Philippine Auditors Warn PAGCOR Over Delinquent POGOs

June 21, 2023
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Philippine government auditors have placed new pressure on PAGCOR, by demanding the cancellation of two foreign-facing online gambling operator licences (POGOs) over non-payment of more than $620,000 in fees.

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Philippine government auditors have placed new pressure on PAGCOR, by demanding the cancellation of two foreign-facing online gambling operator licences (POGOs) over non-payment of more than $620,000 in fees.

The Commission on Audit said in a June 15 letter to PAGCOR, released on Monday (June 19), that an annual review of the gambling regulator found six areas of non-compliance requiring “immediate action”.

The most sensitive of the six saw the auditors quote PAGCOR’s own POGO manual back at the regulator in requiring licences to be cancelled in the event of unmet financial obligations.

“Despite the continued non-compliance to remit financial obligations due to PAGCOR, the licences of the subject POGOs were not cancelled, contrary to” the POGO manual, according to the auditors’ report.

It recommended that PAGCOR officials “revisit” their manual “and strictly enforce the same”.

In addition to the unpaid 238m pesos ($623,000) by the unnamed POGOs, auditors found the regulator under-calculated foreign currency-denominated accounts receivable from POGOs by 238m pesos in its total of 2.3bn pesos ($42m) owed by operators.

Other compliance failures included a negative/abnormal balance of 85m pesos for all gaming operations, and an overstatement of revenue of 26m pesos from four unnamed casinos as a result of delayed reporting dating back to 2014.

A fifth non-compliance item involved the failure of two PAGCOR satellite slot machine clubs to impose a 20 percent withholding tax on foreign customer winnings.

PAGCOR’s failure to write off up to 18 years of bad gambling debt worth 383m pesos ($7m) with “a zero percent collection rate” across most gaming segments also drew the auditor's attention.

The bulk of the debt was accrued over 16 years by an unnamed licensed casino, with another 18 years of debt reported by the PAGCOR-operated Casino Filipino branch in Cebu.

Audit commission sub-director Chito Janaban said in his letter that PAGCOR must implement the commission's recommendations on the six items and report back within two months.

The BusinessWorld online daily on Tuesday quoted a PAGCOR spokesperson as saying that the two delinquent POGOs were granted extensions to make up the payments, but it was not immediately clear if they have been able to do so or how they secured exemptions from manual requirements.

An enthusiastic supporter of online gambling, PAGCOR has been under sustained pressure for years over wayward POGO operations.

The latest scandal saw police raid a compound in Clark Freeport in early May to free more than 1,100 enslaved workers involved in cyber scam operations.

Leading POGO licensee Oriental Game was fined $350,000 late last month for failing to properly supervise affiliates who were responsible for the site.

Some Philippine senators are continuing to threaten PAGCOR with the complete eradication of the foreign and domestic-facing online gambling segments, though there is little evidence at this time that they have swayed the executive or Philippine President Ferdinand Marcos Jr., to whom PAGCOR directly answers.

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