SPECIAL REPORT: Is POGO good for the country?

Conclusion

MANILA, Philippines — One sector that is clearly benefiting from the Philippine Offshore Gaming Operator (POGO) landscape introduced by the Philippine Amusement and Gaming Corp. (Pagcor) is property because of the growing demand for office space.

Andrew Tan’s Megaworld Corp., which is among the top, if not the top lessor of office space in the country, for one, is reaping the rewards of this new and growing segment.

Megaworld senior vice president Jericho Go said the company has already leased 80,000 square meters to four POGO operators.

“They need space for their back office, customer support operations, IT and technical support.

POGOs require three categories of office space. Category one are those that have live streaming where there are ladies that serve as dealers for online games. Category two and three, meanwhile, are sub sectors of the business process outsourcing (BPO) industries which provide back office support.

“So for example, if there are questions on how a game is played online, they will provide clarifications. That is why you need a lot of Chinese and Mandarin proficient people and that is why they require a lot of office space. And in the same manner, if they have difficulties, if for example the website is down, there has to be an IT guy,” Go explained.

One POGO license requires a minimum of 10,000 square meters of office space.

David Leechiu, a known property consultant, said demand would continue to grow as POGO grows.

“There is strong office take up in 2017 despite softening of IT-BPM demand,” Leechiu said.

He said that in 2016, online gaming accounted for 56,000 sqm of office space, while as of end-  August, online gaming already accounted for 125,000 sqm.

The demand is expected to pick up as Pagcor has indicated that it would issue more licenses.

POGO ladies

It seems all good – additional office space, employment opportunities for POGO ladies and growth in related economies.

Social costs

But development always has social costs. An executive of a property player said the category one POGOs  – or those that do live streaming  – are not good to be mixed with the usual mixed use commercial estate developments, some of which are family oriented.

“The ladies are in their skimpy and revealing clothes and it would be awkward to see them in groups smoking in malls,” the executive said.

There is also a view that the ladies, because they have to wear revealing clothes, may be exploited.

But an industry source, who operates several POGO companies, debunked this view.

“There is no way that the ladies can be sexually assaulted or receive innuendos because it’s not face-to-face,” he said.

The same source said the clothes are “just a bit sexy, but still decent” just so it’s not boring and monotonous to the eye of the player who can spend hours in front of the screen, in full view of the female dealer.

Another possible negative effect observed by the executive of a property developer is that some Chinese employees, when mixed in other offices, tend to  be rowdy and noisy when huddled in groups that they end up disturbing other tenants.

Thus, the property company said they have to be lumped in one building and not mixed with other office tenants. This requires additional costs as developers need to build exclusive POGO spaces.

Another problem is density, an industry source said. An unexpected boom, the source said, may worsen the already worsening traffic and overpopulation in Metro Manila.

Money laundering

 When Pagcor came out with the POGO scheme, it intended to thwart fraud and money laundering which may happen in brick and mortar casinos.

But is POGO spared from the possibility of being used as a haven for launderers? All that launderers have to do is to have gamblers open accounts for them as if it’s for online gaming.

A POGO operator, however, said this is unlikely because they have their own KYC system and internal security measures. They also have realistic limits so that account holders don’t use online games to park their funds.

Pagcor licenses

POGO will definitely grow even more with Pagcor hunting that its previously indicated cap of 50 licensees no longer applies.

When it started issuing licenses in September 2016, Pagcor said it would issue around 25 POGO licenses and would first study the landscape. As of Oct. 30, however, Pagcor has already issued 51 licensees, data from the regulator said.

In terms of revenues, Pagcor said POGO’s nine-month revenues have already reached over P2 billion or nearly twice the P1.1 billion reported in the first half period,  according to CalvinAyre, citing data from Pagcor.

Overall gaming revenues rose to P42.4 billion in the nine months to September, it also said.

The government is definitely churning additional revenues from the sector.

Whether or not, the advantages will outweigh the social costs in the end is still unclear.