What does Philippine President Rodrigo Duterte really think about gambling? It depends on when you ask.
In 50 words or less, here’s a roundup of Rody’s views since he took office in 2015:
“I hate gambling. I do not want it.”
“These are the guys who sit in their private jets and their mansions, watching their money grow like a running taxi meter.”
“There will be no casinos outside of what are existing. I am not granting anything.”
“I cannot stop it anyway. I will not meddle with it anymore.”
“Gamble until you die. I do not care.”
The latest turnabout came July 29, during the president’s fourth State of the Nation address to lawmakers in Manila. In that speech, Duterte noted the record revenues generated by casinos, offshore and land-based.
“My salute to Andrea Domingo,” he said, referring to the head of the Philippine Amusement and Gaming Corp. “Magpasugal ka pa, ma’am, nang marami, “ Duterte added (“Push more gambling, ma’am”).
Confused? Local reporters certainly were. After the address, they pressed presidential spokesman Salvador Panelo for clarity on the issue. Panelo didn’t call Duterte a fan of gambling, but said he “wants more online gambling and legal casinos to increase the government’s take.”
When the former Davao City mayor took office, he declared war on loosely regulated iGaming and online bingo operations in the country, calling them “a source of widespread social menace and corruption.” Such games, he said, fostered “disregard for the value of dignified work, perseverance and thrift.”
Duterte later went after land-based operations then in the pipeline, including a Galaxy Entertainment casino proposed for the resort island of Boracay, a casino resort planned for Cebu City, and a Landing International complex that would have been the fifth entry in Manila’s Entertainment City casino quarter. That project, called NayonLanding, was canceled by Duterte the same day it broke ground.
Fast forward a few years, and the controversial leader seems to have softened his stance on gaming, at least as a money-maker for the government.
In his SONA address, Duterte reported that, of the more than PHP61 billion collected from government corporations to July 9, almost a third, PHP16 billion, came from PAGCOR. That’s not a bad payday: the gaming regulator, which also operates gaming halls under its Casino Filipino brand, contributed more than US$312 million to the government till.
Domingo, who has called gaming “the sunrise industry in Asia,” is urging Duterte to walk back his ban on new casinos. If his latest speech is any barometer, her efforts are bearing fruit.
“There are still areas in the Philippines that can still absorb and benefit from these investments, which won’t go here with the current ban,” Domingo said in January. Last year, the PAGCOR chief projected that the industry will generate gross gaming revenues of PHP217 billion for full-year 2019, or US$4.1 billion—a 13 percent increase over 2018, which itself surpassed 2017 by 14 percent.
According to Fitch Ratings analyst Alex Bumazhny, that level of growth puts the Philippines in “a top-tier market, but I don’t think it’s to a Singapore level yet and it is definitely not up to the Las Vegas Strip, which is up to $6 billion in GGR and Macau, which is north of $30 billion.”
One reason the Philippines has seen such rapid growth is its appeal for Chinese gamblers, Bumazhny told GGB News. “The tax rate is very low on the VIP business, and regulations for VIP are looser than in places like Singapore or Macau, so junkets have an incentive to drive business there. You can put Cambodia and some other markets in the same boat, where the tax rate is low and the regulation is not as tight—you see very rapid growth in places like Cambodia as well also markets like the Mariana Islands.”
In the latter case, at the Imperial Palace Saipan in the Commonwealth of the Northern Marianas, a skyrocketing VIP business soon plummeted due to uncollected debts and the property’s reliance on a handful of high-rolling players.
The Philippines, on the other hand, is a far more populous country, with a concentration of more than 1.5 million people in metro Manila, home of the Entertainment City casino zone.
The industry there has “a broader market, including a lot of local play,” Bumazhny told us. “The VIP market, which is mostly Chinese, is driven largely by efforts by the Philippines vis-a-vis looser regulations and higher commissions” for junket investors—who cultivate VIP clients, arrange their travel, accommodations and perquisites, and extend lines of credit.
Another reason VIPs like the Philippines: they can bet by proxy, by phone or online through a representative, a practice that’s forbidden in Macau and Singapore.
Online gaming is booming too. The sector occupies more office space in Manila than any other business except call centers (and soon will overtake those). The industry employs a reported 138,000 people, mostly Chinese, who are in place to serve players on the Chinese mainland, where gambling is illegal.
At the recent Philippine Asian Gaming Expo, Domingo pointed to the construction of two online casino “hubs” in the Manila area to house the country’s Philippine Offshore Gaming Operators (POGOs) as a sign of the industry’s strength.
So what does the future hold? In a May report on the market, financial services firm Morgan Stanley wrote that gaming is “growing faster in the Philippine market than in Vegas, Macau, and Singapore.” The report said “strong Chinese visitation and Macau junkets’ expansion to ASEAN market should drive market growth.”
Entertainment City has begun to show signs of saturation at this point, said Fitch’s Bumazhny. But there’s a whole big casino-free country out there, and at this point, it might be reasonable to conclude that Duterte would permit if not celebrate growth in the profitable business.
But as history has shown, the volatile president is unpredictable. Last week Duterte lifted his ban on lotto operations in the Philippines—five days after imposing it.
GGB News reached out to PAGCOR for comment on Duterte’s stance. In an August 1 note, a communications spokesperson replied, “Please note that to date, the President has not lifted the ban on new casinos.”
Operative words: “to date.”
