Some Philippine offshore gaming operators (POGO) have been canceling their lease contracts with local building owners for “lack of business” amid China’s crackdown against gambling.
Finance Secretary Carlos Dominguez III reported this to senators on Wednesday when asked during a Senate budget hearing on his department’s projection on the increase in government revenues from POGO operations.
“We are, at the moment, making that estimate. But let me just point out, your honor, that last night, I got a call from one of the owners of a building in Makati, who’s saying that his POGO and service provider clients have started cancelling their lease contracts for lack of business,” Dominguez said in the Senate finance committee’s deliberation of the DOF’s proposed 2021 budget.
“I think the Chinese government is clamping down on money transfers as well as lack of operators. Because I think the Chinese government has also started cancelling passports of those people servicing the POGO industry,” he added.
Senate Minority Leader Franklin Drilon noted that under the “Bayanihan to Recover as One”, or Bayanihan 2 Act, the government could also get its funds for COVID-19 response from the franchise tax collected from offshore gaming operations.
The franchise tax shall be five percent of the gross bets or turnovers received by the POGOs, or of the pre-determined minimum monthly revenues from their operations, whichever is higher.
“It revised the basis of franchise from five percent of net winning to five percent of gross debts because of the cheating that has happened in the system of net winnings,” Drilon raised to Dominguez.
Earlier, he said this provision is expected to yield some P17.5 billion in additional revenues for the government.
POGOs have been flagged for their several violations of Philippine laws, including tax evasion, and skirting of immigration and labor regulations. Law enforcement agencies also attributed to proliferation of POGOs the increase of crime incidence.
Last year, China formally appealed to the Philippine government to take action and ban POGOs following reports that their nationals, who are mostly employed in POGOs, are being abused by their fellow Chinese.
China prohibits all forms of gambling, including online and overseas gambling, with the exception of Macao.