In recent years, the gambling industry in Southeast Asia has been turbulent, with Philippine Offshore Gaming Operators (POGO) once thriving. However, as the crackdown on illegal activities intensifies in the region, the future of POGO faces many challenges.
The Rise and Fall of the Philippine Gambling Industry
The gambling industry in the Philippines has experienced significant growth over the past few years.
According to Alejandro Tengco, chairman of the Philippine Amusement and Gaming Corporation (PAGCOR), the industry's total revenue in 2024 is expected to exceed 350 billion pesos (about 6.03 billion USD), surpassing the previously set target of 334 billion pesos, and showing a significant increase from 285 billion pesos in 2023.
However, as the gambling industry develops more "vigorously," many serious issues such as drug abuse, human trafficking, kidnapping, extortion, murder, and proliferation of firearms have emerged.
The concept of offshore gambling contributing to the overall GDP of the Philippines is undeniable, but the illegal problems it generates are also significant. Ultimately, all this ended with the issuance of a POGO ban by President Marcos.
As for why the revenue of the gambling industry has not decreased but increased, this is mainly due to the rapid development of the electronic gambling sector.
In the first half of 2024, 45.53% of PAGCOR's gambling revenue came from the online gambling industry, including electronic games, electronic bingo games, and bingo games, bringing in 20.66 billion pesos (357.9 million USD).
By November, PAGCOR announced that its third-quarter revenue increased by 37.5% year-on-year, reaching 94.6 billion pesos, with revenue from the electronic gaming sector climbing from 6.3 billion pesos in the same period in 2023 to 35.7 billion pesos, a key driver of overall performance growth.
Now, on one hand, many illegal POGO centers have moved to regions like Luzon or dispersed into resorts, villas, and apartment buildings to operate covertly; on the other hand, foreign employees who lost their jobs due to POGO closures and had visa issues have turned to kidnapping, extortion, and other criminal activities, leading to many social security problems.
As a result, President Marcos and government departments have repeatedly emphasized the need to stop these serious illegal activities disguised as legitimate businesses, asking local governments to watch for signs of suspected illegal POGOs, submit reports, etc. However, there has been no related news coverage so far, only sporadic cases of a few people being caught every now and then.
Joint Crackdown by Southeast Asian Countries
Not only the Philippines, but other Southeast Asian countries are also intensifying their crackdown on illegal gambling and telecommunications fraud.
On January 12, news reports stated that since the start of a special operation against telecommunications network fraud in January, the governments of China, Myanmar, and Thailand have arrested over 53,000 Chinese suspects involved in fraud, and the large-scale telecom fraud parks in the northern Myanmar area near the Chinese border have been completely eradicated.
On January 16, the head of Thailand's Technology Crime Suppression Division stated that they had cooperated with multiple departments to cut off the communication signals of neighboring countries' telecom fraud gangs.
On the same day, the Chinese Foreign Minister met with ambassadors from the 10 ASEAN countries in China, stating the need to strengthen bilateral and multilateral law enforcement and security cooperation with ASEAN countries to resolutely combat online gambling and telecom fraud.
On January 21, the Lancang-Mekong Comprehensive Law Enforcement Security Cooperation Center held the "Seagull" operation meeting in Kunming, with representatives from Cambodia, China, Laos, Myanmar, Thailand, and Vietnam unanimously agreeing to strengthen all-around cooperation and carry out special actions to crack down on telecom fraud, arresting criminal gang leaders and destroying telecom fraud centers.
Especially the Thai government. After the Wang Xing incident, it implemented a stricter border policy immediately, also developed an accountability system for related border areas, and recently plans to launch a six-month crackdown focusing on drugs, telecom fraud, and human trafficking, among other issues.
Moreover, Thailand will implement new laws this month, requiring telecommunications companies and financial institutions to take more responsibility for victims' losses to curb online fraud.
Even the Prime Minister of Thailand, Prayut Chan-o-cha, is very anxious, shouting that rumors about Thailand are false, using AI to send videos calling for Chinese people to travel, and planning a visit to China in February, all in an effort not to lose China as a major consumer.
POGO's Response and Future
Facing the government's strong crackdown, many POGO operators choose to shut down or transform. According to reports, since President Marcos announced a comprehensive ban on POGO, a large number of licensed POGOs have been closed, and the remaining illegal POGOs are trying to evade crackdowns through miniaturization and concealment.
Some operators disguise their businesses as Business Process Outsourcing (BPO) companies and relocate to other regions of the Philippines, or even to neighboring countries with more lenient regulations, such as Cambodia and Vietnam.
However, as Southeast Asian countries join forces to crack down on illegal gambling and telecommunications fraud activities, the living space for POGOs is further compressed. The high-pressure situation in the region makes it difficult for these operators to find new footholds.
Moreover, the Philippine government's strict regulation of the BPO industry also poses greater challenges for POGOs attempting to disguise and transform.
In Conclusion
Under the joint crackdown on illegal gambling and telecommunications fraud activities by Southeast Asian countries, the POGO industry in the Philippines is facing unprecedented challenges. As regulatory measures intensify in the region, the future of POGO is filled with uncertainties. In this context, the Philippine gambling industry needs to explore new development paths to adapt to the constantly changing market environment and regulatory requirements. For example:
1. Transform and develop legal online gambling
The Philippines can utilize its existing network infrastructure to develop regulated legal online gambling platforms while intensifying the crackdown on illegal operations.
The current strong momentum of electronic games is a good sign. The Philippine government could try to approve official online gambling platforms, attracting international investors through transparent tax and regulatory systems. This approach also helps ensure user privacy and financial security.
2. Transform into a regional entertainment center
Gambling can be part of an entertainment complex, combined with tourism, hotels, shopping, and cultural activities. Like Macau, it could create a comprehensive entertainment area that integrates gambling, theater performances, high-end shopping centers, and international conferences.
The current draft of Thailand's gambling legalization also focuses on comprehensive entertainment, with casinos occupying only 3% of the area.
3. Diversify the market, reduce dependence on gambling
Reduce dependence on a single market (such as Chinese tourists) by tailoring services for tourists from Southeast Asia, the Middle East, Europe, and America, achieving market diversification. For example, develop alcohol-free gambling venues for the Middle Eastern market or attract European and American tourists to high-end casino resorts.
