The Philippines has announced plans to ban offshore gaming operators, targeting an industry that mostly caters to Chinese gamblers and has sparked growing alarm from law enforcement over its alleged connections to organized crime.

Known locally as POGOs, Philippine Offshore Gaming Operators have spawned across the country, both licensed and illicit, employing tens of thousands of Chinese and foreign nationals.

But in a state of the nation address Monday, President Ferdinand Marcos Jr. announced a total shutdown of the industry.

“Effective today, all POGOs are banned,” Marcos said to a standing ovation from lawmakers as he underlined the growing concern in the Philippines over the explosion of the offshore casino industry.

“Disguising as legitimate entities, their operations have ventured into illicit areas furthest from gaming, such as financial scamming, money laundering, prostitution, human trafficking, kidnapping, brutal torture – even murder. The grave abuse and disrespect to our system of laws must stop,” Marcos added.

The ban comes as Marcos takes an increasingly hard line against Chinese-linked operations amid simmering diplomatic tensions between Manila and Beijing over their competing claims in the South China Sea.

But China’s government is likely to welcome the move. Gambling is banned in China – with the exception of Macao – and Beijing has recently clamped down on cross-border gambling, especially across Southeast Asia.

There are 46 licensed offshore gaming operators and dozens more illicit gambling hubs in the Philippines, according to the country’s gaming regulator, which Marcos has ordered to close by the end of the year.

The POGO sector emerged in the Philippines in 2016 under Marcos’ relatively China-friendly predecessor Rodrigo Duterte, who critics say turned a blind eye to suspected illicit activities as the industry brought billions of pesos to state coffers.

Since then, the Philippines has become a major hub for online gaming catering to tens of thousands of players based in China.

In recent years, Southeast Asia has seen a surge of online scam syndicates raking in huge profits from victims around the world, including in China and the United States. During the coronavirus pandemic, many illicit casinos pivoted to scams when visitors dried up as borders closed.

Many of those working for these scam syndicates are themselves victims of human trafficking.

Some POGOs are based in abandoned malls, while others are found in converted parking lots or cheap rented offices that have come under increasing scrutiny from authorities in Manila, who say many are fronts for scam centers and other crimes.

In March, more than 800 Filipinos, Chinese and other nationals were rescued in a police raid of an online romance scam center posing as a casino about 100 kilometers north of the capital, the official Philippine News Agency reported, citing local authorities.

Last month, the Chinese embassy in Manila said it appealed to the Philippines to ban POGO “to root out this social ill,” adding it had assisted Philippine authorities in shutting down five offshore gambling centers and repatriated nearly 1,000 Chinese citizens over the past year.

In March, China’s embassy in Singapore warned its citizens in the city state to avoid all forms of betting, reiterating that gambling overseas violates Chinese laws.

“Even if overseas casinos are legally opened, cross-border gambling by Chinese citizens is suspected of violating the laws of our country,” the embassy said in a statement.