POGO Shutdown: Effects on Taxes, Employment and Real Estate

Philippine Offshore Gaming Operators (POGO) have stirred up a lot of debates lately. These online gambling platforms, mainly serving foreign clients, have had a big impact on the Philippine economy. They’ve brought in significant tax revenue and created thousands of jobs but are linked to kidnappings and illegal detentions.

Recently, the government decided to ban POGOs altogether. President Marcos, in his 2024 State of the Nation Address, made it clear: “The grave abuse and disrespect to our system and laws must stop. Kailangan na itigil ang panggugulo nito sa ating lipunan at paglapastangan sa ating bansa.” This shows just how serious the issue is.

This blog post examines how banning POGOs could affect tax revenues, employment, and the real estate market in the Philippines. Understanding these impacts will help clarify what the future might hold for the Philippines without POGOs.

The Financial Contributions of POGOs

Taxes collected from Philippine Offshore Gaming Operators (POGOs) saw a significant increase in recent years. In 2022, the Bureau of Internal Revenue (BIR) managed to collect PHP 8.88 billion in taxes from POGOs, more than doubling the PHP 3.91 billion collected in 2021. However, despite this notable rise, the revenue remains significantly lower than expected. The Duterte administration’s POGO Law, passed in 2021, projected an annual tax income of PHP 32 billion from the industry. The actual collection of PHP 8.88 billion thus represents only about 30 percent of the expected revenue, highlighting a gap between projections and reality.

Effect of Banning POGO

Loss of Revenue

With the ban in place, the immediate loss of tax revenue from POGOs is a significant concern. The government will need to find ways to fill this financial gap, which could impact public services and infrastructure projects. Economists say losing POGO-related tax revenue could substantially impact the national budget and funding for critical public programs.

Loss of Employment

The ban on POGOs also means the loss of thousands of jobs. Many Filipinos who were employed directly by POGOs or in businesses that catered to POGO workers will be affected. Tengco indicated that these 43 Integrated Gaming Licensees (IGLs) employ 31,000 Filipinos directly. Another 9,800 Filipinos are part of the special class of business process outsourcing (BPO). This could lead to increased unemployment rates and economic hardship for those individuals and their families. The ripple effect of job losses could extend to food services, transportation, and retail, which benefited from POGO employees’ spending.

Real Estate Market Adjustments

The real estate market in the Philippines has also been significantly influenced by the presence of POGOs. The demand for office spaces, residential units, and commercial properties surged with the influx of POGO operators and their employees. With the ban, there is expected to be a sharp decline in demand for these properties. Real estate developers and landlords may face increased vacancy rates and potential losses in rental income. This could lead to a broader downturn in the real estate market, affecting property values and investment returns

Conclusion

Banning POGOs in the Philippines marks a significant shift in the country’s economic and regulatory landscape. The immediate loss of tax revenue, jobs, and real estate demand is challenging. This move opens opportunities for economic diversification. By addressing the issues linked to POGOs, the Philippines can build a more stable and prosperous future.