STL, lotto probe to open Pandora’s box

“A grand conspiracy” and massive corruption inside the Philippine Charity Sweepstakes Office (PCSO) triggered the sudden closure of its gaming operations (small town lottery or STL, lotto and Keno). President Duterte said names would soon come out as he ordered the Department of Justice to conduct a full investigation.

The President became aware of the numerous anomalies and collectibles at the PCSO, triggering the hastily arranged televised address on Friday night. I learned that for several weeks, the PCSO had been the recipient of numerous temporary restraining orders from different judges, asking it to refrain from collecting from errant STL operators. When new PCSO General Manager Royina Garma reported for work on Monday, her hands were tied and she could not do anything.

The Commission on Audit said that in 2017 and 2018, there were “understated STL revenues” of P7.32 billion. The PCSO also failed to collect P4.6 billion in monthly sales from STL collectors, it added.

Insiders said the most delinquent STL operators came from the ranks of new players who, because of “jueteng” inexperience, did not make money out of their STL businesses. As a result, they failed to pay their monthly obligations to the PCSO, particularly the charity fund and franchise taxes.

Several months ago, there were rumors about STL franchises in the provinces going for P50 million each that were being cornered by friends and classmates of former PCSO officials. Some of these franchises were failed big business operations that accumulated arrears and are now being sought by PCSO.

Around 700,000 people and their families are directly affected by the closure of STL outlets nationwide. A businessman friend warned that if this situation was to continue, these people would get hungry and might turn to the illegal drug trade.

Officially, the PCSO lists 315,046 jobs in STL—274,649 sales agents (“kubradores”), 26,677 sales supervisors (“kabos”) and 13,720 organic employees. The real figures, however, conflict with those of the PCSO.

Talk is rife about the very serious “underdeclaration” of STL revenues since its legalization via Republic Act No. 1169. In 2015, during the time of President Benigno Aquino III, the PCSO collected from STL a measly P4.7 billion. In 2016, it went up to P6.3 billion.

After Mr. Duterte’s assumption, STL collections increased dramatically to P15.7 billion in 2017 and in 2018, revenues zoomed to P26.1 billion. This begs the question: Which group got the rest of the STL (or jueteng) money in the past administrations?

Now comes allegations that even the present P26.1 billion collection is underdeclared.

Another growing issue is the closure of lotto outlets operated by the PCSO, with Pacific Online Systems Corp. providing operating and management systems for the lottery industry.

Affected are 8,769 outlets nationwide: 2,251 in Metro Manila, 1,952 in the Visayas, 1,674 in Mindanao, 1,145 in Central Luzon, and 1,747 in Southern Tagalog and Bicol region.

But the interesting part is the bidding for the next lotto equipment lease agreement with the PCSO on July 31. Was the President’s decision related to this upcoming development? Will Pacific Online Systems Corp. be able to renew its contract or will another group from Malaysia, supposedly backed by by a politician and gaming expert, take over?

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