Pagcor revenue plummets as pandemic pummels Pogos

MANILA, Philippines—State revenue from online gaming, once a cash cow that helped fund COVID-19 response, has dropped dramatically as the pandemic curtailed the Philippine Online Gaming Operators (Pogo) industry.

Responding to reporters’ queries, the head of the Philippine Amusement and Gaming Corp.’s (Pagcor) unit supervising Pogo companies said Pagcor’s income from regulatory fees of at least P600 million a month had declined by half so far this year. This was because only 32 out of 60 Pogo firms had been allowed to resume operations and limited to only 30 percent of their capacity.

Because of these constraints, earnings of Pogo firms have fallen by 80 percent, Pagcor offshore gaming licensing chief Jose Tria said.

Only 111 of the 218 accredited Pogo service providers—roughly half of accredited firms—were allowed to resume operations after they received clearance from the Bureau of Internal Revenue (BIR).

Tria said regulatory fees paid to Pagcor would have fallen even lower had it not been for the minimum guaranteed fee it collects from the industry, which requires Pogo firms to pay a fixed rate monthly or 2 percent of their gross revenues, whichever is higher.

At the same time, stricter quarantine and tax rules further pressured the sector resulting in the cancellation of five Pogo licenses and the suspension of five others. Another 42 Pogo service providers have applied for the cancellation of their accreditation.

Among the reasons being cited by Pogo operators for the spate of closures are restrictions on operations due to the pandemic, the inability of Chinese workers to return to the Philippines, as well as more stringent tax policies.

Finance Secretary Carlos Dominguez III said on Wednesday (Sept. 23) that revenue, including those from corporate and value-added taxes from the real-estate sector and other dependent businesses, are likely to be adversely affected by the downturn in the Pogo industry.

The finance chief said a number of office leases had already been cancelled by Pogo firms after their Chinese workers returned home since the start of the pandemic.

This exit of foreign workers will adversely impact real estate prices and other businesses, which will translate to lower income tax and value-added tax collections, according to Dominguez.

He warned that office and residential businesses and also restaurants, bars and retail outlets were at risk of losing substantial income should Pogos and their local service providers close shop, adversely affecting thousands of Filipinos employed in the sector.

According to property analyst David Leechiu, Pogo firms occupy an estimated 1.7 million square meters of office space nationwide and 2 million square meters of residential space before the COVID-19 pandemic.

TSB