Risa warns of loopholes in Pogo shutdown order

Sen. Risa Hontiveros —Senate PRIB

MANILA, Philippines — Sen. Risa Hontiveros said on Saturday that the presidential order to terminate Philippine offshore gaming operators (Pogos) contained loopholes that may allow their continued operation inside casinos and freeports.

Executive Order No. 74, signed by President Marcos on Nov. 5, did not explicitly declare that the ban on Pogos covered all establishments that were not under the supervision of the Philippine Amusement and Gaming Corp. (Pagcor), Hontiveros said.

The state gambling regulator had said that the prohibition, which the President announced during his third State of the Nation Address (Sona) on July 22, would include all Pogos, which Pagcor had since renamed as internet gaming licensees, or IGLs.

READ: Marcos order banning Pogos finally out: All for national security

“While I laud the aims of the executive order and thankful for the reintegration program for the displaced workers, there are things in the EO that are not clear,” Hontiveros said in a statement.

Silent on ecozones

For one, she noted that Section 1b of the order stated that Pogos, which flourished during the Duterte administration, “excludes online games of chance conducted in Pagcor-operated casinos, licensed casinos or integrated resorts with junket agreements.”

“It appears that Pagcor-operated and -licensed casinos are exempted (from the ban) on operating offshore online games of chance,” Hontiveros said.

“Does this mean that Pogos may be allowed to operate in casinos like City of Dreams or Fontana (Leisure Park)? Or in resorts that operate casinos (inside their property)?” she asked.

Hontiveros, who has led two separate Senate inquiries into Pogo-related crimes, also pointed out that the EO was silent about the power of special economic zones, like the Cagayan Special Economic Zone and Freeport, to grant permits to offshore gambling companies.

Cagayan Economic Zone Authority (Ceza) Administrator Katrina Ponce Enrile, the daughter of Chief Presidential Legal Counsel Juan Ponce Enrile, had denied reports that Ceza allowed Pogos to operate at the freeport in Sta. Ana, Cagayan.

“The ‘other offshore gaming licensees’ are those ‘authorized under their respective charters and subject to the supervision and/or jurisdiction of Pagcor,’” Hontiveros said.

Order to Ceza

“But Ceza and Apeco are both outside the supervision and jurisdiction of Pagcor,” she added. Apeco is the Aurora Pacific Economic Zone and Freeport Authority in Casiguran, Aurora.

Malacañang on Saturday said that in a memorandum from Executive Secretary Lucas Bersamin on the same day the EO was signed, Ceza was directed to strictly and immediately comply with the President’s order.

Bersamin told Enrile that “you are hereby instructed to adhere to the directive issued by the President during his State of the Nation Address on 22 July 2024 regarding the immediate ban of Philippine Offshore Gaming Operators or Internet Gaming Licensees in the Philippines, subject to applicable laws, rules and regulations.”

“For strict and immediate compliance,” he said.

For national security

Originally envisioned to cater to bettors abroad, particularly Chinese, Pogos became entangled in various criminal activities, such as kidnappings, killings, human trafficking, torture and cyber fraud. These were exposed during Senate hearings on Pogos spearheaded by Hontiveros.

In issuing the EO on Friday, Marcos said that it was the state’s “paramount duty to safeguard national security, maintain public order, uphold the rule of law, protect the safety of its citizens and ensure the integrity of the social fabric of the nation.”

On July 31, a week after the President’s Sona, Enrile and her father appeared at a House hearing on crimes linked to Pogos where they said that the prohibition on Pogos should not destroy Ceza’s operations, including its offshore gaming licensees.

Enrile said Ceza had offshore gaming licensees or interactive gaming (iGaming) operators. She said the foreign iGaming operators all operate legally and are barred from soliciting or accepting bets from the Philippines or from countries where gambling is illegal.

Ceza has the authority to conduct offshore iGaming operations since its charter allows it to register enterprises organized or based here and abroad, Enrile said. The Ceza charter was principally authored by her father, a former senator.

Unique hub in Asia

The Cagayan Freeport Zone is the first and only regulated interactive gaming jurisdiction in Asia, where foreign iGaming operators are licensed to conduct interactive gaming activities like sports betting, telebetting, e-casino and random number games.

Enrile told the lawmakers that Ceza’s iGaming activities “do not in any way negatively affect, influence, nor contribute to the proliferation of gambling activities,” and that the President’s Pogo ban should not be to Ceza’s detriment.

She did not explain why shutting down those deemed to be Pogo companies would lead to the detriment of Ceza when in its own report in June this year, there were only 12 interactive gaming support services and business process outsourcing operators out of 96 registered enterprises.

The report, however, did not indicate how much investments had been poured in by the 12 iGamers and BPOs.

Locators

The tourism sector was the largest business category, with 16 registered enterprises. Other leading sectors included trading and services (15 registrants), financial technology and offshore virtual currency exchanges (13 registrants) and real estate (11 registrants).

In a 2017 report, the Commission on Audit said that of the 92 locators or investors Ceza had then had pumped in P8.753 billion into the economic zone. It said 35 were in iGaming, 14 in trading and other related services, 12 in tourism and resort services, seven in real estate, five in leisure facilities development and operation, three BPOs, three more identified as gaming operators, three in mineral processing and exportation, plus 10 in other businesses, such as port operations and logistics.

Ambiguities

Hontiveros said the ambiguities in the President’s order highlighted the need to enact a “clear law to move forward with a meaningful, clear, unequivocal and comprehensive ban.”

She took the same position as Sen. Joel Villanueva on two Senate bills—Senate Bill No. 2752, or the Anti-Pogo Act, and Senate Bill No. 1281, or the Anti-Online Gambling Act—in pushing for the immediate passage of the measures that would outlaw all kinds of internet-based gambling in the country.

“I will make sure during the periods of interpellation and amendments that these gaps and loopholes (in EO 74) are addressed,” she said.

Villanueva said the President took a “decisive action” in issuing the EO and it showed the administration’s sincerity in “permanently shutting down Pogos while ensuring (the) welfare of displaced Filipino workers.”

“As we have consistently stated, the social costs of Pogos far outweigh any benefit, which is why it’s time to remove them from the country once and for all,” he told the Inquirer.

“Legislative action will solidify the executive’s policy and ensure its lasting impact,” said the senator, who is also a Christian pastor.

Money laundering

EO 74 said the increased crime rate, social instability and exploitation of people significantly outweighed the economic and social benefits of Pogos.

The Anti-Money Laundering Council said Pogos were susceptible to money laundering, fraud and other illicit financial activities, and pose threats to the integrity of the national financial system.

“The high reputational risks associated with Pogos/IGL operations deter foreign investment and tourism, undermining the efforts of the national government in promoting the country as a safe and sustainable investment and tourism destination,” EO 74 said. —with a report from Inquirer Research