Philippine Offshore Gaming Operators (POGOs): a Trojan horse in Manila’s rich ghettos

While Philippine Offshore Gaming Operators (POGOs) handle online gaming for mainland Chinese players, considered an illegal operation in China, the “golden goose” industry employs more than one hundred thousand foreign workers deployed in major cities across the country, leaving only one-third of the positions to local Filipinos.

Prior to the Covid-19 pandemic, Philippine public and national security agencies worked quietly in silos, avoiding a stronger unified command, indulging in all sorts of compartmentalized strategies to crack down on POGO-related crime and espionage and to combat organized crime by Chinese nationals, who occupy the booming cities of Metro Manila, now considered a Trojan horse.

POGOs recreate ghettos by stirring up an image of patriarchal hegemony of transnational corporations imagined in a strict and confluent mafia culture. Unrestricted gambling goes beyond the glorification of “godfathers” and opens the door to the trafficking of drugs, human beings and weapons.

Offshore gambling for popular entertainment and recreation amplifies social inequalities and economic injustices, leading to a system of corruption locally dubbed “pastillas” or cash cows, cyber fraud, contract killing, economic crimes and prostitution. The (re)making of a Chinese ghetto in Metro Manila’s financial districts looks auspiciously odd, strategically located in such a way that it cultivates cultural acrimony and financial insecurity.

The influx of Chinese workers attached to diversified businesses has inevitably led to a variety of services catering exclusively to them and the required caution on the negative impact of POGOs has largely been sacrificed on the altar of the country’s immediate economic interests.

An economic gray area

The legitimacy of China’s resumption of offshore gaming operations, in light of the general quarantine imposed by local authorities as a result of the Covid-19 pandemic, is undeniably in question, despite the clamor to open up the troubled businesses. 

The proliferation of online gambling is starting to pose serious challenges to the Philippine government and its volatile bilateral relationship with China. Ostensibly presented as an economic gray area with an estimated contribution of PHP 94.7 billion (USD 1.87 billion) to the local economy, these gambling operations have fast turned into influence operations in turn leading to acts of money laundering and tax evasion.

Leveraging the strong trade relationship between the Philippines and China, the increasingly large number of Chinese companies operating in the archipelago have been capitalizing on geographic proximity and labor cost affordability. The actual result of the boom in demand for real estate and retail spending by Chinese nationals has led to the rapid growth of various industries and start-ups in the country. However, the social backlash caused by POGO operations has limited the scope of unpopular liberalization policies, in spite of the immediate economic gains and their related cash flow boon and bane.

Island chain strategy and Trojan virus

In August 2019, the Chinese Embassy in Manila expressed deep concern about Chinese citizens working in offshore gaming companies as Philippine authorities had proposed the establishment of self-contained POGO districts outside of Metro Manila. Much to the chagrin of Chinese officials who took it as an infringement on the rights of foreign operators, the idea was to limit interactions between local and foreign workers.   

The most controversial investment planned for POGO’s economic hubs set off alarm bells in the country’s national security community when Chinese investors set their sights on the strategically located Fuga Island in Cagayan province and the adjacent islands of Grande and Chiquita in Subic Bay, Zambales province, with the aim of building a Chinese smart city on the northern border of Luzon.

A byproduct of the Philippines’ involvement in China’s Belt & Road Initiative, the planned mega project would accelerate the penetration of the Chinese Yuan in the local economy, with the aim of supporting the geopolitical agenda of the neighboring giant. If approved, the conversion of the three islands into affluent Chinese ghettos would provide China with an opportunity to expand its access to the first island chain that connects with Taiwan, a clear step towards eventual reunification with the “renegade province”.

The dynamic presence of POGO centers near military headquarters has considerably heightened alarms and fears of espionage, partly attributed to poor urban planning and the conversion of military bases into commercial space. Worries that Chinese workers could be involved in spying operations are becoming widespread, as are concerns over the sophistication of disruptive technologies used by offshore gaming operators penetrating and compromising the country’s critical infrastructures.

Perceived as a “Trojan horse” threatening the Philippines’ economic security, the controversial online gaming industry has multidimensional implications for public safety and the related risks could have a negative domino effect on Philippine national security. Much like a Trojan malware infecting users’ devices or attacking wireless network routers, offshore gaming operations have recently been acting as economic stimulus while giving rise to a new social disease and increasing cyber vulnerability.

Picture credits: Focus Gaming News