The Philippine authorities have launched a large-scale campaign to combat illegal offshore gambling operators, many of which are run by Chinese companies. The move follows growing calls to ban these activities due to their alleged links to criminal syndicates. Currently, there are between 250 and 300 offshore gambling firms operating in the country without a license, which far exceeds the number of legal operators, which is only 46.
The offshore gambling industry in the Philippines has experienced significant growth, attracting mostly Chinese customers due to the country’s liberal gambling laws. However, the pandemic and stricter tax regulations forced many operators to either relocate or go underground. Authorities are currently stepping up efforts to root out illegal operations due to their links to crimes such as human trafficking, torture, kidnapping, and financial fraud. In this context, it is important to analyze the impact of these measures on the gambling industry and the Philippine economy, as well as consider possible policy changes aimed at finally solving the problem of illegal gambling.
Scope Of The Problem: Unlicensed Operators Vs. Licensed POGOs
Illegal operators operate outside of the regulatory framework, which allows them to avoid tax liabilities and compliance with established safety and integrity standards. This jeopardizes not only the country’s economy but also creates conditions for the spread of criminal activity. Legal POGOs licensed by PAGCOR are required to comply with strict rules, including paying taxes and fees, which account for a significant share of government revenues. These operators are expected to generate 24.5 billion pesos (approximately $417 million) in fees and taxes in 2024. You can try out the best GCash casino that pays taxes and operates openly. Half of these legal operators are owned by Chinese companies that, unlike their illegal competitors, work within the legal framework, contributing to the economic development of the country.
Illegal operators not only avoided taxes, but were also linked to a variety of crimes, such as human trafficking, kidnapping, and financial fraud. This includes so-called “love scams,” where criminals use fake online identities to trick victims into providing them with money. These activities not only undermine economic stability, but also threaten national security, as noted by the Philippine Defense Secretary. Thus, the problem of illegal offshore gambling operators is large-scale and multifaceted. It requires a comprehensive approach, including active law enforcement, effective regulation, and international cooperation. Only such efforts can ensure security, economic stability and protection of citizens from criminal schemes.
Economic Impact: Revenue Losses And Regulatory Costs
In 2024, the 46 licensed operators are expected to bring approximately 24.5 billion pesos (about $417 million) to the state. These funds are used to finance various social programs, develop infrastructure, and support other government initiatives. In addition, legal operators create jobs for the local population, contributing to economic growth and reducing unemployment.
However, illegal operators, whose number is six times higher than the number of licensed operators, operate without appropriate permits and do not pay taxes. This leads to significant losses for the country’s budget. It is estimated that about 250-300 illegal gambling firms operate in the country, avoiding tax liabilities and exploiting weaknesses in the regulatory system. The lack of tax revenues from these operators limits the government’s financial capacity and puts additional pressure on legal market players.
In addition to revenue losses, the fight against illegal operators requires significant regulatory and enforcement costs. The government and law enforcement agencies have to allocate resources to conduct searches, raids, and shut down illegal businesses. This includes the cost of salaries for employees, technical support, and other operating expenses. The need for proactive law enforcement also diverts resources from other important areas, such as crime fighting and public order. In addition, illegal gambling operators are often linked to criminal organizations involved in human trafficking, kidnapping, and financial fraud. This creates an additional burden for the judicial and penitentiary systems, increasing the costs of investigations, trials and the maintenance of criminals.
The main economic challenges associated with illegal operators include:
- Loss of tax revenues: About 250-300 illegal operators do not pay taxes, which leads to significant losses for the state budget.
- Increased regulatory costs: The fight against illegal operators requires significant financial and human resources to conduct searches, raids, and closure of businesses.
- Additional burden on law enforcement agencies: The diversion of resources to fight illegal operators reduces the effectiveness of other areas of law enforcement.
- Increased criminal activity: Illegal operators are often linked to criminal organizations involved in human trafficking, kidnapping, and financial fraud, which increases the burden on the judicial and penitentiary systems.
Conclusion: Evaluating The Efficacy And Long-term Impact Of The Crackdown
The long-term impact of cracking down on illegal gambling operators includes increased government revenue as more players switch to legal platforms, which increases tax revenues. This will allow the government to invest more in social programs and infrastructure. A successful fight against illegal gambling will improve the international image of the Philippines, attracting more foreign investment and contributing to economic growth. The elimination of illegal operators also helps to reduce social problems such as human trafficking, kidnapping, and fraud, improving the quality of life of citizens and reducing crime.
Ongoing efforts to combat illegal activities will be facilitated by improved regulatory mechanisms, including the development of new legislation and the introduction of modern technologies for market monitoring. Eliminating illegal operators and strengthening control over legal POGOs increases players’ confidence in the market, which contributes to its stable development. In general, the assessment of the effectiveness and long-term impact of the fight against illegal offshore gambling operators shows significant success, but further efforts and investments in regulation are needed to ensure the stable and safe development of the gambling industry in the Philippines.