Philippines Offshore Gambling Operators (POGOs): Off-putting

The scandal involving Alice Guo (Guo Huaping) has gripped public attention since April 2024. It has uncovered a web of corruption, systematic failures, and the shadowy operations of Philippine Offshore Gaming Operators (POGOs).

Born in China and formerly the mayor of Bamban, Tarlac, Guo is now at the heart of a high-profile investigation. What began as a crackdown on illegal online gambling and undocumented Chinese migrants has expanded to expose other issues, including Guo’s controversial acquisition of Filipino citizenship and links between POGOs, illegal drugs, extrajudicial killings and human rights violations committed during President Rodrigo Duterte’s (2016-2022) drug war.

Established in 2003, POGOs gained momentum under President Duterte, who relaxed restrictions on internet gambling to boost revenue and create jobs for Filipinos. Duterte’s Executive Order No. 13 in February 2017 formalised POGO operations, placing them under the regulation of the Philippine Amusement and Gaming Corporation (PAGCOR). The executive order facilitated POGOs’ immense popularity and satiated demand for online gambling.

A year later, POGOs faced scrutiny during Chinese President Xi Jinping’s state visit to the Philippines. China called for a halt to their operations. The request stemmed from the fact that POGOs primarily target Chinese gamblers (punting is illegal in China). Duterte initially declined, citing the economic benefits to the Philippines. Later, however, he agreed to review the matter during his state visit to China in August 2019. The review, however, did not put the brakes on POGOs. The share of Filipinos employed in the POGO industry rose from 14.5 per cent in 2019 to 48.9 per cent in 2022, according to a cost-benefit analysis by the Philippine Institute of Development Studies. Real estate consultant Leechiu Property has claimed that the exit of POGOs could cost more than 200 billion pesos in economic losses. The PIDS study concurs with reports from the National Economic Development Authority (NEDA), Department of Finance (DOF) and Philippine National Police (PNP), which indicated that the social costs of POGOs — such as human trafficking, kidnapping, money laundering and other crimes — far outweigh the benefits.

The investigations into POGOs have revealed not only controversies surrounding Guo but also systemic failures within the Philippine government.

The problem is that POGOs have since devolved into a cover for widespread illegal activities. On 13 March 2024, the Presidential Anti-Organized Crime Commission (PAOCC) and PNP raided Zun Yuan Technology Inc. (ZYTI), a POGO hub near the Bamban Municipal Hall. The raid, prompted by a Vietnamese worker’s report of illicit activities on the 7.9-hectare property, led to the arrest of 800 employees. This included around 500 foreigners, of which 427 were identified as undocumented Chinese nationals. The PAOCC decried the “lazy regulation, lack of political will, or the intervention of a foreign state”. This enabled “dangerous criminals to hide in plain sight.”

Guo’s connection to the operation emerged through Baofu Land Development Inc., the real estate company which had leased the property to ZYTI. Although Guo claimed to have divested her shares in Baofu Land when she ran for public office in 2019, investigations revealed ongoing ties with ZYTI. Further scrutiny uncovered that her office had even paid the utility bills for POGO operations. Subsequent investigations by the Senate, the House of Representatives, and law enforcement exposed a network linking Baofu Land, ZYTI, and multiple companies associated with Guo’s family.

Some directors and owners of the aforementioned entities were found to have ties to transnational syndicates in China and Singapore. Huang Zhiyang, Guo’s partner in Baofu Land, reportedly held multiple passports, including Taiwanese, Chinese and Cypriot ones. Guo’s two co-investors— Zhang Ruijin and Baoying Lin — were convicted in Singapore’s largest money laundering case. The ownership structure of these companies was further obscured by “ghost owners”, including market vendors and even Guo’s staff.

The investigations into POGOs have revealed not only controversies surrounding Guo but also systemic failures within the Philippine government. President Ferdinand Marcos Jr.’s directive to end all POGO operations by the end of 2024 is a positive step, but the order to shut down POGOs in less than six months has left many stakeholders and government agencies unprepared. The Senate has cautioned that safety nets must be in place for POGO workers and other stakeholders affected by the ban. Many displaced workers, both Chinese and Filipinos, remain unemployed. Many POGO workers who refused or could not go back to China have gone underground. Chinese media have reported a rise in crimes involving displaced POGO workers, including kidnapping, carnapping, and murder.

In the medium term, the authorities need to put in more effort to dismantle the extensive network of POGOs. This would help to eradicate POGO-related illegal activities. Among them are legislative measures to formalise a POGO ban. Manila will also need to work with the Chinese Embassy in the Philippines on self-deportation plans for undocumented Chinese (POGO workers or not). Further action must also be taken to locate and dismantle remaining POGO hubs, but law enforcement agencies tasked should avoid indiscriminate raids on business establishments suspected of harbouring POGO workers. In putting down the ban on POGOs, the government has taken a step in the right direction, but it still has its work cut out for it.

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