MANILA (Reuters) - The Philippines' gaming regulator said on Tuesday it will cancel the licenses of offshore gambling firms and work with law enforcement agencies to implement President Ferdinand Marcos Jr's order of a total ban on the industry.

In his State of the Nation address on Monday, Marcos said he was banning Philippine Offshore Gaming Operators (POGOs), an industry dominated by Chinese firms, and ordered the regulator to wind down the sector by the end of the year.

"No problem in closing down POGOs because I can invoke national security and the president's order," Alejandro Tengco, chairman of state gaming regulator Philippine Amusement and Gaming Corp (PAGCOR), told Reuters.

The 42 licensed POGOs directly and indirectly employ around 40,000 Filipinos, PAGCOR data show, while nearly 23,000 foreigners worked in the industry as of end-2023.

The challenge for law enforcers was to prevent these firms from going underground, Tengco said, adding the government stood to lose around 23 billion pesos ($400 million) of license fees and taxes annually from the licensed POGOs.

The finance and labour ministries will assist displaced Filipino workers through safety nets and training programs, Finance Secretary Ralph Recto said in a statement.

A separate crackdown on hundreds of illegal POGOs, home to scam farms and other crimes such as human trafficking and torture, will continue, the Presidential Anti-Organized Crime Commission said in a statement.

Foreign nationals working in these companies will be deported, the commission said.

The online gaming industry emerged in the Philippines in 2016 and grew exponentially as operators capitalised on the country's liberal gaming laws to target customers in China, where gambling is banned.

The POGO industry, which at its peak prior to the pandemic involved 300 firms, boosted demand for apartments, offices, and transportation services.

($1 = 58.4150 Philippine pesos)