Has the POGO Ban Affected the Attractiveness of PH as an Investment Hub?

October 3, 2024 Philippines iGaming & Gambling Industry Updates

The Philippine Offshore Gaming Operators (POGO) sector has recently faced intense scrutiny, culminating in a total ban by the government. This decision raises critical questions about the Philippines’ future as an investment hub. To gain insights on this issue, Asia Casino News (ACN) conducted interviews with key figures in the gaming industry during the 3rd Annual SPiCE Philippines event held at Shangri-La Mactan in Cebu from September 17-19, 2024. Their perspectives provide a nuanced understanding of the impact of the POGO ban on investment potential in the country.

Understanding the POGO Ban

The POGO ban was announced during President Ferdinand Marcos Jr.’s 2024 State of the Nation address. It aims to curtail illegal operations that have plagued the sector, including human trafficking and scams disguised as gaming activities.

Joe Pisano, CEO of Jade Entertainment and Gaming Technologies, noted, “Unfortunately, a few bad actors destroyed that industry. It affected a number of very good companies. This has affected not only the operators but it has also affected some of the special class BPOs that are servicing offshore companies in the US and the UK.” He emphasized that the ban targets illegal operators rather than harming the entire gaming industry.

Continued Investment Confidence

Despite the challenges posed by the POGO ban, industry leaders remain optimistic about the Philippines as an investment destination. Akili Polee, CEO of DeFiX Solutions LTD, highlighted the importance of allowing local operators to compete. Polee believes that redirecting funds from the banned POGO sector towards local enterprises could stimulate economic growth. “Absolutely, if the government allows these small operators to compete. If they allow small operators to come in and compete, that’s when things could flourish for the country. Because you’re talking about getting rid of a quarter million employees that came from China.

“If you use those funds and give that money to new operators from the Philippines, that’s new funding and salaries to people who need them in the country. That’s where you will see a better return of investment and also, you’ll see that money being utilized and staying in the country. That’s important for the economy of the Philippines.”

Andrew Pearson, founder of Intelligencia Limited, echoed this sentiment, stating, “I think the Philippines should keep in mind the advice from Latin writer Publilius Syrus: ‘A good reputation is more valuable than money.’ The social cost of these POGOs was extremely high. The story did not reflect well on the gambling industry in many ways. These crimes were heard around the world, so the sooner the government addressed and cleaned up, the better.”

He further noted that while the loss of revenue from the POGO sector seems minimal, it could be compensated by incoming investments, emphasizing, “A country’s business reputation is an important variable in the equation investors use to decide where to invest. Reputation might be more valuable than money, but it might also attract coveted investments too.”

Harmen Brenninkmeijer, Managing Partner of NYCE International, also shared optimism, saying, “Absolutely, the Philippines is primed for the future of the gaming industry, especially with the present market growth under PIGO [Philippine Inland Gaming Operators License], focusing on developing the local market. However, there is one major limitation and that’s the inability of owning your company 100% if you’re an investor from outside the Philippines.” This limitation remains a concern for foreign investors looking to enter the market.

Evan Spytma, CEO of Casino Plus, reinforced their commitment to invest significantly in the Philippines. He disclosed that his company is investing “a substantial amount. Hundreds of millions, but we believe in the future of the Philippines: both land-based and online, so we think it’s a safe investment.” His confidence suggests that, despite the political climate, the gaming industry can continue to thrive.

A New Direction for the Industry

The overall consensus among interviewees is that the POGO ban, while disruptive, may ultimately lead to a healthier gaming environment.

During one of the panels at SPiCE Philippines 2024, Brenninkmeijer remarked on the need to address the root issues associated with POGOs, emphasizing that “if you talk about human trafficking, that’s not a gaming problem. That’s actually an immigration problem. It has nothing to do with gaming.” He stressed the necessity of better immigration enforcement rather than blanket bans on the industry.

In a separate interview with ACN, Brenninkmeijer said about the POGO ban: “It raises concerns as to why politicians have placed the blame solely on POGOs, PAGCOR [Philippine Amusement and Gaming Corporation] and the gaming industry, when the issues appear to involve other factors such as immigration as well. Moreover, the effects of the ban extend beyond the Philippines, as it highlights broader regional challenges that could influence investor confidence across Southeast Asia.”

Akili Polee noted the importance of this reset, stating, “I feel like it’s very important for President Marcos Jr. to put pressure on POGOs and remove them in order to reset everything.” He believes fostering a local gaming environment could create jobs and wealth for Filipino citizens, further enhancing the country’s investment appeal.

While the POGO ban has forced a re-evaluation of the gaming landscape, many believe it opens the door for legitimate operators to emerge. Joe Pisano explained, “The POGO ban is addressing illegal operators that were using gaming as a front for their scam businesses. They’re not gaming people; they’re scam artists.” He underscored that the future may still hold opportunities for offshore gaming once the sector is cleansed of illicit entities.

The sentiments shared by industry leaders indicate that the POGO ban could lead to a more robust and sustainable gaming sector. Evan Spytma added, “Absolutely, I really feel like we’re just scratching the surface on what’s possible here in the Philippines.” His optimism suggests that, provided the industry adapts to new regulations, growth remains possible.

The POGO ban has undeniably stirred significant changes in the Philippine gaming industry. However, insights from key figures suggest a potential silver lining. By targeting illegal activities and encouraging local investments, the Philippines could reshape its gaming landscape into a more attractive investment hub. While challenges remain, the commitment from industry leaders to adapt and invest indicates that the Philippines still holds promise for future growth in the gaming sector.