What's at stake as Duterte stops PCSO lotteries?

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Following President Rodrigo Duterte's verbal order to stop all PCSO-licensed gaming operations, the police force on Saturday shut down thousands of outlets nationwide.

Metro Manila (CNN Philippines, July 27) — Over half a million Filipinos benefited from the medical assistance provided by the Philippine Charity Sweepstakes Office (PCSO) in 2018.

The PCSO earned ₱63.56 billion from all its gaming activities that year, ₱18.69 billion or 30 percent of which was used for charity programs. It paid for the confinement, medicines, and chemotherapy and other medical procedures for indigent patients.

As President Rodrigo Duterte ordered the PCSO to immediately stop gaming operations, Malacañang said the Philippine Amusement and Gaming Corporation (PAGCOR) may take over these charity projects.

"We can always redirect them to the office of the PAGCOR as well as the Office of the President," Presidential Spokesperson Savador Panelo told CNN Philippines. PAGCOR is a government-owned and controlled corporation under the Office of the President which regulates gaming operations in the country.

A 1954 law states that one-third of proceeds from sweepstakes races, lotteries, and other similar activities shall be used for health programs, medical assistance and services, and government charities.

Under the Universal Healthcare Law signed this year, 40 percent of the PCSO's charity fund will partly finance the billions of pesos needed for the implementation of the landmark measure. Other sources include sin tax collections and the government's share in PAGCOR proceeds, among others.

PCSO General Manager Royina Garma said the state lottery agency will appeal for the resumption of its gaming activities "for the interest of the PCSO, its agents, and its beneficiaries." The PCSO urged those who have bought advanced playing tickets to just keep them for now.

Job losses

Following Duterte's verbal order to stop all PCSO-licensed gaming operations, the police force on Saturday shut down thousands of outlets nationwide.

READ: Police shut down PCSO outlets, arrests made

In Northern Mindanao, the group called Misamis Oriental -- Cagayan de Oro Lotto Agents Association warned that lotto operators, who have invested money in the business, will lose their income. They will be forced to close their stores, stripping their workers of jobs.

Gelo Pardilla, who worked at a lotto outlet in Pandacan, Manila, voluntarily closed the kiosk upon learning of the President's order. He said it earns at least ₱5,000 a day from more than a hundred bettors in the area.

60% lost to corruption?

While the PCSO in its 2018 accomplishment report boasted of earning 20 percent more than the ₱52.98 billion it had generated the previous year, Malacañang said the government was not getting its fair share.

Citing "massive corruption" in the PCSO, Duterte in a video message late Friday night ordered a stop to all PCSO-licensed gaming schemes. Presidential Spokesperson Salvador Panelo said 60 percent of PCSO revenues are lost to corruption.

"All players, all participants of the gaming corporations are involved, including even court who issues injunctions in favor of these operations," Panelo told CNN Philippines. "The President will reveal the modus operandi of those people involved in due time."

According to the PCSO's charter, 55 percent of net proceeds go to the payment of prizes, 15 percent to the operating fund of the agency, and the remaining 30 percent to the government's health and charity programs. The Commission on Audit in 2018 called the PCSO out for using ₱5.89 billion of the charity fund for various purposes not related to health programs, medical assistance services, and other charities – violating Republic Act 1169.

Senate President Vicente "Tito" Sotto III said the President is not violating the law in stopping state lotteries. "He is not stopping the PCSO, only the franchise holders until things are straightened out," he said in a text message sent to CNN Philippines.

The PCSO remitted more than ₱4.5 billion in taxes and duties last year. More than ₱422 million was given to local government units and the national police as part of small town lottery shares meant for health and charity projects.

CNN Philippines' Paolo Barcelon contributed to this report.