Corporate Securities Info

What Pogo shutdown?

/ 05:02 AM September 03, 2019

Some business people must be having sleepless nights over China’s request to the Philippine government to ban online gaming operations in the country that cater to Chinese citizens.

Thanks to the liberality of the Philippine Amusement and Gaming Corp. (Pagcor) in issuing licenses, Philippine gaming offshore operators (Pogos) have boomed in the past two years.


Aside from the P111.9 billion in license fees Pagcor has so far collected, owners of commercial buildings that house Pogos are also earning from high rentals paid by those companies for the use of their premises.

The same windfall is being enjoyed by owners of residential houses and condominium units that rent them out to the Pogos’ Chinese employees. Restaurants, service facilities and other commercial establishments that cater to the needs of Pogo employees are similarly experiencing high sales.


Anticipating further growth in Pogo operations, some real estate developers are building communities for the exclusive use of Pogos and their employees. These enclaves would allow the Chinese employees to work, live and enjoy the company of their fellow citizens.

These financial gains, both present and future, may be reduced, or worse, go down the drain, if the Philippine government accedes to China’s request to cut back or shut down Pogo operations.

The adverse impact of any of such action would not be limited to companies hosting Pogos.

It would also hit hard the banks that lent hundreds of millions of pesos to Pogo companies for the purchase of additional online gambling equipment and to real estate companies for the construction and maintenance of Pogo buildings.

A decrease (or loss) in revenues from Pogo operations would invariably impair the ability of debtor companies to meet their loan repayment obligations.

In a fit of bravado, Philippine Ambassador to China Jose Santiago Sta. Romana, citing reasons of sovereignty, said China cannot order the Philippine government to shut down Pogo operations.

Really? Considering President Duterte’s unabashed display of affection for China, its call for the closure of Pogos may get favorable response after the heat over Pogo operations has died down.


The important question to ask in this regard is whether China is serious or only playing to the gallery when it made that call. The Chinese government is known for double-talk: Its public statements do not match its actions.

There have been numerous incidents in the past that involve the Philippines where China said one thing but did something behind the back contrary to its statement.

It’s doubtful if the Chinese government is serious in making that closure call. Despite China’s protestations about the evils of gambling, it indirectly benefits from the operation of gambling facilities in other countries by its citizens.

Gambling is a traditional pastime for the Chinese people. They have been engaged in it for centuries and no amount of repression from their government would prevent them from doing it on the sly.

By “officially” prohibiting gambling within its territory, and at the same time allowing it to be done elsewhere in the world through Pogos run by its citizens, it is able to publicly keep faith with the Communist Party credo on gambling while enabling its citizens to enjoy their favorite pastime.

Also, Pogos in other countries enable China to give employment to thousands of young Chinese with limited educational attainment and cannot get gainful employment in their own country.

A huge army of unemployed young Chinese is a breeding ground for social dissatisfaction that could threaten the stability of China’s one-party rule. The thousands of young Chinese citizens working in the Philippines are better off here than in China.

To those opposed to Pogos, don’t hold your hopes high. They are here to stay until the Chinese government, or in particular, the People’s Liberation Army (the real repository of power in China), does not have any use for them.

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TAGS: Business, Philippine Amusement and Gaming Corp. (Pagcor)
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