You hear a lot about POGOs and gambling issues in the Philippines. Now some senators want to bid “good riddance” to the industry.

It has to do with politics and money of course. Who doesn’t want a piece of the pie? It makes the organization of gambling operators stuck between a rock and a hard place.

It has to contend with numerous scandals and a pandemic shutdown. The government of Rodrigo Duterte is said to bleed it dry.

Government interference

President Duterte is quite vocal about his distaste for gambling. The evidence is seen in frozen applications for new casinos and constant railing against lotteries, even those that benefit charities.

He previously told the Philippine Amusement and Gaming Corporation (PAGCOR) to revoke all online gambling licenses, which lead to the suspicion that he would kill the industry entirely.

The POGO licensing scheme was adopted, allowing the government more direct control over industry regulation.

The plan brought in greater revenues for each vertical of operation. As a result Duterte let things pass by. As long as POGOs didn’t service the locals, generally followed the laws, and paid their dues, everything would proceed normally.

Duterte was known for his drug war although he became an international pariah. He is hot to make anti-corruption his hallmark.

But China has been a problem for him, especially his allowing Chinese workers to obtain POGO employment. The opposition has been strong.

Who is on board?

Senators Risa Hontiveros and Frank Drillon have been prominent in celebrating the supposed exodus of POGOs. They have attacked him for his Chinese favoritism. Senator Joel Villanueva of the majority block has entered the fray as part of a general anti-corruption crusade.

The rest of the Senate hasn’t said a word. Why would they defend the industry? Duterte believes the country needs POGOs and has been defending it from Chinese protests.

On the subject, presidential spokesperson, Harry Roque has made it clear.

“Although the President said we need the resources and revenues including POGO operations to fund the government’s COVID-19 response… the bottom line is they need to settle their tax obligations.”

Along these lines, House Representative Joey Salceda’s (currently in Duterte’s political party) bill seeks 5% of an operation’s gross income, as well as a 25% withholding tax on foreign workers.

He wants Duterte to sign immediately so the government can go after POGOs more directly for tax revenue, complaining that PAGCOR shrouds them from their obligations.

PAGCOR is standing by, just a regulatory body with no policing power over tax evasion. Commenting on POGOs potentially avoiding their tax obligations, Jose Tria said,

“We’re not tax experts. It is for POGOs to question the applicability of the franchise tax.”

Back on track?

While the tax question is unclear as to the amount, PAGCOR has announced that 11 POGOs have settled all their tax debts and are not permitted to resume operations.

So issue now is if Duterte and his ruling party and perfectly happy letting POGOs continue on as is. At risk is the licensed online gambling industry could be driven out of the Philippines. Even if some operators leave, it won’t impact it that much, or will it?

The industry is certain lucrative and provides valuable jobs and government revenues. Think of the P6 billion ($120 million) in PAGCOR fees.

Plus, POGOs also take up 13% of the office demand in the country. They employ at least 30,000 Filipinos, paying middle class or better wages. They may offer jobs even in the private sector.

If Representative Salceda is right, more POGOs may leave because they would rather not pay 5% of their gross.

Meanwhile, public outrage is mounting. The simple solution is to get those licensing fees and back taxes secured. Then the operators can move on and continue to fuel the economy.

Source: https://calvinayre.com/2020/07/01/business/pogos-are-the-easy-target-of-philippines-politics/

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