PAGCOR Chair on busting the Philippines’ black market
PAGCOR chairman Alejandro Tengco busted the online gambling black market in the Philippines – but how did he do it?
The story of white versus black markets these days feels like an army in retreat. The illegal threat is big, so we hear, and it’s getting bigger. But amid the gloomy channelisation figures and assurances it’s going to get worse, there has been a potentially surprising success in East Asia’s only regulated online gambling market.
When Alejandro H. Tengco took office as chairman and CEO of the Philippine Amusement and Gaming Corporation (PAGCOR) in 2022, the black market was on the march. Criminals had infiltrated the country’s controversial offshore gaming regime, human trafficking was rife and most Filipinos played outside of the regulated environment. According to jurisdiction-specific GCI-Yield Sec data, 92% of all online GGR in the Philippines was accrued via illegal operators as of January 2023.
By December 2025, however, this number had halved, with legal, licensed online operators accounting for more than 50% of online GGR – representing a more than six-fold increase in legal market share over just three years.
Now halfway through his six-year term, which runs to 30 June 2028, Tengco believes the balance has shifted decisively towards regulation, enforcement and long-term sustainability. The once internationally renowned Philippine Offshore Gaming Operations – or POGOs for short – are banned, while the few remaining underground sites are regularly besieged by police and PAGCOR task forces.
Speaking from Manila, in a rare interview with NEXT.io, Tengco set out the reasoning behind the series of reforms that reshaped the market. These included steep reductions in licence fees, the introduction of a public-facing licence verification platform, a ban on offshore gaming operations, tighter coordination with law enforcement agencies and a renewed emphasis on responsible gaming and player protection.
“When I assumed the chairmanship in 2022, the online gaming market was being run by and was favouring the illegal market,” said Tengco. “Many were saying we had less than 10% [of the total] market.”
That unfortunate reality, he said, was shaped by the acceleration of online gambling during the pandemic and combined with a regulatory framework that made legal participation commercially unattractive.
“Outrageously high” licence fees
A central tenet of Tengco’s strategy was to address what he saw as a fundamental misalignment in the model. PAGCOR had limited experience in regulating online gambling and had inadvertently set licence fees at levels that discouraged compliance.
“Our rates were just outrageous,” he said. “We had licence fees anywhere from 50% to 55% and I thought it does not give any incentive to go legal.”
Tengco argued that once licence fees were combined with marketing costs of 15% to 20%, along with platform expenses and general overheads, the commercial logic of operating legally collapsed. “There is no way you would want to be regulated,” he added.
Despite resistance from within, he pushed through a phased reduction in fees, cutting them to 47.5%, then 42.5%, then 37.5% and finally 30%, which is where they still stand today. “I told them, I would like to gamble and I would like to give it a try,” he said.
The outcome surprised sceptics: “Believe me, nobody thought the fees collected would go sky high,” he recalls, reiterating that lower rates expanded the taxable base and drew operators out of the black.
PAGCOR also applied a cheaper fee structure for integrated resorts, given their typical capital investment of at least $1bn and employment in the region of between 4,000 and 8,000 people. “I thought they should have been given a break,” said Tengco.
Alongside fee reform, the regulator launched the PAGCOR Guarantee platform, a public database allowing players to verify whether an operator is licensed and legal. “Slowly, the number of visits started to get higher,” said Tengco.
Enforcement, offshore gaming and responsible play
The regulatory reset coincided with a decisive political intervention. President Ferdinand Marcos Jr moved to ban POGOs in July 2024, a sector that Tengco said had become deeply compromised.
“Of the hundreds of licences that we had then, I’d say close to 85% were illegal operators, and they were using the PAGCOR licence to scam people,” he said. “The sad part is we became known to be one of the top scamming capitals in Asia.”
PAGCOR cancelled offshore licences and oversaw what Tengco remembers as an orderly wind-down of operations, while intensifying enforcement against illegal activity. This included closer coordination with the Philippine National Police, the Bureau of Immigration, the National Bureau of Investigation and even branches of the armed forces.
“We were showing the illegals that this guy is tough and PAGCOR now is very strict in implementing its rules and regulations,” he said.
But at the same time, concern around the visibility and social impact of online gambling started to grow, with PAGCOR publicly perceived as weak on responsible gaming during the early stages of expansion.
“As part of the birth pains, I had to make adjustments,” he said. “The industry was new.”
PAGCOR responded by working with the Advertising Standards Council of the Philippines to ban outdoor marketing that focused on large wins. Operators were given 30 days to remove offending billboards, while any remaining illegal adverts were physically removed by PAGCOR.
The regulator has also moved to set-up a new 24-hour responsible gaming hotline, which is due to launch in the first quarter of this year. “We will have a hotline for those who feel that gambling is overpowering them,” said Tengco.
Market maturity and regulatory confidence
With licensed operators now accounting for a much larger share of the market, PAGCOR recently introduced a minimum guarantee fee of PHP9.5m, equivalent to more than $100,000, for online gaming licensees that fail to commence operations.
“We have close to 70 online gaming licences, and there are still some that have not moved, though they have been given the notice to commence,” Tengco said. He added that some licensees were attempting to sell their licences without launching operations.
By imposing a fixed minimum payment, PAGCOR is hoping to discourage speculative behaviour and free up capacity for serious applicants. “You pay nine and a half million pesos whether you are running your platform or not,” he said. “Clearly, you will not survive by paying the fee without operating.”
For Tengco, this policy reflects a broader maturation of the market. “As we mature, that will be good for the online gaming industry, because it gives the prospective licensee the confidence that by being a licensee of PAGCOR, who in the world is a respected name now as a regulator, that mark will also help them in their online gaming business,” he said.
He pointed to complaints data as evidence of the value of regulation. Over the past three and a half years, PAGCOR received close to 2,000 letters a month from players seeking assistance with issues ranging from unpaid winnings to withheld deposits. “Now, at least 60% of those letters refer to companies who are not licensed,” he added.
Decoupling regulation and operation
Looking to the remainder of his tenure, Tengco highlighted one reform as central to his legacy – above all others: the proposed decoupling of PAGCOR’s role as both a regulator and a casino operator.
“Today, PAGCOR is an operator and a regulator,” he said. “No one in the world, when you find the regulator, is also an operator.”
PAGCOR still operates 36 community casinos alongside its regulatory function. Tengco admits this structure has created an unavoidable conflict of interest. “How can a company giving out licences to investors be competing against them, because we also operate our own casino?” he said.
There are plans to divest PAGCOR’s operational assets, subject to government approval, while protecting employees through enhanced retirement packages which would require winning bidders to absorb at least 70% of the workforce.
If approved, the benefits would be substantial, insists Tengco. “Number one, consumer confidence. The players will say PAGCOR is really a regulatory body that does not bend the rules.”
Decoupling would also reduce costs and allow PAGCOR to focus on the core regulatory duties of licensing, compliance and revenue collection. “Government has no business running a business,” said Tengco, noting that state casinos already struggle to compete with integrated resorts.
Balancing protection and participation
Throughout the interview, Tengco repeatedly turned to the theme of balance. PAGCOR’s mandate, he said, was to generate revenue for nation-building without sacrificing player protection or market integrity.
Key to that balance is strict KYC enforcement. “We do not allow players who are 21 years or below to play in any of our property or in any of the licensed online gaming operators,” he said.
PAGCOR has also started using AI to monitor player behaviour, arguably playing catch-up to the wider industry, alongside tools such as deposit limits and self-exclusion. Some players, he acknowledged, may return to illegal platforms to avoid such safeguards. “Believe me, sooner or later, they will realise that where they’re playing is not straight at all,” he said.
Enforcement remains a critical backstop for Tengco. PAGCOR operates a one-strike policy for major violations such as the under-reporting of revenue or breaking KYC rules. “We just cancelled the licence of a big licensee because they were caught not following KYC processes,” he said.
For Tengco, the message to both operators and players in the region is consistent. “It cannot be profit, and profit only, without first protecting the player,” he said. “Before profit comes player protection.”
As long-serving head of the regulator, Tengco told NEXT.io he hoped to be remembered for being prepared to take calculated risks in the pursuit of long-term stability. “I want to be remembered as somebody who was firm and gambled in my decisions,” he said. “Sometimes difficult decisions.”
In a market once defined by illegality and mistrust, Tengco believes the Philippines has turned a corner and demonstrated what is possible when regulation, enforcement and economic realities are aligned.
Tengco believes the changes sown by PAGCOR reforms should bear rewards across commerce and community in the Philippines for many years to come.
https://next.io/news/features/pagcor-chair-busting-philippines-black-market/