Philippine offshore gaming operators (POGOs) are clearly becoming more of a liability than an asset in the country's economic growth as they leave the Philippines' gaming regulators with P1.365 billion in delinquencies.
The hype about the Philippine offshore gaming operators (POGOs) being a milking cow was proved wrong by a 2020 Commission on Audit report that showed POGOs owed the government, through the Philippine Games Amusement Corporation (Pagcor) P1.365 billion.
COA posted on its website on August 16 that 15 POGOs owed PAGCOR this much but did not identify them.
The COA report said the top two delinquent POGOs have payables totaling P462.604 million and P179.764 million, respectively.
However, the licenses of both gaming companies were canceled as of March 21, 2020.
The license of third POGO which had a payable of P174.405 million was also canceled as of June 30, 2020.
Uncollected dues
The auditors also noted that aside from this amount, Pagcor also had additional uncollected dues of P16.203 million from poker, bingo, and other electronic gaming firms, Rappler reported.
In its reply included in the COA report, Pagcor said that out of the P1.382 billion past due accounts, it had already processed P97.325 million for restructuring. Pagcor added that another P6.079 million were "adjusted."
Pagcor's legal department also replied that of the 15 POGOs with delinquencies, eight already had their licenses canceled, one was suspended, and three were under review.
Pagcor also mentioned that it had verified that three were still operating as of January 12, 2021.
COA said in its report: "Considering the substantial amount of uncollected accounts receivable, the inability to collect deprived the Pagcor of additional funds for its operations."
Prioritize those with past accounts of 1-9 years
The auditors recommended that Pagcor direct its vice president for Finance Group to prioritize efforts to collect from gaming firms with receivables that were already counting one to nine years.
COA also said that the Pagcor's offshore gaming and licensing department should monitor the performance bonds of these POGOs and forfeit those that were delinquent.
Mass exodus
A report last August 27 quoting PAGCO said that POGOs fled for Cambodia, Vietnam and Laos because of the prospect of increased taxation of their business, with around half of the industry decamping for Indochina, said PAGCOR chair Andrea Domingo.
“More than half have closed (and gone) to Cambodia, Vietnam, and Laos,” she said at a House appropriations committee hearing Friday.
Domingo said government revenue from POGOs over the past last six months have fallen drastically to P1.6 billion. The industry’s revenues used to average P8 billion to P9 billion a year.
She said that revenue from POGOs this year is likely to hit only P4 billion.
Albay Representative Jose Maria Clemente S. Salceda, chairman of the House Ways and Means Committee, said on July 22 that the House will adopt the Senate version of a POGO tax bill imposing a 5 percent tax on gross gaming receipts for offshore gaming licensees (OGLs) and a 25 percent tax on gross income for nonresident aliens working for POGO service providers.
The Senate version requires every alien employee of POGOs to have a Tax Identification Number (TIN), imposing a P20,000 fine for each one that fails to acquire a TIN. It also taxes non-gaming income at 25 percent.
The bill also bars the Aurora Pacific Economic Zone and Freeport from issuing new POGO licenses and transfers the regulation of POGOs currently registered with the economic zone to PAGCOR.
Salceda estimated that the bill will raise P13.4 billion in the first year and P176.9 billion over five years.
What are POGOs and who is allowed to play on them?
What are POGOs
POGOs are online gambling companies that operate in the Philippines but offer their services to customers outside the country.
They carry out their transnational gambling operations through online videos of dealers who conduct the activities on tables within offices in the Philippines as players watch from their homes elsewhere.
In return for operating in the country, POGOs are supposed to set aside half of their total gaming revenue to the Philippine government and other mandated beneficiaries.In 2019 alone, the Philippines was said to have collected P14.28 billion in taxes from POGO operations.
To be legal operators they must hold a license from PAGCOR. At present 46 Pagcor-licensed POGOs in the country.
The main customers for POGOs are Chinese nationals since online gambling is illegal in China. While the use of POGOs is prohibited by Chinese law, it is still common practice to use them in the country.
Pagcor places full responsibility on the offshore gaming operators themselves to ensure no wagers are accepted in jurisdictions where the activity is illegal.
While it does specify that operators should provide a license from the foreign jurisdiction where the feed will be streamed, it is assumed that operators either provide fake licenses or none at all.
The bottom line is that Pagcor knows that all forms of gambling are illegal in China yet its licensed POGOs continue to offer their services there anyway.
Tags: #POGOs, #offshoregambling, #Pagcor, #royalties, #economy