This Messy Jueteng Business

President Aquino wishes jueteng would just go away.

First it drags his shooting buddy, Rico Puno, into the affair so that he may actually have to dismiss him. If he does his statement might read: “After incessant nagging from my sisters, I am accepting with sadness the resignation of Rico. Rico and I have had good times together. He always provided me ammunition so we could shoot together even as his own company that imports bullets was floundering.”

Presidential spokesperson Lacierda said the allegations against Puno “was news to us”. What is it about wives and Presidents that they are always the last to know?

Jueteng also threatens to implicate the President’s cousin, Tonyboy, who was said by retired Archbishop Oscar Cruz to have interceded on somebody’s behalf, it is not clear. Cruz initially tagged Tony as “Gretchen Barretto’s boyfriend” which Tony much preferred since he could then remain anonymous.

The ex-prelate obviously follows bad soap operas and gossip columns more than he does business.

The Government spends over P2 billion for intelligence, has hundreds of law enforcers yet it is not aware of the people behind a P30 billion business involving thousands of players. Either we have some pretty dumb officials in high office or they are thumbing their nose at us. I am not sure which is worse.

How do we eradicate jueteng ?

Jueteng is both an enforcement issue and a failure of a business model. Both have to be addressed to resolve the problem.

Jueteng thrives because  public officials benefit from it. Were jueteng to be legalized new ways would be found to create a jueteng clone to feed corrupt officials. Legalizing jueteng is therefore not the way to go.

Going after illegal gambling is a necessary but not sufficient condition to eradicate it. This must be coupled with an alternative that will satisfy the public’s desire to gamble.

That alternative was supposed to be the Small Town Lottery of the PCSO. STL has failed because its business model is flawed.

Under STL, PCSO awards franchises to small town operators to sell Keno and other PCSO products. In exchange, the franchise holders must pay 10% of revenues as a royalty  and post a bond of P5 million.

The problems with the program are:

1. No security- STL tickets have no security features and thus can be falsified. The Franchisee will claim a lower revenue to PCSO based on “official” tickets sold when most of his revenue comes from sales of colorum tickets. STL effectively became a front for jueteng. Think McDonalds franchisees selling non-McDonalds hamburgers on the side.

2.Inferior product- STL sells a 38 number combination ticket which gives the holder a lower chance of winning than the jueteng’s 37 number combination.

Government must treat STL like a consumer product. It must:

1. Make STL a more competetive product than jueteng in terms of benefits, service, integrity and settlement. It must lower the number combination of its tickets to improve the chances of winning.

2. Advertise  STL as a superior offering to jueteng.

3. Protect the STL brand by prosecuting illegal operators and fining their customers. It must also improve its security features. Microsoft pursues sellers of its knock-offs while making it harder to duplicate its products.

4.Improve its franchise system. Like all successful franchises such as Jollibee, PCSO must require a minimum standard of performance from its Franchisees in terms of revenue, integrity and service. Failure to meet these standards can mean cancellation of the franchise. PCSO should have a team to audit and help Franchisees improve their operations.

5. Add a floor to the royalty fee that Franchisees pay. This will ensure a minimum take to PCSO and motivate Franchisees to sell more.

6. Vet prospective franchisees for integrity and business sense. One suggestion is to increase the bond but this may prevent honest but less wealthy applicants from applying. Another way may be to grant established corporates limited territorial rights. They may not have the local savvy but they have the business sense and marketing know how. Imagine if Globe or Smart were given franchises.

7. Reward the community. A percentage of PCSO’s take must be returned to the local communities to encourage cooperation from local Government and the populace.

Jueteng is an enforcement, a behavioral and a business issue. It needs a stick and carrot approach.

On the one hand the Government must prosecute illegal operators and their customers.

On the other hand the Government must offer an attractive product alternative to jueteng to satisfy a demand for gambling that is clearly there.

It is a combination of police and market forces that will  eradicate jueteng. Individually, none of them will.

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About Leo Alejandrino

The blog is principally a commentary on Philippine politics and economics.
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