Shares of e-Games provider PhilWeb soar
The government of Philippine President Rodrigo Duterte has ordered PAGCOR (Philippine Amusement and Gaming Corporation) to sell its own casinos to raise funds for the 2017 national budget. “We are now preparing the template for the planned privatization so we could maximize the benefits for the government,” Domingo said.
Some analysts say it’s a smart move for both regulator and operator. Maybank ATR analyst Rommel Rodrigo told Bloomberg, “It’s a step in the right direction that will take away potential conflicts of interest. The government will get the highest value if these casino are sold as one rather than if the assets are sold separately. Bundled as one, these casinos will give buyers a massive advantage.”
PAGCOR is in the uncomfortable—and sometimes unethical—position of being both the regulator and casino operator of multiple casinos. The agency has been criticized for years for not separating the roles effectively.
Domingo did not say how many licenses would be put up for sale, but they would be issued for six-month trials at first, reported the Asia Gaming Brief. Astro del Castillo, managing director at First Grade Finance Inc., said the regulator plans to charge a one-time $200,000 for an online gaming license, a fee of $10,000 per table a month, and a $100 per-slot machine player. Licensees would also need to put up a $250,000 cash bond.
Domingo added that she plans to issue casino licenses outside the capital. “It’s 100 percent money. This is going to augment our revenue without breaking any of the pronouncements of the president not to have Filipinos get into the gaming habit.”
Duterte also has envisioned a merger of PAGCOR and the national lottery operator, the Philippine Charity Sweepstakes Office.
Philippine gross gaming revenue rose 23 percent in July compared with the same month in 2015 thanks to solid growth in mass, said CLSA’s Liu in a note. And a new mega-casino, Okada Manila, will soon join City of Dreams Manila, Solaire Resorts & Casino and Resorts World Manila at Entertainment City, a gaming zone in the capital city.
Duterte, who took office in July vowing, “online gambling must stop,” seems to have reconsidered his hardline stance on the games. Now Duterte says he may be willing to permit internet games “provided taxes are correctly collected and gambling halls are situated or placed in districts where gambling is allowed, which means to say not within the church distance or schools.”
Duterte caused shock waves in the gaming industry in August when he ordering the Philippine Amusement and Gaming Corp. not to renew the license of PhilWeb Corp., which offers e-Bingo and e-Games in hundreds of bars and cafes around the country. That move threatened 6,000 jobs and caused PhilWeb stock to plummet more than 70 percent.
Duterte singled out PhilWeb Chairman Roberto Ongpin, the country’s onetime finance minister, calling him “an oligarch” who had to be “destroyed.” Ongpin, who said he had never met the president, resigned his post in hopes that it would save the company. When that didn’t work, he made the extraordinary gesture of putting half his PhilWeb shares up for auction, and finally offering to donate the shares to PAGCOR to fund drug treatment facilities.
Now that Duterte has back-pedaled, he attributes his previous harsh comments to a passing bad mood. “I was mad because even the youth are gambling and there was no way of collecting the proper taxes,” he said.
Last week, Bloomberg News reported that shares of PhilWeb Corp. and e-Bingo operator Leisure & Resorts World Corp. soared in Manila trading after Duterte retreated. PhilWeb stock jumped by 50 percent, the maximum allowed for one day, as did Leisure & Resorts.
“There’s hope for online gaming stocks after Duterte’s comments,” said Harry Liu, president of Summit Securities Inc. in Manila. “All these government policies are already there, gaming companies just have to follow them. If they play it straight and ensure there’s no hanky-panky, they can stay out of trouble.”
Meanwhile, Andrea Domingo, the new CEO of PAGCOR and a Duterte appointee, said, “We are ready with a more reasonable, more stringent and a more socially responsible set of requirements for e-Games and e-Bingos.”
Some analysts think the situation has been overblown. As CLSA’s Marcus Liu told GGRAsia, “President Duterte’s actions stem from his concern for the lower-income Filipinos and the social impact that that carries. We do not think that this will have an impact on the integrated resorts, which target the foreign market and generally price out the lower-income Filipinos.”
PAGCOR, meanwhile, has announced preparations to license online gambling firms that target “non-locals.”
Other big changes are afoot. Elsewhere in the Philippines, fertilizer company Calata Corp. says it will begin construction on a casino on Mactan, an islet linked by bridge to the Philippine holiday island of Cebu. Mactan Leisure City is a partnership of U.S.-based Sino-America Gaming Investment Group and Macau Resources Group Ltd. The resort will break ground in January and is expected to open in mid-2020.
Meanwhile, the government could stand to lose big if it shuts down all e-Bingo and e-Games outlets. Last year, PhilWeb paid about $12.2 million in taxes to the government. Overall, reported CalvinAyre.com, the country could forfeit about 10 billion pesos (US$215 million) in annual revenues if it closes up the betting shops.
First Grade’s del Castillo said Duterte’s sudden policy shift will “shield those who are economically vulnerable from the negative effects of gambling. At the same time, it recognizes that if handled right it can bring investments and help boost the government’s tourism push.”
But Duterte had the last word. “Pay the correct taxes,” he said. “Gamble until you die. I do not really care.”
