Published: March 10, 2019

Pagcor seeks regulation of gaming operators

State-owned Philippine Amusement and Gaming Corp. (Pagcor) is calling for the commitment of other government agencies to ensure that Philippine-based offshore gaming operators (POGOs) follow regulations.

“[W]e opine that the developing offshore gaming industry should be regulated but not without the aid of appropriate government agencies,” it said in a statement issued on Friday.

Being the government agency that regulates gaming in the country, Pagcor said it requires applicants for offshore gaming licenses to submit their company registration with the Securities and Exchange Commission, in view of the latter’s requirement for tax identification number.

This is in line with Revenue Memorandum Circular 78-2018, issued last September, which states all foreign gaming operators and POGOs, including those with offshore licenses, should register with the Bureau of Internal Revenue (BIR) as a prerequisite.

“POGO licensees are required to uphold responsible gaming in the conduct of their operations and production of games,” Pagcor said.

The state-run firm said its latest statement was meant to shed light on Finance Secretary Carlos Dominguez 3rd’s recent claim that the government was losing at least P3 billion a month in tax revenue from foreigners working for offshore gaming operators who are not paying income taxes.

According to Pagcor, foreign workers are regulated by the Department of Labor and Employment (DoLE) and the Bureau of Immigration (BI).

“Pagcor upholds lawful employment,” it said. “Employing undocumented foreign workers by licensed operations and their accredited service providers is a violation warranting imposition of demerits, fines and other administrative penalties, without prejudice to suspension of operations and/or cancellation of license or accreditation.”

Nevertheless, Pagcor said it is committed to uphold the integrity of gaming by taking part in a recently created inter-agency task force that will consolidate and reconcile a list of foreigners working for service providers of POGOS.

It added that technical working group discussions and inter-agency communications are being observed among government agencies such as the BIR, DoLE, BI and other law enforcement agencies such as the Philippine National Police and the National Bureau of Investigation.

“Pagcor actively takes part in this inter-agency coordination by providing requested information necessary for the fulfillment of mandate of the concerned government agency,” Pagcor said.

“By partaking in inter-agency efforts in regulating offshore gaming operations, Pagcor has always supported the government’s policy of equitable and progressive taxation, lawful employment and promotion of public welfare,” it added.

Pagcor noted that since 2016, POGO operations have been contributing significantly to its overall revenues, which eventually go to the government’s coffers and various mandated beneficiaries.

In 2016, POGO operations generated P657 million and P3.924 billion in 2017 and P7.365 billion in 2018, it said.

The new machines are called Video Lottery Terminals, often referred to as VLTs.

“Recently, these machines were legalized in Illinois, and now they are spreading to our state despite the fact that Missouri law has not been changed to allow VLTs,” Schatz said. “These are games of chance with cash payouts that clearly seem illegal to me, but the companies pushing VLTs call them ‘gray machines’ instead of what they really are and that is ‘black market.’ ”

Schatz added he does not agree with the term “gray machines.”

“These are illegal machines and should be treated that way,” he said. “Not only are these machines illegal, but they weaken the Missouri Lottery, which helps fund public education in our state. I think it is time our state takes action and enforces the law.”

Missouri has an established system of regulating games of chance in licensed casinos and through products from the Missouri Lottery, like scratcher tickets and other lottery products.

To combat the machines and lost state revenue, Schatz, who has broad power over the Senate calender, filed Senate Bill 431 on Feb. 25.

“This is one of only a handful of bills that I’ve sponsored as president pro tem of the Missouri Senate,” he said. “I’ve done this because we can’t allow those who operate illegal gambling machines to benefit if the Legislature decides to legalize VLTs in truck stops and other locations.”

On Friday, Schatz told The Missourian the fact that he will be handling the bill personally shows it is a major priority for him.

“This is something I am very passionate about and I’m going to fast track this bill,” Schatz said. “It will be heard in committee next week and should be voted out and put on the Senate calendar quickly. Somebody has to take ownership and we have to get ahead of these things. They are going outside of the law.”

Currently, the Missouri Gaming Commission (MGC) does not regulate the machines and any reports are referred to the Missouri Highway Patrol Division of Drug and Crime Patrol, which may or may not conduct investigations and hand the findings on to local prosecuting attorneys.

The new legislation would allow the MGC to enter into agreements with federal, state, and local agencies for investigations relating to and the enforcement of criminal provisions relating to illegal gambling.

It also would modify the definition of “gambling device” for the purposes of provisions of law relating to the prosecution of illegal gambling by including any device, machine, paraphernalia, or equipment not approved by the Missouri Gaming Commission or State Lottery Commission. 

“Most importantly, any establishment that is convicted of participating in illegal gambling will have their liquor license revoked, and they will lose their ability to sell Missouri Lottery products,” Schatz said. “This penalty will ensure that illegal gaming is taken seriously.”

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