Philippines puts brakes on award of offshore licences

20 August 2019

The Philippine Amusement and Gaming Corporation (PAGCOR) has halted the award of licences to offshore operators until at least the end of 2019 due to concerns about illegal operations and security.

In announcing the move, the Philippines has become the second Southeast Asian country in as many days to confirm a moratorium on issuing approvals after the Cambodian Government ceased awarding new online gambling licences with immediate effect in an effort to clamp down on illegal gambling activities.

PAGCOR chairman and chief executive Andrea Domingo confirmed that the licensing process was actually put on hold three weeks ago, and the suspension will continue for Philippines Offshore Gaming Operators (POGOs) while the regulator reviews existing contracts.

Domingo added that there had been particular concerns about security problems, the legitimacy of operators' businesses and the social impact illegal gambling conducted under a PAGCOR licences were having.

“We decided to do what is necessary to address these issues immediately," he said. "We will no longer at this time accept applications until we have reviewed and addressed everybody’s concerns.

“It’s about time, after almost three years of implementing this programme, to stop and look at other concerns that we have not resolved comfortably and effectively.”

PAGCOR has awarded licences to 58 POGO operators that employ more than 130,000 people since 2016, while three further licences are currently pending approval.

In March, PAGCOR entered into a mutual cooperation agreement with the Philippine National Police, National Bureau of Investigation, Bureau of Immigration and the Office of Cybercrime under the Department of Justice to form an inter-agency council with the aim of tackling illegal online gambling in the country.

POGOs have already been warned by PAGCOR to inform the watchdog immediately about any issues concerning the operators’ staff.

“We have actually done a very good job of intervention in the offshore gaming sector and other countries are now looking at our model,” Domingo added.

The decision to stop issuing gaming licences follows a stinging rebuke from China, which accused the Philippines of aiding online operators targeting the Chinese market. These operators had caused "hundreds of millions of Chinese Yuan" to flow out of the country to PAGCOR-licensed operators, a Chinese Embassy spokesperson said.

"[The] fact that a large number of Chinese citizens are lured into illegal gambling has resulted in an increase of crimes and social problems in China," the spokesperson continued. "In particular, some gambling crimes and telecom frauds are closely connected, which has caused huge losses to the victims and their families."

It added that Chinese citizens had been lured to work illegally in Philippine casinos or for online gaming operators, and were effectively enslaved by their employers.

"They are confined to live and work in certain designated places and some of them have been subjected to extortion, physical abuse and torture as well as other ill-treatments. At the same time, dozens of kidnappings and tortured cases of Chinese citizens who gamble or work illegally in gambling entities in the Philippines have taken place. Some Chinese citizens were physically tortured, injured or even murdered."

The statement ended by warning the Philippine government to respect China's anti-gambling stance, and take "concrete and effective measures to prevent and punish the Philippine casinos, POGOs and other forms of gambling entities for their illegal employment of Chinese citizens and crack down related crimes that hurt the Chinese citizens."