Criminality and prostitution prompts Makati POGO moratorium

9 December 2019

The Philippines city of Makati has declared an indefinite moratorium on the issuance of new business licences and permits to service providers of Philippine Offshore Gaming Operators (POGOs).

Makati mayor Abby Binay said that effective immediately, the city would cease to issue Letters of No Objection (LONO) and stop accepting new applications for business permits from the suppliers.

"We would no longer accept new applications for POGO service providers and crack down hard against illegal activities that are catering to POGOs and their employees within Makati," Binay said.

The mayor explained that the city’s residential and commercial leasing market was “overheating” due to an influx of foreign workers requiring housing and work stations, causing property rates to spike. Furthermore, the demand for housing had seen a rise in illegal rentals on the market.

“These apartments are usually overcrowded with insufficient exits and faulty fire-alarm systems,” she said.

In addition, she said, Makati had also seen rising rates of criminality targeting POGO employees and prostitution. In the past two months, Binay noted that the city government had closed four illegal POGO service providers, two brothels, one unsanitary restaurant and a catering company.

Authorities also seized ₱2.5bn worth of illegal drugs from an apartment rented by a Chinese national.

The mayor did, however, add that businesses that adhered to laws and regulations, namely the payment of taxes, would still be welcome. From POGO service providers licensed by the Philippines Amusement and Gaming Corporation (PAGCOR) and registered with the Business Permits and Licensing Office, Makati earns more than ₱200m in local business taxes each year.

Makati is currently home to around 300 of these supplier, which provide services such as live casino video streaming, customer service, marketing and technical support.

“We will always welcome legitimate businesses in the city that strictly adhere to  laws and ordinances, particularly the payment of taxes,” Binay said. “And we will always strive to provide these businesses and their employees with a safe environment conducive to business growth and personal activities.”

Binay has taken the action in line with the calls from President Rodrigo Duterte and Finance Secretary Carlos Dominguez to crack down on illegal activity related to POGO service providers.

This saw PAGCOR suspend the awarding of new POGO licences until the end of the year in August, despite the government repeatedly refusing to implement an outright ban, despite pressure from China.

Since then the country’s Bureau of Internal Revenue (BIR) has been shutting down POGOs that fail to pay taxes, with three falling foul of this crackdown already. In November Dominguez reiterated the need for action against tax-delinquent gaming operators.

This comes against the backdrop of a bill to increase the tax levy on POGOs to 5% of annual gross income, with the bill progressing to a second reading in the House of Representatives late in November.