State-run Philippine Amusement and Gaming Corp. said Thursday its online gaming revenues contracted by almost half as income of Philippine offshore gaming operators declined by as much as 80 percent during the pandemic.
Atty. Jose Tria, PAGCOR assistant vice president for offshore gaming licensing, said PAGCOR’s monthly regulatory fees of around P600-million per month was slashed by almost half since only 32 out of 60 POGOs were allowed to resume operations albeit on a limited, 30 percent capacity.
On the other hand, only half – or 111 of the 218 accredited POGO service providers – were allowed to resume operations after they were cleared by the BIR, he noted.
“Our monthly regulatory fees of around P600-million pre-COVID is now down by almost half. This should have been lower if not for the minimum guaranteed fees which allows PAGCOR to impose higher regulatory fees than two percent of POGOs’ GGR [gross gaming revenues] following the ‘whichever is higher formula’,” Tria said.
As stricter quarantine and tax rules ramped up pressure on the sector, he said the licenses of five POGOs were already cancelled, another five are suspended, while 42 service providers have requested cancellation of their accreditation.
Industry sources said COVID-19 restrictions on operational capacities, inability of foreign workers to return to the Philippines, and new tax policies were among the reasons for the spate of POGO closures.
On Wednesday, Finance Secretary Carlos Dominguez III said the exodus of POGOs from the country will adversely affect government tax revenues including corporate and value-added taxes from the real-estate sector and other POGO-dependent businesses.
Dominguez said he received information about a number of office leases cancelled by POGO companies after their foreign workers who are mostly Chinese fled the Philippines in recent months.
While the government’s direct tax revenues from POGOs are “not s much,” he said the exit of foreign workers will put a dent on real-estate prices and other businesses, which will translate to lower income tax and value-added tax collections.
Property analyst David Leechiu of Leechiu Property Consultants has consistently warned that office and residential businesses as well as restaurants, bars and retail outlers were at risk of losing substantial revenues should POGOs and their local service providers close shop. Thousands of Filipinos employed in the sector are also at risk of losing their jobs.
According to Leechiu, POGOs occupy as much as 1.7 million square meters of office space nationwide and two million square meters of residential space before the COVID-19 crisis.
Based on the property consultancy firm Colliers, the POGO slowdown will hurt Metro Manila real-estate industry as over one million square meters of office space, around 10 percent of leasable office space in the capital, were occupied by offshore gaming companies.