PAGCOR Admits To Probity Weaknesses In Online Gambling

March 19, 2024
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Philippine gambling regulator PAGCOR has admitted to defects in vetting foreign-facing online gambling licensees (POGOs) following the latest raid on a cyber scamming operation that freed more than 850 people.
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Philippine gambling regulator PAGCOR has admitted to defects in vetting foreign-facing online gambling licensees (POGOs) following the latest raid on a cyber scamming operation that freed more than 850 people.

PAGCOR needs help from local officials, law enforcement agencies and the private sector to implement the “cleansing process” that online gambling requires, according to Jessa Fernandez, the assistant vice president of PAGCOR’s Offshore Gaming Licensing Department.

“We admit that although we exert so many efforts, PAGCOR alone cannot do this,” Fernandez told the ASEAN Gaming Summit in Manila on Tuesday (March 19).

“We need the help of the local government, the law enforcement agencies, and even the operators themselves.

Fernandez was responding to a Vixio GamblingCompliance question on last week’s raid on a 36-building compound in the Tarlac Province town of Bamban, just north of Clark Freeport.

The operator of the compound, former POGO licensee Zun Yuan Technology Inc, is under police and PAGCOR investigation over alleged cyber scamming operations and enslavement of its workforce, which initial reports placed at 875, including more than 430 Chinese nationals and citizens of at least six other nations.

Hiding in plain sight, the compound is located behind Bamban’s police station, municipal hall and courthouse.

Since the raid, officials have revealed that the compound held luxury vehicles, including villas, a swimming pool, and a tunnel network reaching outside the property, suggesting that suspects may have escaped during the raid.

The compound was previously raided in February, with police then accusing Hongsheng Gaming Technology, whose POGO licence had been cancelled in late 2022, of using online gaming as a front for cryptocurrency scam operations.

PAGCOR has replaced the informal acronym “POGO” (Philippine Offshore Gaming Operator) with the official term “internet gaming licensees” (IGLs).

Fernandez said Zun Yuan had been undergoing a vetting process and had only received a provisional licence before it was cancelled on Wednesday (March 13).

“I know that the cleansing process will not be perfect right now, and will never be perfect,” she said.

“But I am very sure and am very confident that we have come a long way from last year, and the years where so many criminal activities have been happening in the operations of our internet gaming licences,” she said.

PAGCOR director Gilbert Remulla said the regulator will learn from the incident.

“Our regulations for this are being constantly improved over time, and we will always respond to the challenges,” he told the summit.

“Like this latest [incident], [we] definitely will be taking into account the details behind it. And if we need to make adjustments to our regulations and our policies, then definitely [so].

“Nothing is set in stone, so if we need to be stricter, definitely.”

PAGCOR chairman and CEO Alejandro Tengco told Vixio after the panel that the illegal operation at Bamban escaped the attention of PAGCOR’s probity checks because Zun Yuan had leased the offending location within the compound to a third party.

The nature of the relationship between Zun Yuan and the third-party cyberscamming organisation remains unclear, and is still under investigation, Tengco confirmed.

Fernandez told the panel that illegal operations uncovered last week were found “many, many buildings away” from the building whose floors were approved by PAGCOR for gaming operations.

Still, the latest raid has cast a shadow over PAGCOR’s ability to guarantee the suitability of its licensees.

It has also obstructed the regulator’s public relations drive, including at the ASEAN Gaming Summit, where PAGCOR has been a regular speaker and promoter of the Philippine gaming industry.

Tengco’s keynote presentation on Tuesday heralded the aggressive recovery of the Philippine gambling industry from the coronavirus pandemic.

He linked 2023’s record gross gaming revenue of 285.3bn pesos ($5.1bn) and sustainable industry growth to the expansion of integrated resorts and the “strong performance” of electronic gaming, the nation’s fastest-growing segment.

The Philippines’ gaming performance, generous tax structure, business-friendly regulation and revenue outlook promise the nation will become the “gold standard for gaming in the Asia-Pacific” and the second-biggest market after Macau, Tengco said.

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