While the Philippine Offshore Gaming Operator (POGO) segment is falling out of favor, the Philippine Inshore Gaming Operator (PIGO) alternative could take over. If a current plan being developed by gaming regulators in the country comes to fruition, land-based casinos that launch online operations will need to be prepared to give up almost half their revenue to the Philippines in the form of taxes. That compares to the 5% “franchise tax” on turnover paid by the POGOs. If that tax rate didn’t seem appealing, it’s doubtful the higher rate will find a lot of enthusiasm.
PAGCOR (the Philippine Amusement and Gaming Corp) is working on a tax framework that would require online operators to give up 42.5% of their online gaming revenue to the state, and they would also have to pay a 5% “gaming systems fee,” according to Asia Gaming Brief and its sources. PIGOs could be the up-and-coming online gaming star in the Philippines; however, only if presented with an economically viable situation that wouldn’t see the segment follow the same course the POGOs took.
These percentages are apparently not fixed yet, according to the sources, and could be altered before the final draft of the framework is signed. However, the rates are expected to be “very close” to what has been projected and this means that PIGOs would be facing one of the highest tax rates of anywhere in Asia. The proposal would mean substantial revenue for the Philippines, but only if land-based casino operators believe it makes sense to launch a PIGO, and the suspected tax rate will almost certainly become a big obstacle to entry.
When POGOs began popping up everywhere, before they fell out of favor, the 5% franchise tax seemed adequate by most standards, and was a way to get the gaming segment running. It didn’t work out that way, though, and PAGCOR continuously found itself scrambling to get operators to pay. That led to a discussion by legislators about increasing the tax rate to 30%; however, this, too, fell flat as it never gained traction in the Senate. It isn’t clear how much success will be found with the PIGO tax rate, but it’s doubtful the plan will give PAGCOR what it wants.