Marcos Makes it Official: POGOs Must Go

Government’s resolve tested as gaming firms seek to continue operations

On November 5, Philippine President Ferdinand Marcos Jr. made official his July State of the Nation Address order outlawing Philippine Offshore Gaming Operators, or POGOs, saying the state “has the paramount duty to safeguard national security, maintain public order, uphold the rule of law, protect the safety of its citizens, and ensure the integrity of the social fabric of the nation.”

The order, to go into effect immediately, seeks to put an end to hundreds of Chinese-operated online gaming ventures that have metastasized into criminal operations involving human trafficking, online fraud including so-called “pig butchering” and Ponzi schemes, and illegal gambling aimed at mainland Chinese nationals, as gambling is illegal in China.

In many cases the gaming operations have disguised themselves as call center-style facilities employing hundreds of foreign workers, mainly from China but also from other countries, many of them kidnapped or forced into employment. Operations are concentrated in self-contained compounds and so-called special economic zones which local police are often unwilling or unable to enter or investigate. Authorities last month liberated 35 Indonesians from an illegal POGO in Cebu. Chinese construction companies have been instrumental in helping POGOs establish their operations in Southeast Asia, providing the necessary infrastructure for these businesses to thrive according to a Philippine country risk firm.

In an explosive 36-page report issued last year and titled “How Organized Crime Operates Illegal Betting, Cyber Scams & Modern Slavery in Southeast Asia,” the Asian Racing Federation said that tens of thousands of people are being held in modern slavery conditions to work in organized illegal betting and cyber-scam operations across the region, run by individuals with long histories of involvement in illegal betting and organized crime and estimated to make at least US$40 to 100 billion a year in illicit profit.

Across Asia this criminal gaming diaspora has grown into a trillion-dollar illegal industry funding organized crime, the report said, with the groups running such operations active since the 1990s, involved in the movement of money across borders, violent debt collection, bribery of local officials, provision of related “entertainment” such as narcotics and sex. In the early 2000s, it was supercharged by the development of online gambling run directly out of existing casinos or related properties, which massively increased the target market.

Governments, attempting to supplement their budgets typically by licensing operators for a fee, have led to the spread of such operations across the region and had major negative impacts, the report said. There is no better example of this than the Philippines, which is now reaping the downside of their departure. Thousands of mainland Chinese now have decamped, depressing the real estate rental market in the Pasay district of Manila and leaving as many as 20,000 Filipinos jobless. The first operators set up shop in the early 2000s and were limited to where they could operate, with many of the biggest names occupying vast offices in PBcom Tower and RCBC Plaza overlooking Ayala Avenue in Makati.

From 2016 onwards, with encouragement by the Duterte administration, their numbers increased as they spread into rural areas where enforcement was lax and malleable. As an example of how high the connections go, Duterte’s own presidential spokesperson Harry Roque Jr. and two others have been charged with human trafficking for alleged involvement in a Philippine Offshore Gaming Operator hub.

Core activities include widespread corruption, movement of money across borders, violent debt collection, provision of related “entertainment” such as narcotics and sex closely associated with, or directly run by, individuals with organized crime backgrounds. One authoritative source told Asia Sentinel that some of these “POGO islands” are so deeply entrenched behind legitimate businesses in outlying areas that it could take years to root them out – if corrupt local officials are even interested in doing so. More than 100 illegal POGO hubs are believed operating underground throughout the country. Philippine Sen Risa Hontiveros, who has been on a months-long crusade against the POGOs, also noted that Marcos’s order doesn’t explicitly include all establishments, particularly those outside the oversight of the Philippine Amusement and Gaming Corporation (PAGCOR), such as those operating within the Cagayan and Aurora free ports.

The question is where those departing go next, and a bigger question is where they are banking. As Asia Sentinel reported on November 1, Singapore, having been hit with a massive money-laundering scandal involving Chinese organized crime in 2023, has slammed the brakes on with a multi-pronged national strategy involving the police, the central narcotics bureau, and the corrupt practices investigation bureau to address hazard and guide actions.

Relocation outside ASEAN, particularly to more mature European jurisdictions where offshore gaming licenses are well-established and governments offer a stable and well-regulated environment, may be necessary for the legal ones. But others are likely to be off to other Asia-Pacific countries such as Vanuatu, Papua New Guinea, and Timor-Leste, already warned by Philippines Justice Secretary Jesus Crispin Remulla of potential relocation of offshore gaming operations. The Philippines and Vietnam are already on the international Financial Action Task Force (FATF) grey list for additional monitoring, and Myanmar is on the FATF black list.

Laos, according to the Racing Federation’s report, “is a long-standing facilitator of trafficking and other illicit activity, but also a potential future expanded threat or hub. For 15 years, Laos’s Golden Triangle Special Economic Zone has been a reported haven of criminality, and US sanctions on its key principal have seemingly had zero impact. Laos is also reportedly considering a POGO-style online betting licensing regime, which would instantly attract operators because regulatory oversight would in all likelihood be even more lax than in the Philippines or Cambodia, yet with a more stable environment than Myanmar.

Such relocation has already been seen in response to illegal betting and trafficking crackdowns in Manila and Sihanoukville in Cambodia. The Laos Golden Triangle Special Economic Zone is bigger than the entire enclave of Macao, according to the report, and employs nearly 700,000 people.

“In the coming months, the Philippine government’s resolve will be tested, as POGOs explore every avenue to continue their operations, whether by rebranding, relocating, or diversifying,” said the country risk firm. “What is clear is that this issue extends beyond gambling and has deep implications for national security, organized crime, and the integrity of the country’s legal and political systems.”