Philippine Offshore Gaming Operators — referred to as POGOs — owe the country nearly $30 million in unpaid taxes and various fees. That’s according to a new audit conducted by the federal government.
POGOs operate online casino games from inside the Philippines. The interactive gaming platforms are prohibited to allow Filipinos access to the sites. Instead, the gambling platforms exclusively cater to foreign countries.
POGOs are licensed and regulated by the Philippine Amusement and Gaming Corporation (PAGCOR). The Philippine Commission on Audit disclosed recently that PAGCOR is missing an estimated PHP1.365 billion (US$27 million) from POGO operators.
The audit findings were made during the Audit Commission’s annual review of PAGCOR.
The gaming corporation regulates all elements of the Philippines gaming industry, including commercial land-based casinos, POGOs and VIP iGaming. PAGCOR additionally operates its own casinos under the Casino Filipino brand.
Fleeing POGOs Blamed
China bans all forms of gambling — both online and in person — everywhere other than Macau. Philippine offshore internet gaming sites primarily target Chinese high rollers.
Prior to the pandemic, POGOs were big business, and greatly benefited the Filipino government. Philippines President Rodrigo Duterte has in recent years rejected China’s calls to eliminate its POGO industry. He says the casino websites provide the Philippines too great a tax benefit to consider their removal.
But Duterte trying to further stick his hand in the candy jar might have been costly.
In early 2020, PAGCOR announced it would be tacking on an additional five percent tax on POGO gross gaming revenue. The regulatory amendment also added a monthly gaming tax of PHP500,000 (US$10,000) per live POGO table game dealer, and $5,000 monthly per each interactive online slot game.
The increased regulatory costs, then paired with the pandemic, resulted in many licensed POGOs abandoning the Philippines. And some allegedly didn’t make good on their outstanding fees before departing.
Further verification revealed that the past due receivables from offshore gaming were the accounts of the POGOs with canceled operating sites,” the audit report explained. “Considering the substantial amount of uncollected accounts receivable, the inability to collect deprived the PAGCOR of additional funds for its operations.”
PAGCOR splits half of its net income with the Philippines government. The gaming agency is the second-largest tax generator in the country. PAGCOR reports that there are currently 33 accredited POGOs. That is down from 60 pre-pandemic.
Gaming Tax Loss
With land-based operations shuttered throughout much of 2020, gaming taxes dropped dramatically. That prompted Duterte to reverse his opposition to allowing a casino on Boracay Island.
Billionaire Andrew Tan has already announced his intentions to build a casino on the vacation island. Galaxy Entertainment could also reignite its $500 million casino resort development there.
The Philippines Department of Tourism clarified last Friday that it has no role in deciding whether the island should become home to a casino.
“That is the decision of the president, so we follow the president,” said Tourism Secretary Bernadette Romulo-Puyat. “When we promote the country, we promote sun and beach.”
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