Misunderstanding of “gross earnings”
The Philippine Amusement and Gaming Corp. which regulates casino gaming in the country, is in arrears to the government to the tune of PHP15.4 billion (US$325.5 million). According to media reports, the regulator underestimated its payments from 2011 to 2015.
PAGCOR defended its remittances for the years in question, but the Commission on Audit was equally firm in its conclusion.
According to the website Yogonet.com, after deducting a 5 percent franchise tax, the state-owned casino operator is required to pay 50 percent of its gross earnings to the government. The COA calculated that it should have paid $2.08 billion during the five-year period, but remitted only $1.53 billion, which resulted in a shortfall of around $549 million.
The COA said PAGCOR mistakenly thought “gross earnings” were those coming from casino gaming alone, rather than overall revenues. Because it overpaid about $223 million during the period, its balance comes to $327.1 million.
“When we speak of the ‘gross earnings,’ we mean the entire earnings or receipts of such person or corporation from the business or operation to which we refer,” read a statement from the COA. “Therefore, the aggregate gross earnings of the Philippine Amusement and Gaming Corporation from which the 50 percent government share shall be computed should not only mean income from gaming revenues but should include income from other related services as well.”
Meanwhile, survival could be difficult for Philippine iGaming provider PhilWeb, with newly elected Philippine President Rodrigo Duterte’s vow to end online gambling in the country. Just after his inauguration on June 30, Duterte said online gaming is a social scourge that keeps people from their work. He also said it’s too hard for the government to collect taxes from online gaming enterprises.
The only online gaming licenses issued by PAGCOR are for terminal-style eGames run by PhilWeb and Leisure & Resorts World Corp. PhilWeb shares fell so precipitously following Duterte’s announcement—32 percent—the firm asked for a three-day suspension of trading.
Later, in a statement to the Philippines Stock Exchange, the company said its license had been extended for a month, until August 10. Along with the filing was a letter from the new PAGCOR Chairwoman Andrea Domingo, a Duterte appointee, saying the license is short-term until Duterte’s “directive regarding online gambling can be clarified.”
PhilWeb reportedly has more than 300 game stations in internet cafés around the country, and more than 70,000 active members.
PAGCOR has also announced it has temporarily halted the processing of all online gambling license applications, reported the website CalvinAyre.com.
