it is difficult to eradicate. The Chinese police have repeatedly arrested gambling practitioners overseas, but it is difficult and costly to handle cases across the country. At Sihanoukville, a gambling practitioner bluntly said: “I will catch it, but can I catch it all? Tens of thousands of people are impossible. Now when we hear the wind, we are very Be vigilant, they all hide, and the wind will pass and continue.”

Even when telecom fraud and stock frauds are caught, gambling practitioners will ridicule: “If you have safe spinach, you don’t plant it, do telecommunication fraud, and you should be caught.”

June 15, 2019: Chinese Public Security Minister Pledges Crackdown on Cross-border Online Gambling, in EuropeanGaming:

Zhao Kezhi, the Public Security Minister of China, has pledged to resolutely crack down on cross-border online gambling according to the law. Zhao made the remarks at a meeting to deploy forces to bust those involved in illegal gambling.

He said that the police will bust a series of major criminal cases that organise outbound gambling and use the Internet to open casinos, and bust networks of criminal organisations involved in recruiting gamblers from China by overseas casinos and using the Internet to open casinos in China.

He also said that the police will also crack down on “underground banks” and online payment platforms that provide a financial settlement for cross-border online gambling and other crimes, and wipe out domestic network operators and companies that provide technical support for such crimes.

July 11, 2019: DICJ warns operators against online gambling and proxy betting, in Asia Gaming Brief:

The Gaming Inspection and Coordination Bureau has issued a warning to the city’s six gaming concessionaires, stressing the need to adhere to local and foreign laws on gambling.

The message was relayed during a meeting on Tuesday with the DICJ and representatives of Macau’s junkets and gaming concessionaires – only days after junket and IR operator Suncity Group was reported by a Chinese-state owned news outlet for offering illegal online gambling and proxy betting to Chinese nationals.

July 22, 2019: Macau gaming stocks up after online gambling crackdown was said to be beneficial to local operators, in Yogonet Gaming News:

Credit Suisse said that Macau’s tougher measures on online gambling were beneficial to local casino operators and Macau gaming stocks were higher this week.

This came even as Goldman Sachs rebutted the connection, saying that less business for online casinos based in Southeast Asia would not necessarily translate into more business for the Macau SAR…

Meanwhile, according to data released on Tuesday by the Gaming Inspection and Coordination Bureau, the VIP gaming segment continued its decline in the second quarter of 2019.

July 28, 2019: Crown Drops on Junket Operators’ Reported Links to Triad Gangs, in BNN Bloomberg:

Crown Resorts Ltd. shares fell the most in two months after local media reported the company used junket operators linked to an Asian crime syndicate that allegedly laundered money in the gaming firm’s casinos.

III.  POGOs in the Philippines (Regulations and Developments):

PAGCOR Website: Philippine Amusement and Gaming Corporation (PAGCOR) conceptualized Philippine Offshore Gaming Operator (POGO) to enable the Philippine government to capture a greater share of the growing, yet previously unregulated, online gaming pie. See also: List of Approved Philippine Offshore Gaming Operators.

July 20, 2015: The rise of the Philippine casino industry, in SGV:

Previously, PAGCOR operated most casinos under the Casino Filipino brand. With the grant of PAGCOR licenses to private entities, recent years have seen the rise of luxury casino hotels and integrated resorts located in Newport City and Entertainment City.

In 2009, Resorts World Manila, the first Philippine integrated resort, was built across NAIA Terminal 3, following the grant of a PAGCOR license to Genting group.

In March 2013, Bloomberry Resorts Corp.’s Solaire Resort & Casino (Solaire), opened in Entertainment City.

In December 2014, City of Dreams Manila opened. It is operated by Melco Crown (Philippines) Resorts Corp. in collaboration with Manila’s Belle Corp.

PAGCOR has also granted licenses to two more operators in the Entertainment City — Kazuo Okada’s Tiger Resort Leisure and Entertainment, Inc. and the Andrew Tan-led Resorts World Bayshore City, Inc., which are expected to open in 2015 and 2016, respectively.

This recent surge in casino operations in the Philippines has sparked speculation that Manila could soon rival Las Vegas in terms of the sheer number of casinos built along a designated gambling “strip.”

This interest in expanding the Philippine casino industry becomes more evident in light of the decrease in Macau’s VIP gambling business since the last half of 2014 due to the government crackdown on money transfers, the newly imposed transit visa restrictions for Chinese visitors, and recent comments warning of further sanctions to come.

Macau is also now facing increased regional competition for international VIPs, with new or expanding projects sprouting in Australia, the Philippines, South Korea, Cambodia, Vietnam, Russia and potentially Japan, should gaming legislation be passed in 2015.

Investment banker UBS issued a report in September 2014 saying other jurisdictions could generate VIP revenue of US $1.1 billion in 2015, with Macau’s VIP revenue seen to be shrinking between 4% and 5%. Regional players are, of course, hoping to pick up the VIP business lost by Macau. Given the high-quality experience to be found at Philippine integrated resorts, it is reasonable to expect that a significant portion of this business will land on Manila’s gaming tables.

September 20, 2016: Memorandum Circular No. 6, “Enjoining All Government Officials and Employees to Strictly Observe and Comply with the Prohibition Against Going to Gambling Casinos.”

February 2, 2017: Executive Order No. 13, s. 2017: “Strengthening the Fight Against Illegal Gambling and Clarifying the Jurisdiction and Authority of Concerned Agencies in the Regulation and Licensing of Gambling and Online Gaming Facilities, and for Other Purposes.” See summary of content and effects of the E.O.

September 18, 2018: The rise of POGOs: A new landscape in e-casinos and sports betting, by Richard R. Ibarra in P&A Grant Thornton:

PAGCOR conceptualized POGO to enable the Philippine government to capture a greater share of the growing, yet previously unregulated, online gaming pie.

In 2016, PAGCOR issued rules and regulations covering the operations of POGOs. A POGO refers to an entity that offers and participates in offshore gaming services by providing games to players, taking bets, and paying the winning players. The gaming activity refers to online games of chance through the internet, using a network and software, exclusively for offshore-authorized players who have registered and established an online gaming account with the PAGCOR-licensed POGO. Filipino citizens, even while overseas, are not allowed to play.

PAGCOR can issue a POGO license to qualified operators, which could be Filipino-based operators or foreign-based operators.

The POGO framework also covers service providers that provide the various components of gaming operations, such as the gaming software provider, business outsourcing provider, and content streaming provider. These providers also need to secure a PAGCOR license.

Under Revenue Memorandum Circular (RMC) No. 102-2017, POGO operators and accredited service providers are subject to three types of taxes. First income from gaming operations are subject to a 5% franchise tax in lieu of all kinds of taxes, levies, fees or assessment. This is the same tax regime enjoyed by PAGCOR. Second, income from other related services or non-gaming operations is subject to normal income tax, value-added tax, and other applicable taxes. Third, POGO operators are not relieved of their liabilities as tax withholding agents.

October 9, 2018: How China’s online gambling addiction is reshaping Manila, by Ralf Rivas and Alex Evangelista in Rappler:

POGOs previously had to go through investment promotional agencies like the Philippine Economic Zone Authority (PEZA) and Cagayan Economic Zone Authority (CEZA) to set up shop in the Philippines.

However, President Rodrigo Duterte signed Executive Order (EO) No. 13 in 2016, transferring the responsibility of regulating POGOs to Pagcor.

October 24-26, 2018: Estimating Casino Revenues and Transfers for the Philippine Balance of Payments Statistics, by Bangko Sentral ng Pilipinas:

The revitalized casino and gaming industry is turning out to be of growing importance for
the Philippines and its economy, having generated about ?158 billion (US$3.3 billion) in gross
gaming revenues in 2016 and ?172 billion (US$3.4 billion) in 2017. In 2016, data from the
Philippine Statistics Authority (PSA) indicated that tourism contributed 8.6 percent to nominal
GDP. A study conducted by Technavio Research noted that in 2015, over 67 percent of foreign
tourists in the Philippines visited a gambling hub in Manila. Euromonitor International also
estimates that casinos in the country account for about 60 percent of tourism-related activities in
terms of their total value. Conceptually, gambling expenditures of non-residents while on travel
(or other non-residents by definition, such as foreign diplomats and military stationed in foreign
territories) are recorded under travel services. Meanwhile, revenues from online gambling (in
which non-resident gamblers are not travelling to a foreign territory) are recorded under
personal, cultural, and recreational services of the trade-in-services account of the balance of
payments (BOP). In addition, non-residents’ winnings in gambling activities are recorded as
current transfers. Currently however, such receipts and transfers are data gaps in the Philippines’
BOP…

This study recommends that it may be better to direct questions relating to winnings of nonresidents to PAGCOR or casino establishments. Some information used in the estimates can be
extracted from administrative data, company financial statements, and industry reports however,
reconciliation of available data sources prove to be difficult. In addition, there is also a need to
disaggregate and thoroughly understand available data to come up with better estimates of related
service revenues and winnings from non-residents. Given the existing limitations, filtering available
administrative data with the help of the industry regulator can be worked on moving forward. Also,
the proposed conduct of a casino survey in 2018 with the assistance of the ASEAN-Australia-New
Zealand Free Trade Agreement Economic Cooperation Work Program (AANZFTA-ECWP) can help the
Balance of Payments compilers of the BSP to collect more disaggregated, analytical, and accurate data
to generate better estimates of casino and gambling service revenues.

The Philippine gambling industry is on a trajectory of growth but the BOP statistics compiled by
the Bangko Sentral ng Pilipinas (BSP) falls short in capturing service revenues from casino and gambling
activities. Under this premise, the paper discussed a brief background of the growing Philippine casino
industry, its current market, and some intricacies in the nature of casino transactions. The paper
additionally discussed casino revenues and proposed a method on how to estimate gaming industry
service revenues and casino winnings attributable to non-residents. As the industry is now reported to
generate around US$3.0 billion dollars in GGR annually, associated service revenues from non-residents
is estimated to fall between 30 to 50 percent of total industry GGR or about US$1.6 billion. Also, gambling
winnings of non-residents are estimated to fall between US$33.7 to US$36.1 billion. However, since these
amounts are assumed to be sourced from non-residents’ wagers, this will not be recorded in the BOP. In
addition, this paper recommends coordination and dialogue with the industry through PAGCOR in order
be able to navigate and understand other intricacies of the gambling industry that this paper may have
failed to take note of. Coordination with PAGCOR may also help with the understanding, disaggregation,
and improvement of administrative reports so as to cater to the data needs of the BSP for BOP statistics.

November 21, 2018: Joint Philippines-China Statement on the State Visit of Chinese President Xi to the Philippines, Department of Foreign Affairs:

12. Both sides agree to strengthen law enforcement cooperation, and will enhance cooperation and communication to combat transnational crimes, including job-related crimes, telecommunications fraud, illegal on-line gambling, cybercrimes, human trafficking and illegal wildlife trade. Both sides agree to speed up the discussions with a view to signing a bilateral agreement on Transfer of Sentenced Persons.

November 22, 2018: Why Is the Philippines the Home for Chinese Offshore Gambling?, by Alvin Camba in The Diplomat:

This segues perfectly as to why Chinese offshore gambling has increased in the Philippines: the consumption-based economy that relies on malls, hotels, and internal markets generate a suitable ecosystem for offshore and onsite casinos.

Gambling dominated much of Macau’s economy during Portuguese overlord rule and autonomy from China. While Hong Kong handled banking and mainland Chinese acquired export manufacturing, Macau’s economy relied on visits from Western, Australian, and Japanese tourists spending a few days in the small city-state, indulging on gambling, malls, prostitution, alcohol, and luxury accommodations. But rising real estate prices and legal actions by China against Macau’s gambling elites are pushing the migration of gambling capital elsewhere. The domestic economic landscape of the Philippines explains why much of Macau’s capital is moving here: it sees the Philippines as a similar prototype of what Macau was before the Chinese government’s increased scrutiny. A corruptible police force, the strength of the local governments, and the importance of Philippine oligarchs in the service sectors make it a prime destination for Macanese gambling capital.

Apart from the Philippines’ ideal configurations for gambling money, other Southeast Asian states have proven unable to meet gambling capital’s needs. Myanmar, Laos, and Cambodia may have cheaper real estate, and do serve as locations for onsite gambling, but these economies also do not have the Philippines’ luxurious malls, hotels, and onsite casinos, which all attract wealthy tourists. The Philippines also has stronger infrastructure that attends to tourists and gamblers’ needs, boasting opportunities to gamble offline in safe venues. Furthermore, the Southeast Asia riparian states are also geographically closer to Beijing, which makes it more dangerous for Macanese capital, since gambling is illegal for mainland Chinese citizens.

Indonesia and Malaysia may have better infrastructure, but these countries are also limited by the religious regulations of their constituents. While offshore gambling operations do exist, it is only in far-flung areas away from the cities and limited to the export processing zones. In Thailand, the mobilization of monks and the state’s position against gambling limited offshore Chinese investments. The higher real estate prices of Jakarta, Kuala Lumpur, and Bangkok also discourage any expansion for gambling capital. In addition, because these countries have an export portfolio in their economies, Chinese firms have invested in their manufacturing, technology, and natural resource sectors. That empowers economic elites in these sectors to influence political elites, whose interest are met by political capital generation, employment, and economic growth. The export-oriented nature of these economies makes economic elites or firms interested in gambling less influential in government circles.

In sum, the structure of the Philippine economy — relying on consumption, exporting labor to acquire remittances, and possessing a strong internal market — and the nature of Philippine elites’ capital accumulation make it logical for offshore gambling firms to invest in the country. The Philippines’ relative autonomy from the Chinese government also encourage Macanese capital to invest in the Philippines, knowing that their Philippine host state allies can protect them from Beijing’s reach.

March 19, 2019: Virtual Casinos Deliver a Tricky Jackpot to the Philippines, by Jake Maxwell Watts, in The Wall Street Journal:

Many jurisdictions, including some U.S. states, allow online gambling among their own populations but few specifically license companies to target foreign markets. Those that do tend to be small tax havens looking to tap industries where they can be globally competitive.

The Philippines is the largest among them, more than double its nearest rival, Gibraltar, according to Global Betting and Gaming Consultants, on the Isle of Man.

As the business grew, President Rodrigo Duterte in 2017 put the national casino regulator in charge of licensing online-gambling providers, formally taking the role from special economic zones outside the capital and ending the contract of a private operator. The shift allowed the industry to proliferate in Manila, where connectivity is better and labor and support services easier to come by.

Mr. Duterte cast the move as an effort to rein in illegal gambling, but the gambling regulator’s ability to do that is limited. The Philippines prohibits online casinos from targeting markets where gambling is illegal, including China, according to the regulator, Philippine Amusement and Gaming Corp., or Pagcor. But many online casinos use the Philippines purely as a base for their production and support operations, Pagcor says, and are registered and process payments elsewhere.

That limits Philippine jurisdiction when investigating and prosecuting alleged financial crimes, according to Pagcor, which says it still maintains a robust anticrime framework.

Since 2016, the year Mr. Duterte took office, Pagcor has licensed more than 50 online operators, almost all of them aimed at a Chinese market, with Chinese-language websites and advertising.

Online gambling companies contacted in Manila didn’t respond to requests for information about their operations and what share of their client base is in China—which offers the biggest supply of Chinese gamblers. The Chinese Embassy in Manila has repeatedly warned Chinese citizens not to participate in online gambling or move to Manila to work in the industry, citing examples of kidnappings and extortion…

At one of the Philippines’ tallest buildings, the 55-story PBCom Tower in Manila, more than half the tenants are Chinese, most of them online gambling firms, according to the building receptionist.

Online-gambling businesses brought in 7.4 billion pesos ($141 million) in licensing fees for the Philippine government in 2018. The broader Philippine casino industry generated a record $4.1 billion in revenue last year, Pagcor estimates show, up 8.5% from a year earlier….

May 9, 2019: Inside a Chinese gambling entity:  What happens, who works, how? by Alvin A. Camba, in Philippine Center for Investigative Journalism:

Offshore gambling originated during Joseph Estrada’s brief term as president, reemerged throughout the Benigno S. Aquino III presidency, and now has surged since Rodrigo R. Duterte took power. Similar to BPOs, Chinese offshore gambling firms target the external market, which do not threaten Philippine businesses, and instead present an additional opportunity to earn.

Offshore gambling is a booming sector because of three things. First, customers are located not only in China, but also in the ‘greater China’ area of Singapore, Hong Kong, and Taiwan. There are also reports that the Chinese across the United States and Europe avail of these services. It would be a mistake to put the blame on investors from China or Macau alone. A careful analysis of companies shows that investors come from China, Macau, and Taiwan. The workforce comprises labor from China, division heads from Malaysia, and management from Taiwan.

Second, all of these states have experienced some degree of social mobility and the emergence of the “new rich,” which means that there is surplus money that can be used. Among these states, the People’s Republic of China provides the most customers due to its massive population and the legal ramifications on gambling. And finally, Hong Kong and Macau’s offshore gambling firms were increasingly pushed out by Beijing in 2016. Because offshore gambling has also been a venue for laundering money out of China, which has led to the outflow of U.S. dollars, Beijing has begun to implement tighter regulations on the industry.

These three reasons coincided with a major change in Philippine regulations in offshore gambling. Specifically, the Philippine Amusement and Gaming Corporation or PACGOR, as a GOCC, has the power to sell licenses to offshore or online gambling companies. In the early 2000s, the Philippine private company PhilWeb signed a 13-year contract with PACGOR to sell these licenses outside the special economic zones. It was a monopoly for PhilWeb. But this was not maximized because of the company’s unwillingness to sell to the Chinese offshore gambling firms and its commitment to a business market that targeted Filipino gamblers. Since firms close to the Duterte administration realized that there was money to be made, Philweb’s contract was not renewed. PAGCOR then regained its powers to sell licenses, leading to an open market for offshore gambling firms and the uptick of Chinese business activities and services in the dataset. This move would not have been possible earlier because of PhilWeb’s close links with the Aquino administration and the possibility of a long legal battle at the Supreme Court.

Offshore gambling companies are very low maintenance. Unlike Western BPOs, they can set up shop anywhere so long as they have computers and Internet connection. Functions of online gambling include customer service, which entails talking to customers about the firm’s products, services, and games. This is similar to how Filipino call-center workers talk to U.S. mobile phone owners halfway across the world in order to deal with processing refund, hotel reservations, and other issues.

Some companies reportedly use customer service not only to deal with online gambling concerns, but also to provide service to Chinese companies that need to deal with consumers from China. There is a division on marketing, which targets the email addresses and home numbers of Chinese populations across the world, in order to induce them into playing. A gaming division exists, which comprises the Chinese workers pretending to be players in the game to induce players into playing more. A research and technology division creates new research and programs new apps. Some companies also have training divisions, which serve to train the outfit’s new workers.

June 17, 2019: Special Report : Inside a Philippine offshore gaming company, by Iris Gonzales in Philippine Star:

On the fourth floor of an offshore gaming firm somewhere in Paranaque City, a sprawling cafeteria serves a variety of Chinese food.

At mealtime, hundreds of workers form long queues beside rows of chafing dishes filled with everything Chinese – fresh, leafy Chinese broccoli, beef stew, Chinese fried rice, crunchy, yellow noodles and a variety of dimsum and dumplings.

A Chinese chef, aided by a team of Filipino cooks, is in charge of preparing the daily menu. The cafe serves all 7,000 Chinese employees of the online company who work on two 12-hour shifts to ensure the gaming entity’s 24/7 operations.

Not far from the mess hall is a small booth selling milk tea, a popular beverage in Taiwan that has become a craze among Filipinos and Chinese alike. On the same floor is a convenience store catering exclusively to employees of the gaming company.

Within the offices are bright red Chinese lanterns, corners with tables for tea and wall hangings bearing auspicious Chinese symbols.

There are rows and rows of long tables with dozens of desktops, each manned by a Chinese worker. They are young Chinese men and women, mostly in casual clothes – jeans and shirt – seated side by side.

They are all glued to their desktops, typing an email, responding to a chat or addressing a phone call on their microphones and headphones.

Mobile phones are neatly stacked at the end of every table as their owners are prohibited from using them while on duty.

Any first time visitor might easily think of it as an office in China with rooms filled with Chinese workers.

However, there are also a sizeable number of Filipinos – game developers and I.T. staff, finance and admin personnel, electricians, carpenters, drivers and other maintenance crew – inside the facility. A high-tech surveillance and computer server room is manned by an all-Filipino I.T. team.

The company is just one of 55 licensed Philippine Offshore Gaming Operators (POGOs) in the Philippines. Yet, it already employs thousands of Chinese workers expatriated straight from mainland China…

One studio has 25 gaming tables employing 150 Filipinas rotating on three shifts for 24/7 broadcasting. There are also some Koreans and Vietnamese targeting specific markets.

The work of the Filipinas is no different from dealers in brick and mortar casinos, except that gaming floors are broadcast live from POGO offices in the Philippines all the way to the computers, mobile phones or gadgets of players based in other countries.

The dealers are mostly attractive young ladies in their 20s who usually don brightly coloured Cheongsams, cherry red lipstick, pompadour hair and heavy make-up. They make an average of P30,000 a month, according to one of the dealers interviewed by The STAR.

June 25, 2019: Doing Business in the Philippines: POGO Regulations Every Business Should Know, by Christopher Ting in KMC SAVILLS:

The Philippine Offshore Gaming Operators continue to bring growth to the country’s revenue. The POGO sector has registered a significant increase in 2018 after it recorded PHP 7.265 billion in revenues. This is double the amount the sector contributed in 2016 and 2017 combined…

Given its increasing presence in the Philippines, the government has set up an interagency task force with other concerned bodies to ensure smoother operations. The Bureau of Internal Revenue created a customized taxation for POGOs while the Department of Labor and Employment (DOLE) and Bureau of Immigration (BI) concern themselves with the employment of foreign workers in the country.

The providers are also tasked to register their company to the Securities Exchange Commission (SEC) for lawful employment and monitoring of Tax Identification Number (TIN). Local authorities such as the Philippine National Police and the National Bureau of Investigation are tasked to consolidate and reconcile the list of foreign workers currently working for POGOs.

July 1, 2019: China has a new casino: the Philippines, by David Pierson, Alice Su, Los Angeles Times:

By some estimates, at least 100,000 people from mainland China have moved to Manila for jobs as gambling company marketing agents, tech support specialists and engineers — all to serve the Mandarin-speaking clientele…

The story of the rise of offshore Chinese gambling in the Philippines starts in the world of bricks and mortar.

Over the last decade, the country has built some of the region’s largest casino resorts, none bigger than those located along Manila Bay in a development called Entertainment City.

The gleaming gambling houses and hotels here have helped turn the Philippines into Asia’s third-most lucrative gambling destination, just behind Singapore and very far behind world-leading Macao.

Chinese high rollers once would have scorned the idea of gambling in the Philippines. Then in 2016 Duterte announced his “separation” from the U.S. and realignment with China. Over the next two years, according to the Philippine tourism department, the annual number of Chinese tourists nearly doubled to 1.2 million…

The online boom was set in motion when Duterte signed Executive Order No. 13 in 2016, stripping two small regional economic agencies of the authority to issue offshore gambling licenses and handing it to the Philippine Amusement and Gaming Corp., which is both a national regulator and a gambling operator.

Almost overnight, investors in the Philippines and elsewhere in Southeast Asia seized the new opportunity to reach Chinese gamblers.

Their online game of choice is baccarat. The sites also featured roulette and the Chinese dice game sic bo. Many feature livestreams with dealers at empty tables.

Several sites each receive more than $3 million a day in deposits — the money players transfer to the sites to bet with — according to a gambling executive whose company provides payment software and operates a site that features virtual slot machines…

Property owners have naturally been more welcoming. Real estate prices around Manila have soared 40% since offshore gambling took off in 2016.

Some gambling operators, scrambling to find office space and apartments for their workers, are providing a year’s worth of rent in advance, according to David Leechiu, who heads a Manila-based real estate firm…

Both the Philippines and China have overlooked their own laws to allow the industry to thrive.

The law stipulates that the sites are not allowed to target any country where gambling is banned.

Kickbacks are also common. One former security consultant for a gambling operator in Manila said the company paid $500,000 to $1 million a month in bribes.

“Legislators, law enforcement, immigration officials, they all came asking for handouts because they knew the money was coming from China,” said the consultant, who spoke anonymously because of a confidentiality agreement.

For its part, Beijing has done little to pressure the Philippines to stop targeting China. Nor has it moved to break up the black-market banking system the industry relies on.

July 17, 2019: Special Report : Inside a Philippine offshore gaming company, by Iris Gonzales in Philippine Star:

POGOs are offshore gaming firms that facilitate online gaming via the internet. They use networks and software exclusively for authorized players outside the Philippines who have registered and established an online gaming account with the POGO operator.

From each POGO applicant, Pagcor charges application fees of $150,000 for an e-casino and $120,000 for sports betting. License fees, on the other hand, is $200,000 per e-casino and $150,000 for sports betting. A cash bond of $300,000 is also required per licensee.

Only foreigners based in another country are authorized to play, while foreign nationals in the Philippines and Filipinos residing abroad are not allowed to participate in online gaming activities according to POGO rules.

July 19, 2019: Are We Playing Our Cards Right? Breaking Down Philippine Offshore Gaming Operators, by Anri Ichimura in Esquire Philippines:

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.

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…

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…

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.

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.

July 29, 2019: Amid government’s crackdown on lotteries, Chinese gaming firms keep rising, by Catalina Ricci S. Madalang in Interaksyon:

The POGO system was introduced by the Philippine Amusement and Gaming Corp. in 2016, allowing the country to take in online gaming operators from mainland China outlawed by Xi Jinping, China’s president.

Around the same time as it was launched, over 119,000 Chinese tourists skirted Philippine labor regulations to work for gaming firms tranferred offshore to catering to continuing demand of game players in China.

During the Senate probe into the influx of foreign workers, Duterte made a soft stance over their deportation, saying several Filipinos abroad have the same fate.

While the rise of POGO firms could be seen as a nod to the local economy, the Department of Finance and the Bureau of Internal Revenue found estimated an omission of P32 billion in unpaid income taxes from the gambling firms.

The sheer number of new employees, mostly Chinese, also became a burden to the BIR’s capacity to issue tax identification numbers.

The demand for office space increased as well and could soon replace the country’s information technology and business processing management sector in terms of scale, according to a property consulting firm.

Chinese migration is racking up prices of the local real estate market, particularly in Metro Manila, making them too expensive for Filipino buyers and tenants.

While some POGOs employ Filipinos and other nationalities, they still prefer those from mainland China to serve a Chinese-speaking clientele.

July 30, 2019: Pogo workers in their midst: Notes from an ‘invasion’, by Cathy Cañares Yamsuan in Philippine Daily Inquirer:

Every midnight without fail, a white van unloads five or six Chinese men in front of a convenience store in BF Homes, Parañaque City.

They purchase energy drinks, sandwiches and fruits, and take a short walk to the parking area of a popular coffee shop, where they consume the stuff. They move out after about 10 minutes of loud chatter, leaving their litter behind.

The men are employees of an online casino—“gaming center” is the formal industry term—operating from one of the buildings just outside the village, the one behind tall walls and with glass windows that barely offer a peek into the tech-heavy dealings inside.

They are part of the swelling army of foreigners employed in Pogos, or Philippine offshore gaming operators— a burgeoning business sector that does not make it to the news, except when immigration agents crack down on overstaying aliens or when government officials gripe about how these workers are largely going untaxed.

July 31, 2019: The POGO Problem: Harmonizing Immigration, Gaming, and Gambling, by Napoleon L. Gonzales III, ACCRALAW:

It is highly illegal to gamble in China save for a few state-run lotteries. To avoid this prohibition, gambling companies operate offshore so that they may continue catering to Chinese nationals who play casino and e-games online. These companies took a sharp interest in expanding their businesses to the Philippines, which led to the rise of Philippine Offshore Gaming Operators (POGOs). A POGO is an entity which offers and participates in offshore gaming services by providing an online platform where players may gamble with others over the internet.

The emergence of these industries led to a surge of foreign nationals coming to the Philippines for work, and prompted concerns over their disadvantageous effect on the supposed priority given to Filipino workers. Seeking to streamline immigration procedures and impose tighter restrictions on this matter, the Bureau of Immigration (BI) issued BI Operations Order No. JHM-2019-008 on June 27. This outlines the implementing rules and regulations (IRR) on the issuance of Special and Provisional Work Permits to foreign nationals. The said IRR, which makes effective the joint guidelines of the Department of Labor and Employment, the Department of Justice, the Bureau of Internal Revenue, and the BI, aims to “clarify and harmonize existing rules and regulations” affecting foreign workers and “establish systems for the joint monitoring thereof.”

The guidelines ensure that work permits are issued only to foreign nationals whose jobs cannot be performed by a Filipino. Following the mandate of the Labor Code of the Philippines, local companies may engage alien workers only after a determination that there is no Filipino who is competent, able, and willing to perform the services for which the alien is desired.

By way of a background, a Special Work Permit (SWP) is a document that allows an alien to work in the Philippines while on a temporary visitor (9[a]) visa. The Provisional Work Permit (PWP), on the other hand, is a document that enables a foreign national to work in the country while his application for an Alien Employment Permit (AEP) or a work visa is pending. Both the SWP and PWP are valid for a period of three months, and extendible only once for the same period.

Under the new guidelines, the SWP will be available only to foreign nationals who are working outside of an employment arrangement with a Philippine company. These aliens include, among others, those who are working as consultants, specialists, or service suppliers who do not receive any remuneration from a Philippine source. Unlike the previous rules where there was no such distinction, foreign workers who are actually employed by Philippine companies will now have to secure an AEP and the appropriate work visa, regardless of the duration of their employment.

As foreign employees are now required to secure an AEP and the appropriate work visa which takes several months to complete, those who only have short-term contracts such as probationary employees may be faced with a situation where their visa applications have yet to be approved even though their contracts have already lapsed.

Moreover, it is noteworthy that the BI now requires SWP applicants to secure a personal Tax Identification Number (TIN) before an application is filed. While the TIN has always been a requirement for AEP, PWP, and work visa applications, the new guidelines guarantee that even short-term assignees and consultants will be paying their taxes properly for the income they have derived from sources within the Philippines.

Is there a light at the end of the tunnel? Only through an effective implementation of the IRR will the BI achieve its desired objectives, and we can only wait and see how these guidelines may impact the regulation of foreign workers in the country.

August 9, 2019: Offshore Gaming: A Beleaguered High Roller in the Philippine Office Market, in Pronove Tai, International Property Consultants:

August 11, 2019: Why the Philippine economy is trading call centres for casinos, by Raissa Robles in South China Morning Post:

Making things worse for BPO, in June President Rodrigo Duterte signed Administrative Order No 18, ordering the Philippine Economic Zone Authority to stop processing applications for “eco-zones” in Manila. These are areas with tax breaks that have made the growth of BPO centres possible. The government wants to decentralise economic activity to benefit the countryside. But BPO firms are heavily clustered in Manila not just because of the tax perks, but also because the capital has both the infrastructure, including internet connections, and a pool of potential agents.

Last year, the American Chamber of Commerce in the Philippines warned decentralisation might “constrain growth” by forcing BPO companies to set up in areas that are “lacking facilities and a skilled workforce”. Foreign companies might either scale back expansion or not set up centres at all, it said.

Last month, the Information Technology and Business Process Association of the Philippines added: “While some IT-BPM [information technology and business process management] has been successful in expanding to provinces, this is primarily driven by voice services. However, as the industry pivots to digital, talent availability for mid- to high-level complexity work has been predominantly limited to metro cities such as Manila and Cebu.”

In a statement, the Contact Centre Association of the Philippines (CCAP) said the shift to provincial eco-zones “is causing some concerns within the industry”, and it called for “more dialogue” between the sector and government.

But authorities have so far rejected industry appeals to lift the ban on Manila eco-zones. Philippine Star business columnist Rey Gamboa recently wrote that in implementing the administrative order, “the government seems to have turned down 159 billion pesos [US$3.05 billion] in potential foreign investments and let go 50,000 jobs, and put at risk another 34.23 billion pesos in the BPO sector”.

He said that for the government, “the promise of much higher revenues [from gambling] is just too good to resist”.

The CCAP said BPO growth slowed to 5.1 per cent in 2018 instead of the projected 8 per cent, partly because some investors adopted a “wait-and-see stance” over decentralisation.

Pogos and decentralisation are relatively new worries for BPO firms. A threat that’s been hanging over the industry for years is AI – the replacement of Filipino agents by machines and software.
Rajneesh Tiwary, chief delivery officer at Sutherland Global Services, told Reuters: “I don’t think our excellent command of spoken English is going to really be a protection in five, 10 years from now. It [won’t] matter.”

Barbara Cuyugan de Jesus, senior director for operations at BPO company Alorica, told This Week In Asia “there are companies that have reduced head count – before they needed 1,000 [agents], now they only need 300”.

IV. POGO news and trends:

 

June 30, 2016: Duterte says online gambling must stop, in ABS-CBN News:

President-elect Rodrigo Duterte said Thursday he would stop online gambling operations and ordered regulators to revoke all licenses “soon.”

“I do not want a proliferation of gambling activities all over the country. Mahirap yan,” Duterte said during a televised Cabinet meeting in Malacanang.

“Online gambling must stop. It opened up a lot of avenues. It’s out of control… Kung saan saan na lang nag-sprout. In Davao, I stopped it in time,” he said.

Duterte said earnings from the Philippine Amusement and Gaming Corp., the state gambling regulator, would be used to fund health services for the poor.

August 24, 2016: Duterte sets conditions for online gambling to resume, in ABS-CBN News:

President Rodrigo Duterte said on Wednesday he would allow online gambling to resume if correct taxes are paid and operations are moved away from schools and churches.

Duterte also renewed his criticism against PhilWeb Corp. owner Roberto Ongpin as an “oligarch” who must be stopped. The gaming café operator suspended operations earlier this month after regulators refused to renew its license.

December 22, 2016: Duterte says to order closure of all online gaming, in ABS-CBN News:

President Rodrigo Duterte said Thursday he was ordering the closure of online gaming operations in the country, sending gaming stocks on a tailspin.

Shares of PhilWeb Corp. fell 30 percent while Leisure and Resorts World dipped 20 percent after the President’s declaration, which came less than an hour before the market closed.

The President took a tougher stand after he declared in August that online gaming could resume as long as regulations are strictly enforced.

PhilWeb is applying for a new license after regulators refused in August to renew its authorization to supply software systems to gaming cafes. Its former chairman, tycoon Roberto Ongpin, resigned and divested from the company after Duterte branded him as an oligarch who must be destroyed.

“I am ordering the closure of all online gaming,” Duterte said in a speech at the presidential palace.

The President cited corruption in the granting of gaming licenses which he claimed amounted to P300 billion.

“’Yung ma-appoint sa PEZA [Philippine Economic Zone Authority], he gets about P300 billion selling the umbrella-type of license…Mabuti nalang nalaman ko ‘yan,” he said.

March 6, 2017: Atong Ang wants gaming, gambling laws fixed, in CNN Philippines:

Gaming tycoon Charlie ‘Atong’ Ang said Monday amendments should be made to gaming and gambling laws in the Philippines.

“Batas ang problema natin dito. Dahil sa walang malinaw na batas. Dapat magkaroon talaga. Tama yung pinag-uusapan sa Congress.” Ang said in CNN Philippines’ The Source.

[Translation: We have a problem with the law, because there is no clear law. And there should be [clear laws]. The Congress plenaries were right. ]

The businessman explained that despite all of his gaming businesses being above board, he still has to argue their legitimacy–to the point of filing cases in court.

May 8, 2017: As Philippines joins China to fight illegal gambling, more scrutiny of casinos likely, in DZRH:

In their first joint exercise, Philippine and Chinese authorities cracked a transnational cyber gambling operation in April, shutting four illegal websites run out of the Philippines, arresting 99 people and freezing more than 1,000 bank accounts, China’s Public Security Bureau said.

Martini Cruz, chief of the Philippines National Bureau of Investigation’s cyber-crime division, told Reuters authorities were preparing further raids in May targeting illegal betting and online fraud originating in the Philippines and targeted at Chinese gamblers.

“We have been visited by Chinese police to crack down on these illegal gambling operators. They are also targeting possible fugitives who have made our country a sanctuary,” Cruz said.

So far, the crackdown has not targeted proxy betting, which is permitted in licensed casinos in the Philippines and has contributed to a boom in VIP revenues. Casinos in the country raked in nearly $3 billion in overall revenue last year.

May 8, 2017, Impressing Duterte, in Biz Buzz, Philippine Daily Inquirer:

But Biz Buzz has learned that his outburst last week might be due more to a powerful piece of paper signed not too long ago by no less than President Duterte. We’re talking about the President’s ominously numbered Executive Order No. 13 titled “Strengthening the fight against illegal gambling and clarifying the jurisdiction and authority of concerned agencies in the regulation and licensing of gambling and online gaming facilities, and for other purposes.”

The EO’s title is quite a mouthful, but it really signals just one thing: A massive crackdown on illegal gambling—something that previous presidential administrations tried to stop or suppress, but failed. And in this latest effort, President Duterte has put in charge one of his trusted men at the Office of the President, Undersecretary Jesus Melchor Quitain, the former city administrator of Davao City.

According to the EO signed into effect last February (but only coming to light recently), Quitain is the new sheriff in town in charge of the fight against illegal gambling. As such, all government agencies involved in gambling as well as special economic zones which have their own charters that allow online gaming will—you guessed it—report to him.

The EO was meant to, among others, rein in the proliferation of online gaming operations that have sprouted surreptitiously across the country, but which don’t yield any meaningful benefits to the government in terms of taxes and royalties.

The state-owned Philippine Amusement and Gaming Corp. now also coordinates with Quitain in the drive against illegal online gaming, having managed to kill fly-by-night operations by mandating new licensing requirements for the industry.

And here lies the root of the Atong Ang-Kim Wong dispute, we’re told. Wong—the country’s largest casino junket operator—was able to secure Pagcor licenses for his online gaming operations, making them fully legitimate. His business rivals, however, were not able to turn a new page, either because they were unable to apply or failed to meet regulatory requirements, sources told Biz Buzz.

And because of this, Ang is now in the crosshairs of Quitain whose mandate is to stamp out illegal gambling.

November 7, 2017: Is POGO good for the country?, in Philippine Star:

Andrew Tan’s Megaworld Corp., which is among the top, if not the top lessor of office space in the country, for one, is reaping the rewards of this new and growing segment.

Megaworld senior vice president Jericho Go said the company has already leased 80,000 square meters to four POGO operators.

“They need space for their back office, customer support operations, IT and technical support.

POGOs require three categories of office space. Category one are those that have live streaming where there are ladies that serve as dealers for online games. Category two and three, meanwhile, are sub sectors of the business process outsourcing (BPO) industries which provide back office support.

“So for example, if there are questions on how a game is played online, they will provide clarifications. That is why you need a lot of Chinese and Mandarin proficient people and that is why they require a lot of office space. And in the same manner, if they have difficulties, if for example the website is down, there has to be an IT guy,” Go explained.

One POGO license requires a minimum of 10,000 square meters of office space.

David Leechiu, a known property consultant, said demand would continue to grow as POGO grows.

“There is strong office take up in 2017 despite softening of IT-BPM demand,” Leechiu said.

He said that in 2016, online gaming accounted for 56,000 sqm of office space, while as of end- August, online gaming already accounted for 125,000 sqm.

The demand is expected to pick up as Pagcor has indicated that it would issue more licenses.

January 25, 2018: Duterte: I asked ‘top gambler’ Atong Ang to help PCSO, in CNN Philippines:

In a speech before he left to attend the Association of Southeast Asian Nations – India Summit on Wednesday, Duterte said he called Ang to make the request.

“Tinawagan ko ‘yan siya. Sinabi ko, ‘Atong, ikaw ang number one na gambler dito sa Davao. Hawak mo lahat,’ ” Duterte said in a speech on Wednesday before leaving to attend the “Pumunta ka doon sa PCSO, hintuin mo ‘yang lahat ng illegal at tulungan mo ang gobyerno.”

[Translation: “I called him. I said, ‘Atong you are the number one gambler here in Davao. You hold everything. Go to PCSO, stop everything illegal and help the government.”]…

Duterte said he discouraged his “friend,” Ang, from starting jai-alai operations in Davao City when he was mayor. Results of jai-alai matches were often used for gambling purposes.

“Sabi ko sa kanya, ‘kaibigan tayo. Huwag mong pilitin ‘yan. Mag-aaway lang tayo,'” Duterte recalled.

[Translation: “I told him, ‘we’re friends. Do not insist on that or we will have a fight.'”]

February 7, 2018: Pagcor shuts doors on new casino applicants after Duterte orders moratorium, in Philippine Daily Inquirer:

Philippine gaming regulators have imposed a moratorium on new casinos operations after President Rodrigo Duterte raised concerns about their “proliferation”, the ongoing lucrative boom in the local industry notwithstanding.

In an interview with reporters, Philippine Amusement and Gaming Corp. chair Andrea Domingo said only firms which submitted their applications before the President’s order to her last month — including a new casino in Clark, Pampanga owned by Davao-based businessman Dennis Uy — would be considered for approval.

February 8, 2018: Foreigners interested in PH-based offshore gaming operations – Pagcor, in Manila Bulletin:

Foreign online casinos have expressed interest to put up shops in the Philippines while government revenue from offshore gaming licenses is expected to nearly double this year, the Philippine Amusement and Gaming Corp. (Pagcor) said.

March 16, 2018: GLI to check POGO licence holders in the Philippines, in Reviewed Casinos:

Gaming Laboratories International has announced that it has been approved as the first independent accredited gaming test laboratory authorised to complete IP blocking certificates for holders of Philippine Offshore Gaming (POGO) licenses.

Such licensees are required by Philippines decree to block access to citizens of the Philippines, and the certificates are their monitored assurance that this has been done.

GLI says its testing and resultant certificates were undertaken in accordance with a memorandum issued by the Philippine Gaming and Amusement Corp. (Pagcor) to all POGO Licensees, requiring them to ensure that their IP address(es) used for offshore gaming operations were not accessible within the jurisdiction of the Philippines, on or before March 15, 2018.

May 4, 2018: Chinese Money Triggers a Dizzying Rally in Manila Property, in Bloomberg.

June 29, 2018: Island Cove Closing Down, New Owners To Take Over Property; The leisure park south of Manila has been operating for 20 years, in Entrepreneur Philippines:

Island Cove Hotel and Leisure Park (ICHLP) is closing down after 20 years of operations. Its last day will be on July 28, 2018.

The resort located in Binakayan, Kawit, Cavite made the formal announcement via Facebook and Twitter on Friday, June 29, although a report about the closure was published as early as Monday, June 25, by the government-run Philippine News Agency (PNA)…

According to the PNA report, the closure is “in line with the purchase conditions agreed upon with the still unnamed new owners.”

Former Cavite governor Juanito Remulla first opened Island Cove as Covelandia in 1976. It closed down 10 years later and reopened in 1997 as ICHLP. Remulla’s son Gilbert, a former broadcast journalist and former representative of the second district of Cavite, took over operations in 2007.

July 11, 2018: Assessing Duterte’s China investment drive: Separating the PRC and Hong Kong when calculating Chinese investment in the Philippines has major consequences, in The Interpreter:

Fourth, FDI projects outside the original $24 billion aid and FDI deals have already begun. Some examples include the purchase by Jack Ma’s Ant Financial of a substantial minority stake at Globe Telecoms…; the opening of 50 smaller offshore gambling companies in the Philippines; and Philippine Phoenix Petroleum’s agreement to build a Liquified Natural Gas container with China National Offshore Oil Corporation (CNOOC). In one recently concluded major FDI deal, Industrial and Commercial Bank of China (ICBC), which failed to invest in the Philippines during the Arroyo administration, just received permission to start operating.

July 26, 2018: Hong Kong group to build Manila casino despite Duterte ban, in Asia Nikkei Review:

Hong Kong-listed Landing International Development has won a permit to build a $1.5 billion resort with a casino in the Philippine capital’s entertainment district.

In a statement on Wednesday, Landing said it secured a provisional gaming license from regulator Philippine Amusement and Gaming Corp., or Pagcor, to build the integrated resort. A groundbreaking ceremony has been set for Aug. 7.

Pagcor confirmed in a statement on Thursday that it had granted the provisional license but said the Landing resort will not be able to open before 2022 in order to comply with a five-year halt on new casino permits in the Manila Bay entertainment district.

September 30, 2018: Philippines ‘steps up’ crackdown on illegal online gambling, in CalvinAyre.com:

Online gambling operators in the Philippines face a grim future if they continue to operate without a local license, according to the country’s gambling regulatory body.

October 22, 2018: Cancel Boracay casino licenses, TF tells Pagcor, in BusinessWorld:

THE Boracay Inter-Agency Task Force (BIATF) has requested the state-owned Philippine Amusement and Gaming Corp. (Pagcor) to pull the licenses of all casinos in the island paradise.

The request, as contained in an undated letter sent to Pagcor Chairman Andrea D. Domingo, also covers casinos that operated before the closure of Boracay on April 26. The letter to Domingo, a copy of which was obtained by the BusinessMirror, was signed by BIATF Chairman Environment Secretary Roy A. Cimatu, and Vice Chairmen Interior Officer in Charge Eduardo M. Año and
Tourism Secretary Bernadette Fatima Romulo Puyat.

“In view of the pronouncement of President Rodrigo Roa Duterte that no casino shall be allowed in Boracay Island, and in the light of the mandate given to it through
Executive Order [EO] No. 5, Series of 2018, the [BIATF] requests that any and all gaming franchise/s and/or provisional license/s in Boracay Island shall be canceled by your good office,” the letter said.

October 25, 2018: Duterte new threat to ‘suppress’ Philippine online gambling, in CalvinAyre.com:

On Thursday, Duterte’s Chief Presidential Legal Counsel Salvador Panelo told Rappler that “as far as I know, [Duterte’s comment] refers only to illegal online gambling.” That contradicts Duterte’s exact words, which, translated from Tagalog to English, read: “To hell with the contract [held by locally licensed operators], I told you I do not want gambling, period.”

It bears mentioning that this is hardly the first time that Duterte has issued such threats. In July 2016, within hours of being sworn into office, Duterte issued an ultimatum that “online gambling must stop.” That December, he ordered “the closure of all online gambling … All of them. They have no use.”

But in 2017 Duterte issued an executive order (EO) that eliminated the Philippines’ multi-jurisdictional online licensing scheme in favor of the new Philippine Amusement and Gaming Corp (PAGCOR) Philippine Offshore Gaming Operator (POGO) license category.

Duterte’s reference to ‘online bingo’ also recalls his aggressive campaign against local eGames and eBingo operator PhilWeb, which offers ‘online’ gambling to local residents via digital terminals in retail shops across the country, while the POGO industry is strictly focused on international gambling markets.

Moreover, Duterte’s Wednesday comments regarding extortion and kidnapping appear to refer to incidents stemming primarily from land-based gambling. Such incidents have plagued Manila’s casino operators since their launch a few years ago.

Duterte even referenced the Okada Manila casino by name, saying “look at Okada, all the kidnappers, extortionists, scalawag policemen, they kidnap right there in the hotel room. They call the family. “You don’t want to pay?” Then they will kill them.”

October 26, 2018: China’s rise, new immigrants (??): Impact on the Philippines, in Tulay:

“Because of improving diplomatic ties with China, residential sales are no longer dominated by OFW (Overseas Filipino Workers) buyers but by buyers from the mainland,” wrote LPC. “Residential projects notably in the Bay Area, Makati, Manila, Ortigas, and Quezon City, and in other areas near POGO (Philippine Offshore Gaming Operators) locations and existing Filipino-Chinese are experiencing brisk take-ups of 12 [condominium] units a month.”

This heightened demand from Chinese buyers “will continue to push property prices up,” most especially in the Manila Bay Area. LPC revealed that at least 70 percent of the tenants in the Manila Bay Area’s residential projects are Mainland Chinese, compared to only 25 percent for Filipinos and five percent for other foreign nationalities.

The analyst provided three condo projects in the Bay Area as examples—Federal Land’s Bay Garden Club and Residences, SM Development Corp.’s Sea Residences, and Anchor Land’s Solemare Parksuites. These three developments saw their prices surge by 200 percent, 164 percent, and 74 percent, respectively, since their launch 10 years ago.

LPC also pointed out how many of the country’s major real estate developers are taking notice. For Ayala Land, Chinese investors were responsible for 34 percent of its sales in 2017, more than tripling from the year prior. SM Development Corp. also revealed that 30 percent of its residential sales for the first quarter of 2018 were from Chinese investors, a surge from 10 percent in 2017 and less than five percent in 2016.

November 10, 2018: Du30 says EO not needed for no-casino policy in Boracay, in Panay News:

President Rodrigo Duterte said there is no longer a need for him to issue an executive order (EO) declaring Boracay free from casinos.

“No. I’ll just say huwag na lang. Anyway it’s a privilege, whether I put it in writing or say it verbally,” Duterte told reporters in a chance interview on Thursday.

November 28, 2018: PH, China cooperation against illegal online gambling a must – Locsin, in UNTV:

“Two law enforcement agencies will be able to coordinate without it looking as we had surrendered our sovereignty,” the Foreign Affairs secretary said.

During Wednesday’s deliberation of Locsin’s confirmation, senators expressed concern that Filipino workers will end up competing with illegal aliens seeking for employment opportunities in the country.

December 12, 2018: How China’s love of online betting is boosting the Philippine property sector, The Star MY:

Warmer relations between Beijing and Manila under President Rodrigo Duterte have underpinned the influx; Chinese gaming firms took up 30% of the 775,000sq m of office space built in the Philippine capital last year.

But it is not just the commercial real estate segment that has benefited from the boom. Many of the gaming companies have bought flats for their workforces, estimated at between 100,000 and 200,000 people in total…

Beijing began a crackdown on Macau casinos in 2014 to stem the flow of capital from mainland China amid a declining yuan and to reduce illicit funds entering the casino hub. The crackdown has led Chinese gambling operators to look beyond Macau for revenues, and with Beijing’s improved relations with Manila, the Philippines has captured a significant portion of this expansion.,,

Colliers International said the recent property boom could mainly be traced to the expansion of offshore gaming firms entering three areas of the capital – Fort Bonifacio, the Bay Area, and the Makati central business district.

“Since the fourth quarter of 2016, the offshore gaming sector has been a major contributor to office space demand in Metro Manila,” said Joey Bondoc, Philippines research manager at Colliers International.

From 80,000sq m in 2016 to 296,000sq m in 2017 – more than a third of the total – the segment’s office take-up reached 280,000sq m in the first three quarter of 2018, and represented a quarter of all property deals between January and September, he said.

As of September, apartment sales in the pre-selling market – units that are under construction – had reached 42,000 units in Metro Manila, up from 38,000 units in the same period of 2017.

Developers have been ramping up completion of new flats, with 31,000 units launched between January and September, higher than the 22,600 units in the same period last year.

Chinese investors, Bondoc said, preferred to buy studio and one-bedroom flats with sizes ranging from 24sq m to 44sq m each and located in Manila’s Bay Area and Fort Bonifacio, the business district closest to Makati. These units fetch between US$3,770 (RM15,800) and US$5,280 (RM22,000) per sq m.

Hong Kong-based boutique real estate equity fund Arch Capital has recently bought two assets in the Philippines: an office building in Makati and an office development in Cebu City, the second largest metropolitan area after Metro Manila and known as the main business centre in the Visayas region.

December 15, 2018: China holds the cards as online betting booms in the Philippines, in South China Morning Post:

The promises are irresistible to any young Chinese jobseeker: a work visa in the Philippines, with wages of up to 10,000 yuan (US$1,458) a month in the first year, rising to 14,000 yuan and 17,000 yuan in the second and third years.

Education and work experience is not required. There’s free accommodation in an upscale condominium; five meals a day; and 15 days of annual leave with return flights provided. And don’t worry about not speaking any English…

In August, The Beijing News published a report exposing how Chinese workers lured to the Philippines online gambling scene had their passports confiscated so they could not escape from the country; were crammed into tiny bedrooms; not allowed to have meal breaks of longer than 30 minutes; and were banned from going to the toilet for longer than 10 minutes.

The workers described the Pasig City building they worked at – home to numerous online gambling companies and guarded by security personnel with guns – as an “Oriental prison”.

December 22, 2018: Chinese workers ‘flood’ the Philippines, yet Duterte’s officials ‘don’t know’ how many there are, in South China Morning Post:

The two-hour senate hearing failed to uncover just how many Chinese workers had come to the country to live and work since Duterte took office in 2016.

Still, according to data obtained by This Week in Asia, Chinese nationals are working legally in online gambling as well as in sectors where Filipinos are qualified – such as manufacturing and construction. The constitution enjoins the state “to promote the preferential use of Filipino labour”.

The 53,311 AEPs issued by DOLE from 2016 to May 2018 include 18,557 permits given to Chinese nationals in “administrative and supports service activities”; 10,560 in “arts, entertainment and recreation”, which includes gambling, online and offline; 7,754 in “information and communication”; 4,716 in manufacturing; and 2,884 in construction.

January 30, 2019: Domingo wants Duterte to relax ban on new casino licenses, in Asia Gaming Brief:

Andrea Domingo, head of the Philippines’ gaming regulator, said she hopes the president can relax his ban on new casino licenses, fearing the country would lose out on lucrative foreign investment, according to a report from Bloomberg.

“Gaming seems to be the sunrise industry now in Asia,” said Domingo in an interview on Tuesday with Bloomberg. “There are still areas in the Philippines that can still absorb and benefit from these investments, which won’t go here with the current ban.”

During the interview, Domingo said she plans to ask the President as early as this week to implement a selective ban on casino licenses, rather than the current blanket ban.

She would recommend that the ban would be in force in areas not accessible to foreign travelers, thereby alleviating the issue of problem gambling amongst Filipinos.

February 4, 2019: PAGCOR Chief disagrees with President Duterte over new casino ban, in European Gaming:

Andrea Domingo, the Head of PAGCOR, the Philippines gaming regulator, expressed his opposition to President Rodrigo Duterte’s ban on the issue of new casino licenses. She said that the country will fall behind other Asian hospitality industry if the ban stays.

March 5, 2019: Duterte under the gun over Chinese influx into Philippines, in Nikkei Asian Review.

March 21, 2019: How Chinese Investors are Making Philippine Real Estate More Expensive, In Esquire Philippines:

“Because of improving diplomatic ties with China, residential sales are no longer dominated by OFW (Overseas Filipino Workers) buyers but by buyers from the mainland,” wrote LPC. “Residential projects notably in the Bay Area, Makati, Manila, Ortigas, and Quezon City, and in other areas near POGO (Philippine Offshore Gaming Operators) locations and existing Filipino-Chinese are experiencing brisk take-ups of 12 [condominium] units a month.”

This heightened demand from Chinese buyers “will continue to push property prices up,” most especially in the Manila Bay Area. LPC revealed that at least 70 percent of the tenants in the Manila Bay Area’s residential projects are Mainland Chinese, compared to only 25 percent for Filipinos and five percent for other foreign nationalities.

The analyst provided three condo projects in the Bay Area as examples—Federal Land’s Bay Garden Club and Residences, SM Development Corp.’s Sea Residences, and Anchor Land’s Solemare Parksuites. These three developments saw their prices surge by 200 percent, 164 percent, and 74 percent, respectively, since their launch 10 years ago.

LPC also pointed out how many of the country’s major real estate developers are taking notice. For Ayala Land, Chinese investors were responsible for 34 percent of its sales in 2017, more than tripling from the year prior. SM Development Corp. also revealed that 30 percent of its residential sales for the first quarter of 2018 were from Chinese investors, a surge from 10 percent in 2017 and less than five percent in 2016.

March 25, 2019: Philippine finance chief asks Pagcor to clarify POGO wages, in CDC Gaming Reports Inc.

April 5, 2019: PAGCOR: 3 POGOs left town due to higher taxes, in CalvinAyre.com:

It’s unclear if these POGOs left due to increased taxes on their operations, or on their employees. PAGCOR has been working with the recently revealed task force to tally up lists of foreigners who might not be paying their fair share.

Either way, it doesn’t speak well of PAGCOR’s total operation that these POGOs, which were licensed by the regulator, were either allowed to do so with an operation that did not meet the country’s tax laws in the first place, or then experienced tax increases they could not have anticipated. It would be a bit more impressive if the three operations that had left the country were operating entirely illegally.

That is happening as well, to some degree. After busting an illegal gambling ring, the Bureau of Immigration then stopped it again when they discovered it was continuing to operate from jail.

April 12, 2019: Demand for PH offshore gaming office space soars in Q1 2019, in Rappler:

Office space demand from Philippine offshore gaming operators (POGO) surged by 118% year-on-year to 106,000 square meters (sqm) in the first quarter of 2019, according to property consulting firm Pronove Tai…

April 24, 2019, Philippines Cracks Down on illegal Gaming Workers, in Asia Sentinel:

The Philippines has belatedly begun a crackdown on the tens of thousands of Chinese workers who have swarmed into Manila illegally to work in the teeming offshore gaming industry, with Labor Undersecretary Ana C. Dione reporting on April 22 that as many as 130,000 workers in so-called POGO firms are unregistered with the Bureau of Internal Revenue and aren’t paying taxes to the Philippine government.

A review of 88 companies in the Philippine Offshore Gaming Operators (POGO) sector found that only 16,550 workers have been issued work permits, with another 7,411 issued alien employment permits, according to the bureau. The unregistered workers are estimated by the Bureau of Internal Revenue to be costing Philippine coffers as much as PHP22 billion (US$421 million annually, with foreign workers being paid the equivalent of RMB10,000 (US$1,488) per month.

Earlier, President Rodrigo Duterte claimed there could be as many as 300,000 Chinese workers in the offshore gaming industry which has become a huge draw for mainland Chinese who want to gamble online. And while that figure may be a substantial overestimate, having 130,000 in the country, not paying taxes, has raised red flags.

Nonetheless, the industry is kind of the modern equivalent of the swarms of Chinese who moved to the west coast of the United States in the 1850s for what they called “Gold mountain” to work in California gold mines. These are jobs that, while there is almost certain to be exploitation, are far better than the Foxconn assembly factories in Dongguan. They are likely also to keep increasing unless the Chinese government becomes increasingly alarmed at the losses pouring out of Chinese consumers’ credit cards and into the coffers of the POGO companies.

May 12, 2019: Philippines Leader Rodrigo Duterte Announces Hands-Off Policy on Many Forms of Gambling Just Before National Election, in Casino.org:

Online casino operations in the Philippines have led to stepped up enforcement by authorities in China.

Earlier this month, Chinese police broke up a $312 million gambling ring recently working out of China’s Anhui Province that was associated with a sports betting website based in the Philippines. At least seven suspects were arrested by authorities investigating the online scheme.

More than 170 alleged illegal internet gaming enterprises have been raided by federal law enforcement agencies in the Philippines over the last two years. Some 100,000 Chinese foreigners also are in the Philippines helping to facilitate the illegal enterprises, authorities claim, with most of the operations targeting the Chinese market.

May 13, 2019:  Philippines President Duterte Backs Down from Fight with Gambling Sector, in VegasSlotsOnline.com:

The Philippines has embraced its gambling sector for many years, but Duterte in recent times has railed against it.

A government moratorium led to numerous high-profile shutdowns of casino resort development projects.The moratorium, which came into effect in January 2018, means no more resort casinos will be built.

Confusingly, the Philippines Amusement and Gaming Corporation (PAGCOR), which regulates the gambling sector, issued two resort casino licenses after that date. However, Duterte eventually said the two licenses would not be valid. The president’s statement came after development had already begun.

One of the licenses was for the Galaxy Entertainment Group, which was in the process of building a new resort casino on Boracay. However, shortly after development began, President Duterte said no casinos would be allowed on the island.

Also blocked was a $1.5bn resort casino in Manila being developed by Landing International Development. News of the project’s shutdown came mere minutes after ground was broken on the project.

There has been no indication as to whether or not the ban on new resort casinos will continue.

There were also allegations that a lot of foreign workers coming to the Philippines to work in the gambling sector were not paying proper taxes. Most of these workers were from China. This has led to the authorities putting in place a tax on foreign casino workers.

May 26, 2019: Locsin says Xi Jinping wants Duterte to crack down on online casinos: It’s money laundering, in Bilyonaryo:

Foreign Affairs Secretary Teddy Locsin said China has asked the Duterte administration to deal with the online gaming which it believed was being used to clean dirty money from China.

“China wants us to crack down on online gaming. They see it as money laundering,” said Locsin in a tweet…

Philippine Amusement and Gaming Corp. has approved 57 Philippine Offshore Gaming Operations since President Rodrigo Duterte took over in 2016. The Department of Finance has initiated a crackdown on the hundreds of thousands of online casino Chinese workers in the Philippines by making punishing those without working permits and penalizing them for failing to pay their taxes.

June 2, 2019: Why are Chinese workers so unpopular in Southeast Asia?, in South China Morning Post:

Xu says he and his immigrant friends all believe Filipinos are generally friendly and the Chinese in the country rarely ever feel like outcasts.

But last month he had the shock of his life when he walked out of a restaurant in Manila’s Chinatown, in Binondo district, and saw five Filipinos on motorbikes all pointing guns at him and two friends.

“I didn’t know if they wanted to kidnap me or rob me,” Xu, now 39, says. “My friend was forced to the ground and one of the robbers was pointing a gun to his head. They took my stuff and left. We started yelling but they fired a shot in the air and warned us not to follow. I was scared.”

July 2, 2019:  Landlords big winners as Philippines bets on Chinese gaming boom, in ABS-CBN News:

Tessie, her husband and their adult son recently vacated their home of 37 years in a Manila suburb to make way for some unfamiliar tenants – 20 Chinese nationals.

It wasn’t an easy decision to let out their 5-bedroom home, but for 140,000 pesos ($2,730) a month in rent – nearly three times the norm in their middle-class neighborhood – it was an offer too good to refuse, said Tessie. She declined to be identified by her full name.

Like Tessie, many Filipino landlords are laying out welcome mats for the surging number of Chinese coming to Manila to work in online gaming companies taking sports and casino bets, undeterred by simmering anti-China sentiment and a common perception that Chinese are taking Filipino jobs.

“I was afraid at first because I heard so many bad things abut Chinese tenants but I was convinced later on when my friends told me they were doing the same”, said Tessie.

“It’s benefiting people like me who need to earn”, said the 63-year-old housewife.

Her home is close to a two-tower office building where five of the nine floors are used by Chinese gaming firms. A Chinese restaurant and Chinese tea shop downstairs do brisk trade.

Such arrangements are now commonplace across the business hubs of Manila, where Chinese gaming firms are capitalizing on the Philippines’ liberal gaming environment and an insatiable appetite for gambling in China, which forbids all types of betting.

July 8, 2019: Dominguez confirms POGO deal: Over 100,000 Chinese employees to pay income tax, in Philippine Daily Inquirer:

The head of the Duterte administration’s economic team and the largest online gaming operator in the country have agreed on a framework that will align the wages of over 100,000 Chinese workers in the industry with Philippine income tax laws.

July 8, 2019, “Pogo Island” tales, in Biz Buzz, Philippine Daily Inquirer:

July 9, 2019: Crackdown on illegal Pogo operators looms, in Philippine Daily Inquirer:

Firms legally engaged in the booming Philippine offshore gaming operations (Pogo) will help the government crack down on fly-by-night operations that could be employing as many as 50,000 undocumented workers from China— a result of the deal sealed recently between the industry and the Department of Finance (DOF).

July 10, 2019: POGOs seen to edge out BPOs as top PH office space takers by yearend – property consultant, in CNN Philippines:

LPC said offshore gaming has been the fastest growing industry in the local office market since President Rodrigo Duterte took office in 2016, with POGOs only coming in at a close second to BPOs in the first half of 2019 in the demand for offices.

BPOs accounted for 37 percent of the take up of 775,000 square meters (sqm) of office space in the first half of 2019, occupying 284,000 sqm, while POGOs occupied 253,000 sqm, with substantial take up in Bay City in Pasay, Makati and Alabang in Muntinlupa.

POGO firms’ demand for office spaces in Metro Manila have steadily increased in the past three years, from a mere nine percent share to 36 percent in the first half of 2019, when they took up 242,000 sqm, while BPOs took up 244,000 sqm of office spaces.

The uptick of POGOs in Metro Manila have also sent residential condominium rates skyrocketing by as much as 80 percent in Bay City in the last three years.

“Prices of studio units have increased from ?18,000 in 2015 to ?32,000 per unit per month in the first half of 2019. One bedroom units have gone from ?25,000 back in 2015 to ?55,000 per unit per month, while a two-bedroom unit’s price rose from ?55,000 to ?90,000 per unit per month,” the LPC report said.

LPC expects that once office dpace supply dwindles in Bay City, POGOs would head to Quezon City, which is currently dominated by BPOs. Only one percent of office space in Bay City and Alabang remains vacant in the first half .

POGOs have also expanded outside Metro Manila, having taken up a total of 130,000 sqm of office space in Laguna, Cebu City, Clark in Pampanga and Cavite since 2016. LPC predicted that POGOs would expand further in other cities with the completion of infrastructure projects.

Ongoing infrastructure developments in Clark under the Duterte administration’s “Build, Build, Build” program have turned it into the most favorable area outside Metro Manila for BPOs and POGOs.

July 12, 2019: Offshore gaming ‘here to stay’ as gov’t eyes P20-B haul, in ABS-CBN News:

Offshore gaming operations or POGOs are “here to stay,” and poised to deliver up to P20 billion in revenues as they submit to Philippine laws, the country’s gaming regulator said Friday.

The Philippines’ “very good model” encouraged up to 59 POGOs to set up shop. Recent rules that were finalized cover personal and corporate income taxes, the establishment of POGO hubs and setting 3-year and 5-year licenses to operate, said Philippine Amusement and Gaming Corp Chairman Andrea Domingo.

The offshore gaming operations delivered P11.9 billion in revenues from 2016 to 2018 with P8 billion more expected in 2019, Domingo told the Phil-Asian Gaming Expo, a 3-day event, billed as Asia’s largest gaming expo.

July 12, 2019: PAGCOR chief eyes P8-B revenues from POGO in 2019, in Philippine News Agency:

In her speech during the opening ceremony of the first-ever Philippine Asian Gaming Expo (PAGE) at the SMX in Pasay City, which will be held until July 14, 2019, Pagcor Chairman Andrea Domingo said the expected collection from Philippine offshore gaming operators (POGO) this year will be on top of the PHP12 billion collected from 2016 to 2018.

She explained that in the previous years, the government was only able to collect about PHP56 million annually from the sector because the regulator “had a hard time to fully understand what the operator is, and what the service providers are, and how we can have an audit platform that will be independent and will assure us that the government is collecting the proper revenues.”

“In the last two years, we have concentrated on making enough rules and regulations to attract those who will otherwise be declared as illegally operating to go into the fold of the law and operate legally,” he said.

On Wednesday, officials from various government agencies like Pagcor, the Department of Finance (DOF), Department of Labor and Employment (DOLE), Bureau of Internal Revenue (BIR) and the Department of Foreign Affairs (DFA) signed a joint memorandum circular aimed at leveling the playing field through the more stringent implementation of labor regulations on foreigners working in the Philippines.

July 12, 2019: Manila hosts Asian gaming expo as Chinese expats under scrutiny, in ABS-CBN News:

Government agencies recently agreed on regulations for foreign workers and the Department of Finance said they should also pay proper taxes.

The PAGE event in Manila will be an opportunity for gaming industry professionals to “touch base” with regulators like PAGCOR, the Bureau of Immigration, the Department of Labor and Employment and local government units, according to the statement.

Participating companies include Playtech, Oriental Game, Hongtu Game, Global Entertainment, Tianhao, Good Gaming, UG Group, TC gaming, SA Gaming, VR Gaming, iSOFTBET, GPK, Titan Gaming, GuanJie Sports and World Network.

July 12, 2019: Gambling Operator to Build Two POGO Hubs in the Philippines, in Casino News Daily:

Philippine gambling company Oriental Group is building two online gambling hubs north and south of the capital Manila to help the country capitalize on its booming offshore gambling sector.

The two hubs will be able to host Philippine Offshore Gaming Operators (POGO) that are licensed by the Philippines’ gambling regulator, PAGCOR, to provide their services to customers located outside the country.

Oriental Group revealed that it is investing PHP8 billion for the development of a 20-hectare POGO hub in Cavite City in the south. The hub, the larger of the two, will be able to accommodate 20,000 workers.

The other hub is set to be developed in Clark City, north of Manila. The first phase of the project will occupy 10 hectares and will be able to accommodate 5,000 workers.

July 12, 2019: Philippines Plans to Set Up Hubs for Online Casinos, in Bloomberg:

“POGO is legal and is here to stay,” Domingo said, referring to Philippine offshore gaming operators. The industry employs about 138,000 mostly Chinese workers in online casinos catering to gamblers from the mainland and is poised to surpass call centers as Manila’s top new office space user this year.

Oriental Group, one of the POGO operators licensed by the Philippine Amusement & Gaming Corp., is building hubs in Cavite City in the south and Clark City in the north, Domingo said. Those operating in hubs will get a five-year gaming license against the regular 3-year permit given to others, she said.

Oriental is investing 8 billion pesos ($156.5 million) for the 20-hectare POGO City in Cavite that can accommodate 20,000 workers, said General Manager Kevin Wong. The first phase in Clark will be about 10 hectares and can host 5,000 employees.

See also: July 12, 2019: Pagcor: Government not inclined to impose higher taxes on POGOs, in Manila Standard.

July 22, 2019: Philippines Gambling Scene Troubled by Kidnapping and Fake Police, by Andrew O’Malley in VegasSlotsOnline:

*One case saw loan sharks kidnap a Chinese national after losing all borrowed funds at a casino

*The kidnappers demanded that his wife in China send $39,000 as ransom

*Another group was arrested for posing as police to extort money from an online gambling operator

July 22, 2019: Fourth State of the Nation Address of President Rodrigo R. Duterte:

Institutions that are the stewards of our resources and agents of development have long been a major source of public frustration. Drastic reforms within these agencies have yielded results. Our government-owned and controlled corporations (GOCCs), infamous for high salaries and bonuses being paid their executives and employees, have started to shape up. As of July 9, 2019, we collected more than P61 billion from GOCCs or government corporations, 32% of which, or P16 billion, from PAGCOR. [applause] This is more than the P36 billion collected in 2017. My salute to Andrea Domingo. [applause] Magpasugal ka pa, ma’am, nang marami. [laughter]

July 26, 2019: Belle net profit falls 11% amid competition from small-town lotteries, in BusinessWorld:

The company noted the strong revenue growth of integrated resort City of Dreams Manila was offset by the performance of Pacific Online Systems Corp., whose revenue dropped 49% to P558.8 million.

Pacific Online is 50.1% owned by Belle’s gaming subsidiary, Premium Leisure Corp. (PLC). It leases online betting equipment to the Philippine Charity Sweepstakes Office for the latter’s lottery and keno operations. Belle said competition from small-town lotteries mainly weighed down on the top line.

“Pacific Online is working closely with the Philippine Charity Sweepstakes Office and its network of agents to boost the attractiveness of the pari-mutuel games it offers, and is working to implement cost efficiency measures across its operations,” the company said.

July 29, 2019: Amid government’s crackdown on lotteries, Chinese gaming firms keep rising, in Interaksyon. Also see Duterte hits the jackpot as China fuels online gambling boom, in Asia Nikkei Review:

Backed by exploding demand for online gaming from mainland China — where gambling is officially illegal — the 56 licensed Philippine offshore gaming operators, or POGOs, are expected to rake in over $8 billion in revenue this year, nearly double what the country’s brick-and-mortar casinos, including the four flagship integrated resorts, took in last year.

The online gaming boom is attracting locally listed companies. Gaming technology company DFNN Inc. announced on July 17 that it had set up its own offshore gaming subsidiary, Nico Bayan.

Online casinos are growing so fast that they could overtake the $24.5 billion business process outsourcing industry — mainly comprised of call centers — as Metro Manila’s largest office tenant this year, according to POGO real estate brokerage Leechiu Property Consultants.

In the first half of the year, online casinos accounted for 36% of business tenant space, just behind outsourcing companies at 37%, said CEO David Leechiu.

“BPOs take nine months to do a lease, POGOs nine minutes,” said Leechiu. “Without POGOs, this market would have crashed.”

Surging gaming revenues also helped pour $313 million into Philippine government coffers in the first half of this year.

July 31, 2019: Inquirer Opinion (my column):

Yesterday, two friendly voices chimed in to try to stem the tide of popular speculation on the PCSO operational shutdown, since beyond a few official mumblings, the most the public had to go on was reminders that last year, the President pitched for that impressive specimen of integrity, Atong Ang, to take charge of cleansing the PCSO: a proposal so startling it even jolted then PNP chief Bato dela Rosa to denounce Ang, insisting the squeaky-clean police weren’t on the take from small town lottery (STL) operators. Ang had accused the cops of being on the take from STL operators; Bato clarified that what the cops got was a percentage that was legally mandated and given to the regional and national headquarters, and used in the antigambling campaign (Bato had been waging war on illegal gambling since 2017).

Friendly voice No. 1 was the Supreme Insider’s, Mon Tulfo. The President, he said, was fed up over trusted lieutenants (PCSO general manager Royina Garma, a retired police colonel, and that other glittering poster child of impeccable behavior, Sandra Cam, a member of the board) who were bickering over “who would collect the remittances from STL, lotto, Peryahan ng Bayan and Keno operators.” Garma wanted her office to do it; Cam wanted the board and the PCSO chair to do it. Cam had succeeded in ousting a previous chair, Jose Jorge Corpuz, but it seems her luck’s run out.

Tulfo also pointed out that STL franchises had “ballooned” in the current era: When it took over, there’d been 18 STL operators; now there are 85. These were, according to Tulfo, handed out by the retired officers appointed to PCSO to their mistahs from the PMA. The previous chair gave out four, the current chair’s given out one. But the alumni backslapping is nothing compared to former justice secretary Vitaliano Aguirre II, whom Tulfo says got six franchises.

Friendly voice No. 2 is our very own Jake Maderazo, who says the President acted because the receivables of the PCSO had ballooned (something noted last year by the Commission on Audit); Maderazo received information that, in recent weeks, PCSO efforts to collect have been hampered by “numerous restraining orders” issued by judges upon the request of “errant STL operators.” He broadly described what Tulfo was more specific about.

Read more: https://opinion.inquirer.net/122963/lord-of-the-flies#ixzz5wMDljmg5
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August 1, 2019: Lambino: There are Philippine Offshore Gaming Operator (POGO) operations from around the world who are thinking of coming here to the Philippines, in CNN Philippines.

August 5, 2019: Manila’s online gambling boom highlights pivot to China, in Financial Times:

The Philippines has welcomed Chinese migrants for centuries, but views of the Pogos are mixed. Estate agents say the sector is bidding aggressively for large blocks of office space and condos alike. Morgan Stanley, the investment bank, wrote in a recent research note that Pogos were set to overtake outsourcing as the largest consumer of office space in metro Manila this year.

“They have been renting huge spaces,” said Richard Raymundo, managing director for the Philippines with Colliers International, who said that Pogos currently accounted for nearly 30 per cent of commercial property transactions in Manila. “The impact has pushed up rents, both office and residential.”

With Chinese economic growth slowing, state-controlled media have hinted that Beijing — mindful of capital outflows — could also crack down on online gaming, meaning that some of the money and benefits could disappear….

Alvin Camba, a researcher at John Hopkins University, who studies the sector, said the Chinese embassy had cautioned tourists against working in the Pogos and tried to persuade the Philippines to limit investment in them. “If you look at the nature of investors in online gambling, the multinational nature of the enterprise, and the sophistication of their operations, it’s a group of very powerful firms outside the boundaries of any state,” said Mr Camba.

August 8, 2019: Self-contained POGO hubs aimed at separating Chinese workers from locals: PAGCOR, in Inside Asian Gaming:

The development of two self-contained gaming hubs set to house the operations of Philippine Offshore Gaming Operators (POGO) is aimed at limiting interactions between Chinese workers and local Filipinos, according to a PAGCOR official.

In an interview aired on Philippines television, PAGCOR’s Vice President of Offshore Gaming, Jose Tria, said the hubs are a response to complaints from Filipinos over alleged “unruly behavior” from POGO workers.

August 8, 2019: China urges PH gov’t to order crackdown on illegal recruitment of Chinese nationals in gambling sites, in CNN Philippines: China to Philippines: ‘Punish’ casinos, POGOs illegally recruiting Chinese, in ABS-CBN News: for full text, see Chinese Embassy statement on issues of Chinese citizens concerning gambling in the Philippines, in ABS-CBN News:

August 8, 2019: China’s Crackdown on Philippine Casinos Hits the Property Sector, in Bloomberg (see also: China Targets Philippines in Crackdown on Offshore Gambling).

*China warns citizens against cross-border gambling: embassy
*Megaworld falls most in two years, leading property share drop

August 8, 2019: Duterte administration reels as Beijing slams Manila for undermining its cross-border gambling crackdown, in South China Morning Post:

The administration of President Rodrigo Duterte appears to have been caught flat-footed by a strongly worded statement from the Chinese government, which called on Manila to “punish” Philippine offshore gaming operators (Pogos) as well as casinos illegally employing Chinese workers and mistreating them.
Presidential spokesman Salvador Panelo said: “They should file formal complaints so that this particular concern will be raised in the appropriate agencies of the government so we can properly respond.”…

The embassy was particularly ticked off by a recent remark from Jose Tria, vice-president of the Philippine Amusement and Gaming Corporation, that all Chinese nationals working in Pogos would be transferred to “self-contained” communities in a bid to address mounting complaints of their “unruly behaviour”.
In a television interview on August 6, Tria said the Pogo hubs would be set up to limit interactions “between Filipinos and foreign workers”…

A source told the South China Morning Post that the problems brought about by online gaming had been a topic of intense discussions between the countries since last year.

August 8, 2019: China says online casinos illegal but PH to continue collecting taxes from them, in Philippine Daily Inquirer:

The government will continue to collect taxes due from foreign—mostly Chinese—workers in Philippine offshore gaming operators (Pogos) and issue tax identification numbers (TINs) to those still unregistered even as the Chinese Embassy in Manila on Wednesday (Aug 7) said online gambling was illegal in the mainland.

“We will not suspend the issuance of TINs to foreign workers,” Finance Secretary Carlos G. Dominguez III told reporters when asked if the Bureau of Internal Revenue (BIR) would suspend TIN issuance to unregistered Pogo workers.

Dominguez said he had yet to see the embassy statement.

August 9, 2019: China expresses ‘grave concern’ over POGO hubs, in Philippine Star:

The Chinese embassy has expressed grave concern over a proposal of the Philippine Amusement and Gaming Corp. (Pagcor) to transfer Chinese nationals working in Philippine offshore gaming operations (POGOs) to “self-contained” communities or hubs.

In a statement, the embassy said yesterday Pagcor’s proposal, if carried out, “may infringe on the basic legal rights of the Chinese citizens concerned.” Malacañang raised the same concern.

August 9, 2019: Beijing’s crackdown on offshore gambling to hurt PHL operators, in BusinessWorld:

There are signs that the offshore services are penetrating more deeply into China’s population than expected. Some online gaming web sites offer punters wagers as low as 10 yuan and have round-the-clock live streams, making them easily accessible by lower-income Chinese in rural areas, who do not have the means to go to Macau or other ways of scratching the gambling itch…

The ban on junkets using Macau as a settling platform for overseas gambling services kicked in from August 1, said the people, who asked not to be identified as the order has not been made public. Macau’s Gaming Inspection and Coordination Bureau declined to comment on the directive sent to junket operators.

Junkets and Macau-based casinos with operations in Southeast Asia are already starting to halt proxy betting and video gaming services. Concern over the crackdown has hit Macau casino stocks, with a Bloomberg Intelligence index of the biggest companies down 15 percent since the first critical media reports were published on July 8…

The halt reduced the amount of incoming bets, which total about $230 billion annually, by around 10 percent, a person familiar with the matter said, asking not to be identified as the information is not public.

Melco Resorts & Entertainment Ltd., one of Macau’s biggest gaming operators, asked its junket partners to stop all proxy betting at its Manila resort last month on concern it could face reprisals in Macau, according to people familiar with the move. The regulator is set to renew casino licenses in the territory next year, for the first time in two decades.

Proxy betting is a channel for money laundering, according to a 2017 US government report, because the practice allows players to conceal their identities. Some Philippine lawmakers want casinos to be placed on a list of institutions monitored for money laundering due to high profile incidents, like a 2016 heist of $81 million from Bangladesh’s foreign reserves, which were routed through a Philippine casino, a junket operator and a gaming-room promoter.

August 11, 2019: DOF: Duterte, Xi sure to discuss China worries on ‘illegal” online casinos in PH, in Philippine Daily Inquirer.

August 11, 2019:  China threat to crackdown on Philippines gaming industry “could be a positive for Macau,” in Inside Asian Gaming.

August 12, 2019: Stocks to Watch: China’s war vs POGOs hits properties, in Rappler:

China expressed grave concern that the move would infringe on the rights of its citizens. It also said that a huge amount of funds has flown out of China illegally to the Philippines because of POGOs.

The news immediately started a selloff. As of Friday, August 9, the property index had gone down by 1.5%.

Meanwhile, shares of Megaworld fell by almost 6% when news broke on Thursday, August 8, its sharpest drop since 2017.

August 13, 2019: Investors unload SMPH shares on market jitters, in BusinessWorld:

SM PRIME Holdings, Inc. (SMPH) was among the most traded stocks last week due to a slew of factors that may adversely affect the company’s bottom line in the short term such as the lower-than-expected second-quarter economic growth, the renewed escalation of US-China trade tensions, and statements of the Chinese Embassy signaling a crackdown of its citizens’ offshore gambling activities in the country.

August 14, 2019: Finance chief backs hubs for Pogo operations, in Philippine Daily Inquirer:

“We welcome that—it’s easier to collect because they are all in one place. They were telling me: ‘There was one island taken over by the Pogos, [the former] Island Cove [in Cavite].’ We welcome that they are all staying there and it’s easy to catch them. It’s a welcome opportunity, it’s a welcome development,” Dominguez told reporters.

August 14, 2019: Resorts World Manila operator to delist from Philippine exchange: Move to take Travellers private comes amid weak share price performance, in Nikkei Asian Review.

August 14, 2019: Beijing Threatens Philippine Offshore Gaming, in Asian Sentinel:

Beijing is growing increasingly disenchanted with the burgeoning online gaming industry in the Philippines, which is draining hundreds of millions of renminbi through underground banks and cross-border money laundries – even as the industry shows signs of growing into a mainstay for the Philippine economy.

Authorities in Beijing say the government plans to step up action to stamp out illegal gambling and is warning its citizens at home that if they are gambling overseas. They may be committing a criminal act. As Asia Sentinel reported in April, many as 700 million of China’s 1.4 billion people are expected to be gambling online globally over the next five years unless Beijing cracks down…

With the advent of convenient, well-developed payment systems through credit cards. Small-time bettors using their phones can live-stream wagers of as little as 10 RMB (US69¢) through Putonghua-speaking computers. More affluent gamblers can use attractive fashionably-dressed proxies wearing headsets to play baccarat and other games. Thus the Chinese at home are finding it easy to spend vast amounts of money and time online, a growing percentage of that passing through Manila With computers and smartphones, they can hide their gambling from authorities.

The Pasay area itself features huge gleaming new casinos with garish interiors, a US$1 billion annual gaming district offering a respite that is thronged with Chinese, outside the range of the sharp eyes of China’s law enforcement personnel on the lookout for crooked mainland officials eager to gamble away government funds. Macau is now closely watched by Chinese authorities. The Philippines has become a route away from state control.

In July, it was announced in Manila that offshore gaming, most of it operated by an estimated 130,000 mainland Chinese – although President Rodrigo Duterte said there could be as many as half a million – who have flooded into the Philippines, either legally or illegally, is due to overtake offshore business processing as the biggest tenant of Manila real estate. The Philippines is the world’s biggest offshore business processing destination, outpointing India.

August 15, 2019: PNP probing casino junket operators for rise in kidnappings of Chinese gamblers, in Philippine Daily Inquirer.

August 16, 2019: Issuance of permits to POGO workers creates confusion between DOLE, BI, in Manila Bulletin:

The problem lay with the Bureau of Immigration (BI) and the Department of Labor and Employment (DOLE) for issuing permits for foreign workers in the Philippines.

“We found out that the Bureau of Immigrations has been issuing special working permits that they should not be issuing,” said Senator Villanueva.

According to the senator, DOLE was issuing the Alien Employment Permit (AEP). The Labor Department should be the only department to issue the permit but the immigration bureau was also issuing a similar permit.

According to the Bureau of Immigration, Special Work Permit (SWP) is for foreign nationals who shall work in the Philippines for three to six months.

The Alien Employment Permit (AEP) is a requirement for work visas to legally engage in employment in the country according to the Department of Labor and Employment.

“Ang DOLE about less than 50,000(AEP applications) a year, ang BI parang hundreds of thousands na ang (SWP) Special Working Permit,” Villanueva said.

August 16, 2019: Chinese casinos near PH military camps worry DND, in Philippine Daily Inquirer:

Defense Secretary Delfin Lorenzana on Friday (Aug. 16) raised concern over the location of Chinese casinos, also known as Philippine offshore gaming operators (Pogo), which appeared to be too close for comfort to Philippine military camps in Metro Manila.

“This is very concerning until such time I saw the map,” Lorenzana told reporters. “They are near,” he said.

He cited the locations of Chinese casinos at Araneta Center and Eastwood which are within striking distance of the Armed Forces of the Philippines headquarters in Camp Aguinaldo.

August 16, 2019: Pogo hubs to shield legal Chinese workers from harassment, says Pagcor, in Philippine Daily Inquirer.

August 16, 2019: ‘Chinese workers in MM look like military men’, in Philippine Star.

August 19, 2019: Property companies limiting exposure to POGOs, in Philippine Star.

August 19, 2019: POGOs for espionage? China can spy on Philippines even from afar, says Duterte, in ABS-CBN News.

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