Social and economic costs of Pogos

The discovery of illegal activities of some Philippine offshore gaming operators (Pogos) in Metro Manila, Tarlac and Pampanga has elicited demands from several sectors for a ban on their operation.

Until last week, the issues against Pogos involved their involvement in, among others, the crimes of human trafficking, financial scams, prostitution, torture and money laundering.

The recent discovery of military uniforms and other paraphernalia related to China’s People’s Liberation Army in a Pogo building has put a disturbing dimension on the operation of Pogos in the country.

Earlier, some quarters also raised alarm bells over the close proximity of Pogos operating on an island in Cavite to two Philippine military establishments in that province.

In the wake of those reports, several lawmakers had called on President Marcos to ban Pogos and declare their operation illegal. A bill had been filed at the House of Representatives for that purpose.

For Defense Secretary Gilberto Teodoro Jr., Pogos are a natural security concern that, according to National Security Adviser Eduardo Año, could still be handled by the police and civilian agencies.

As expected, Philippine Amusement and Gaming Corp. (Pagcor) chair and CEO Alejandro Tengco came to the defense of Pogos, which are under Pagcor’s regulatory authority. (Incidentally, in a subtle effort to remake Pogos’ tarnished image, Pagcor had renamed them as “Internet Gaming Licensees.” It’s the same dog with a different collar.)

He said a ban on Pogos could result in the loss of over P20 billion in potential annual revenues and may drive legitimate operators to go underground and therefore could create more troubles.

The “loss of revenues” card is often used when the operation of a government office or corporation is under scrutiny for some legal or ethical reasons.

If that ploy does not gain traction, the next excuse cited is the loss of jobs and its adverse effects on the families of affected employees. In light of the country’s huge unemployment problem, that strategy tugs at one’s heartstrings.

Assuming there is truth to that potential revenue loss, that amount cannot compensate for the social and economic costs that Pogos had brought (and would continue to bring) to the country.

According to Sen. Win Gatchalian, in a cost-benefit analysis made in 2021, the costs and ills attributable to Pogos include the crimes of tax evasion and corruption and foregone foreign direct investments and tourism estimated at P143.30 billion, which outweigh Pogos’ economic benefits of P134.86 billion, or a net loss of P8.44 billion.

Since Pogos had their heyday in the following years, it is reasonable to assume that those costs have exponentially increased.

Under these circumstances, crying over the possible loss of P20 billion every year would be difficult to explain, much less justify. There is absolutely no way, regardless of how the numbers are extrapolated, that money would be able to make up for the social costs.

Probably, since Pagcor was created to earn money—a lot of money—it considers those costs as “deductible expenses” incurred in the ordinary course of business.

Then there is the issue of national security. Although Teodoro did not sound alarmist in his description of Pogos in relation to national security, the discovery of Chinese military paraphernalia in a Pogo building should not be taken lightly.

There is something sinister about the presence of those stuff in structures built to, in theory, engage in online gaming business. It just doesn’t fit.

With the Philippines presently embroiled in a dispute with China over certain islands in the West Philippine Sea, those uniforms are not mere props or costumes for the use of Pogo staff. INQ