Economic Zone Boss Slams PAGCOR Over 'Failed' Online Regulation

August 23, 2023
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The head of the Philippine special economic zone that turbo-charged foreign-facing online gambling operations before being sidelined has attacked PAGCOR for having “failed” in regulating the online sector.

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The head of the Philippine special economic zone that turbo-charged foreign-facing online gambling operations before being sidelined has attacked PAGCOR for having “failed” in regulating the online sector.

Cagayan Economic Zone Authority (CEZA) chief executive Katrina Ponce Enrile said PAGCOR should terminate its Philippine Offshore Gaming Operator (POGO) licensing powers and return regulation of the online gambling space to the nation’s special economic zones.

Alluding to years of scandals and congressional probes into mass arrests of illegal foreign workers, tax avoidance, a corrupt PAGCOR contractor, kidnapping and other serious crime, Enrile told Macau-based gaming media outlet AGBrief that POGO problems under PAGCOR have proliferated.

They “just grew without people really understanding the magnitude, the potential, the ramifications, or the consequences that it could create”, she said.

PAGCOR “should only be dealing with local bets”, she added.

Enrile’s intervention is noteworthy as being CEZA’s first public attack on PAGCOR’s record since former President Rodrigo Duterte ordered CEZA-registered operations in 2016 to ditch CEZA and obtain a PAGCOR licence if they wished to operate out of Manila.

The majority of operators did so, with only a small minority leaving Manila to set up business in remote Cagayan Province.

Enrile’s comments reported on Wednesday (August 23) follow a presentation in Manila in July in which she launched a rehabilitation of the Cagayan Special Economic Zone as a “safe haven for [gambling] operators and players”.

“To make this possible, CEZA is making all efforts to streamline its process, reduce bureaucratic red tape and ensure a smooth journey for licensees by embracing an investment-centric approach that fosters a culture of growth, collaboration and innovation,” the Manila Times quoted her as saying.

She added that CEZA is employing former criminal investigators and military-grade law enforcement officials to “fortify law enforcement and monitoring systems” and prevent “revenue leakages”.

After Duterte denuded CEZA of its online gaming revenue in 2016, CEZA officials continued to promote gaming in the zone but eventually pivoted to cryptocurrency operations as a draw for investors and start-ups.

However, Enrile made only oblique “digital” references to crypto in her July speech, with gaming returning to the forefront.

Enrile was appointed to her CEZA post by current President Ferdinand Marcos Jr. in May this year, suggesting she has a degree of leeway in attacking PAGCOR, which also answers directly to the Office of the President.

Enrile is the daughter of heavyweight politician Juan Ponce Enrile, 99, who as senator was influential in PAGCOR’s evolution. Juan Ponce Enrile is also currently chief legal counsel in the Office of the President.

Despite her connections, influence and record as an entrepreneur, Enrile faces significant obstacles, including convincing a battered online gaming sector that Cagayan can offer better terms than the upscale business district of Makati in Metro Manila.

Listed Philippine company DigiPlus Interactive Group, which changed its name from Leisure and Resorts World Corporation in March, noted in its latest annual report that subsidiary First Cagayan Leisure and Resort Corp, to which CEZA outsourced almost all foreign-facing online regulation, only boasted 11 licensees at the end of 2022 and 13 at the end of 2021.

This was down from 138 licensees at the time of PAGCOR’s takeover of most online regulation seven years before.

PAGCOR's line-up of POGO licensees has since halved because of the COVID-19 pandemic, Chinese government pressure on the industry and Philippine government crackdowns. As of August 23, PAGCOR’s own licensee slate lists 32 POGO licensees and 105 accredited service providers.

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