Gambling is a well-known type of entertainment in which only the brave, or occasionally deranged, attempt to win big despite the great hazards. Of course, gambling has negative consequences, including addiction and, in particular, crime. However, in the Philippines, gambling has recently upset the country’s notion of internal safety and security–all thanks to Philippines Offshore Gaming Operators, or POGOs. As a disclaimer, this is a developing topic that has drastically altered in recent months. As a result, this article will not focus on current developments, but rather on the reasons behind the Philippine government’s reluctance to raise the matter as a national security danger, despite claims of corruption, subversion, criminality, and espionage.
Sinking Costs
POGOs are businesses that offer internet gambling services to customers outside of the Philippines. This classification became official in 2016 during the administration of former President Rodrigo Duterte. Under the statute, the Philippine Amusement and Gaming Corporation (PAGCOR), a state-owned company responsible for regulating legal gaming practices, was tasked with overseeing POGO operations and revenue collection. Simply put, POGO was established to centralize the regulation of online gambling companies that have existed since 2003 and to increase PAGCOR’s revenue.
In mid-July 2024, the Department of Finance stated that the yearly net cost of POGO operations was around PHP 99.52 billion, while the entire economic benefits are estimated at PHP 166.49 billion, of which PHP 60.68 billion were direct earnings. However, the DoF also reported a significant financial loss of around PHP 265.74 billion per year, mostly due to negative reputational risks affecting foreign direct investments (FDI). POGOs employed 25,064 Filipinos in 2023, which was at least 50% of the classification’s workforce. It also employed 22,000 to 40,000 foreign nationals in 2023, most of them being Chinese. However, the Philippine Anti-Organized Crime Commission (PAOCC) stated that at its peak under Duterte, POGOs employed at least around 180,000 to 200,000 Chinese nationals. In addition, in 2019, the growth also led to China being ranked 2nd in the number of tourists in the Philippines at around 1.74 million visits.
The reason for the influx of Chinese immigrants and tourists in the Philippines was China’s crackdown on online gambling in 2018, which forced away a big part of their gambling industry. Furthermore, Duterte’s openness to Chinese immigrants coincided with a new appeasement foreign policy towards China, which brought concern from the opposition and 70% of Filipinos.
However, several crackdowns, raids, and investigations, revealed many of these POGOs to have links to crimes such as scamming, murder, drug trafficking, kidnapping, sextortion, and others. Currently, there are 4,355 known victims of POGO-related crimes between 2017 to 2023. PAOCC also stated that around 200 illegal and unlicensed POGOs still operate in the country, despite the ban declared by President Ferdinand Marcos Jr. in June 2024. In addition, many of these POGOs were allegedly involved in corruption schemes with government officials and agencies at different levels. Investigations claimed that a former Cabinet official lobbied in support of POGOs, that these entities have insiders in the judiciary, and that Duterte’s former spokesperson was also implicated in these possible links.
Specifically, many of these links were attributed to the ongoing POGO case of the dismissed Mayor Alice Guo, known as Guo Hua Ping, which rattled the nation. In summary, Guo came to the Philippines with her family in the early 2000s from China with forged identities and documents. She, along with her siblings, ran several businesses, centered around suspicious activities, including POGOs. Guo later ran for mayor and won the 2022 elections, but was later dismissed in June 2024 amid a government probe to determine her POGO links. She was later arrested in Indonesia in August 2024 after fleeing the Philippines in secret in mid-July (Morales & Flores, 2024; Senate of the Philippines, 2024).
Allegations have also been pushed out by the country’s security and government agencies arguing these entities have ties to espionage engaged in surveillance. During a raid on the Guo-linked POGO complex in the province of Pampanga, police uncovered possible People’s Liberation Army military uniforms, medals, and firearms inside the premises. Many of these POGO buildings are also coincidentally found just outside major Philippine military installations, which have led to security officials describing these as possible Trojan horses. Among these locations is the Armed Forces of the Philippines’ headquarters in Camp Aguinaldo which is surrounded by 3 POGO sites.
Never Bet into a Lock
This all leads to the question, why is this still not recognized as a national security threat? Lawmakers urged the country’s security agencies to elevate the issue as such. However, these agencies have rejected calls, stating that a need for further validation. To better understand this reluctance it is best to see the issue from the perspective of the security officials, which have similar approaches to arguments of the securitization theory.
The securitization theory can be best understood with the thought of security issues that can be labeled as such by a decision-maker, requiring immediate resolution after doing so. This typically happens when a “referent object” that needs to be protected is suddenly threatened by something, which can all be entirely subjective on what that object is. To prevent every single problem from turning into a security issue, proponents argued for categorizing issues depending on the threat to the referent object’s social, political, economic, military, and environmental spheres. In addition, the “audience”, or the population, must also be convinced of the threat for the issue to be securitized.
When a Philippine senator inquired the National Security Council’s (NSC) head on their reluctance to raise the POGO issue as a national security threat, they stated that the nation’s territorial integrity, sovereignty, social cohesiveness, and political stability have not yet been affected. Instead, they tagged the problem as a national security concern, as the nation’s law enforcement and legal institutions have been cited for handling the situation well. In addition, the AFP assured that they were looking into the possible threats posed by POGOs, especially with espionage, but stressed that they do not want to cause any panic. What these statements show is that there is a desire to be careful in elevating the issue.
Note, as argued under the securitization theory, any problem that has been turned into a security issue allows decision-makers to skip normal procedures and use every extreme means available to resolve it. To recall, the Duterte Administration had identified the persistent issue of drug abuse and trafficking in the country as an urgent threat by using rhetoric. This led the country’s security agency to launch the controversial drug war that has killed between 12,000 to 30,000 people. In addition, the red-tagging campaign was used to tag opposition groups for having links with the nation’s communist insurgents, resulting in the imprisonment and deaths of numerous people. Such examples are why other international relations fields have criticized the theory as being partly liable for the overreaction of decision-makers.
Further, securitizing an issue tends to overshadow other problems that may need equal or more attention, which could siphon resources to other prioritized matters. This was also a phenomenon that led to the deterioration of the country’s external defense capabilities, as it instead focused on internal security threats for the past few decades. The POGO issue is also concurrent with the developments in the South China Sea Dispute, which the Philippines is facing. However, it is notable that China has been supportive of the efforts of the Philippines to uncover POGO-linked crimes. With statements reiterating China’s stance against illegal gambling. There were also concerns that PAGCOR’s revenue may be significantly reduced, that the Philippine real estate sector would also lose PHP 100 billion, that 23,000 Filipinos would lose their jobs, and that banning POGOs may force these entities underground.
With these, the investigations on POGOs have exposed the glaring realities of the Philippines’ vulnerabilities in its security. However, there are still conflicting arguments between government and security officials on how to properly designate the problem as either a national security concern or a national security threat. To reiterate, this situation is a fast-developing issue, with more things to possibly change. Despite the urgency and depth of the story behind the situation, the need for restraint in using extraordinary means to resolve the issue is much needed. What is ironically clear is that there is a lack of clarity in information. Wherein every new detail published may sway the perspectives of decision-makers towards either label. Just as what POGO was meant for gambling, the entire situation simply asks, who wants to fold or call?
Hence, leaves us with three of the following questions:
- Should POGOs be permanently banned and risk large economic losses, unemployment, and or the network going undergound?
- In this context, what should be the threshold to declare POGOs as a national security threat, and is it really necessary?
- What could be the best approach to quell nationwide organized crime and foreign subversion?
Further Reading
- UNODC: https://www.unodc.org/roseap/uploads/documents/Publications/2024/Casino_Underground_Banking_Report_2024.pdf
- PIDS: https://pidswebs.pids.gov.ph/CDN/document/1666142176_634f4fe05ce5d.pdf
- Inquirer: https://globalnation.inquirer.net/250645/as-docu-angers-guo-shes-told-about-8-steps-of-chinese-spying
