While the players are in China, the croupiers on their screens are often far away in studios in the Philippine capital Manila. Filipino officials say many of these operations are also run and staffed by Chinese nationals.

Now, the Southeast Asian nation is shutting them down, concerned that the businesses have become fronts for a host of crimes. The ban on POGOs—as the country’s gambling operations that cater exclusively to players abroad are called—was announced in a speech this week by President Ferdinand Marcos Jr.It was a crowd pleaser that drew a standing ovation and raucous chants of “BBM! BBM!”—short for his nickname, Bongbong Marcos.

“Disguising as legitimate entities, their operations have ventured into illicit areas furthest from gaming,” he said, ticking off a laundry list of crimes: financial scamming, money laundering, prostitution, human trafficking, kidnapping, brutal torture, even murder. POGOs will be gone by the end of the year, he said.

POGOs flourished under former President Rodrigo Duterte, who held office for six years until 2022 and saw regulating them as a source of revenue. The industry didn’t end up bringing in as much money as expected, however. Licensed POGOs accounted for about 4.3% of the country’s gaming revenue, or roughly $54 million, last year, according to official data. By comparison, traditional casinos inside designated resorts accounted for 45% of the overall revenue, or around $566 million.

The Philippines’ department of finance said this week that the social costs and reputational damage far outweighed benefits such as tax and gaming revenues.

China says it is illegal for its citizens to gamble in any form, at home or abroad. Beijing launched a crackdown on overseas gambling about a decade ago, targeting services called junkets that helped Chinese nationals travel to casino hubs such as Macau. China also imposed travel restrictions to major gambling destinations. Chinese players flocked to the internet.

A 2022 study by market-research firm Technavio said 37% of global growth in the online gambling sector will originate in Asia, powered by China.

The term POGO, which stands for Philippine offshore gaming operators, refers to a variety of platforms including e-casinos and sports betting websites, specifically designed for foreign markets. They occupy physical space in the Philippines, but players must be physically located in other jurisdictions. Philippine officials have taken issue not with the gambling, but with crimes that have piggybacked off it, such as suspected money laundering for Chinese crime syndicates.

Experts say POGO licenses were used to provide legal cover for offices that ended up being bases for criminal enterprises such as cyber-fraud centers where people are forced to work in slave-like conditions as scammers, and launder their illicit proceeds. Benedikt Hofmann, a senior regional representative for the U.N.’s office on drugs and crime, said POGO licenses have provided a “veil of legitimacy” for outfits that ultimately turned into centers for so-called pig-butchering scams, human trafficking and other crime.

“The ban will definitely have an impact as it will bring much needed clarity for enforcement agencies,” Hofmann said. He expects, however, that some criminals will try to move underground or nestle into places elsewhere in the region where they can exploit loopholes and weak governance.

While POGOs are subject to oversight by the country’s regulator, the vast majority are unlicensed and operate illegally, government figures show. The official website of the regulator Philippine Amusement and Gaming Corporation lists only a few dozen licensed operators, while a recent public notice identified hundreds of websites known to be using fake certificates.

The issue spilled into public view earlier this year, when a Senate committee held a series of public hearings taking aim at a mayor accused of links to what officials say are crime-infested POGOs in her town of Bamban, northwest of Manila.

Lawmakers alleged that the mayor, Alice Guo, was involved in incorporating a real-estate firm that leased land to a POGO hub that was later found to be a base for cyber scams and other crimes. They said Guo had business ties to two Chinese nationals recently convicted of money laundering in Singapore, and other links to criminal activity.

A separate antigraft probe resulted in Guo’s suspension and a freeze on assets belonging to her and at least two associates, including 90 bank accounts, real estate and a helicopter. The Philippines’ anti-money-laundering council said investigations uncovered their involvement in “money laundering, human trafficking, and other illicit operations.” She hasn’t been formally arraigned on any charges.

Lawmakers also alleged that Guo is a Chinese national who ran for office under a stolen identity and used her influence to help build the criminal empire.

Guo’s lawyers didn’t respond to a request for comment. Guo told a Senate hearing in May that she is from the Philippines, and that her father was from China. She has denied wrongdoing and refused to attend subsequent hearings, leading senators to order her arrest. Her whereabouts is unknown.

Ties between China and the Philippines have been tense since last year. Marcos has taken a firm stance against Beijing’s claims in the South China Sea, leading to frequent confrontations at sea that risk spilling over into a more serious conflict that could potentially draw in Manila’s ally, the U.S.

But China is also fed up with online gambling and the crimes that come with it. In mid-June, the spokesperson for China’s embassy in Manila called for an immediate ban “so as to root out this social ill.” He said POGOs were “detrimental to both Philippine and Chinese interests and images as well as China-Philippines relations,” and lauded law enforcement cooperation with Manila.

The Guo case “was probably what tipped the balance,” said Ben Lee, managing partner at Macau-based gaming consulting firm IGamiX. “This ban can only help clean up the country’s image.”

Manila has struggled for years to improve its record on money laundering, particularly with regard to its murky gambling sector. The Financial Action Task Force, a Paris-based intergovernmental body that sets standards for combating money laundering and terrorist financing, lists the Philippines on its so-called “gray list” of nations that are under extra monitoring but have committed to fixing deficiencies in their regulatory regimes.

Write to Feliz Solomon at feliz.solomon@wsj.com