PAGCOR casino sales on hold for now
Speaking to reporters at a weekly forum in Manila Bay, the head of the Philippine Amusement and Gaming Corp. projected that gross gaming revenues from the country’s online and land-based gaming industries could reach PHP217 billion (US$4.1 billion) by the end of 2019—an increase of 143 percent over 2018. This year’s total, which is on track to reach PHP192 billion (US$3.67 billion), constitutes a 14.1 percent increase over 2017 and exceeds the previously forecast PHP186 billion.
“Our performance this year is better than expected for both the private integrated resorts and the PAGCOR-owned casinos,” said Andrea Domingo of the state-run regulatory body.
Domingo recently told Inside Asian Gaming that the planned sale of PAGCOR-operated casinos has been put on hold due to the boost in revenues. “You know, the PAGCOR casinos are holding up quite well,” she said in August. “Last year they contributed PHP22 billion (US$405.5 million) to our PHP60 billion earnings, and this year we’re looking at about PHP26 billion to PHP27 billion.”
Does that mean PAGCOR will continue indefinitely as both operator and regulator, a situation some say creates an inherent conflict of interest? Domingo said yes, “for the next few years, because they’re still profitable—because the PAGCOR owned and operated casinos, the GGR they yield goes directly to the government, 100 percent.
“With the IRs, our share of the GGR is about 19.5 percent,” she continued, “so if you look into that and the contribution to the national government every year, if you take this out it will take five years for a new IR to contribute that amount, which automatically lessens our net contribution to the national government by PHP22 billion for at least for the next 10 years.”
Meanwhile, an opposition politician has called for hearings into the growing number of bricks and mortar casinos and online gaming outlets, reports GGRAsia. Senator Leila de Lima says she’s concerned about money laundering and illegal workers. In addition, de Lima wrote in her resolution, “Despite President Rodrigo Duterte’s moratorium on new casinos effective January 13, 2018, more casinos are scheduled to open in the coming years which may place the gambling and casino industry at serious risk for market saturation and oversupply.”
The most egregious example of possible money laundering in the Philippines took place in 2016, when hackers allegedly funneled US$81 million from Bangladesh central bank via an account at the Federal Reserve Bank of New York, diverted to four accounts at a Rizal Commercial Banking Corp. branch in Metro Manila, and then moved to Philippine casinos, where they mostly disappeared. Only US$15 million was retrieved and returned to Bangladesh, according to media reports.
Last October, the country strengthened its Know Your Customer protocols, requiring patrons to present IDs to play at Philippine casinos, and requiring the casinos to keep records of gaming activities for at least five years. Prior to that, casinos in the country were actually exempt from anti-money laundering regulations.
In her resolution, de Lima wrote that there are other “social costs” associated with casinos as well as Philippine Offshore Gaming Operators, or POGOs. “Note that there are a number of Chinese gambling companies and Chinese gamblers in the country because gambling is illegal in China and is heavily opposed by its communist government,” she said. Local media reports that there could be as many as 400,000 Chinese workers in the country involved in online gambling operations.
Meanwhile, the Philippines Court of Appeals has upheld a previous ruling by Manila’s Regional Trial Court ordering PAGCOR to issue a provisional casino license to Waterfront Philippines Inc. to operate a casino-hotel in Entertainment City.
According to CDC Gaming Reports, in 2008 Waterfront filed an application to develop the Grand Waterfront Hotel and Casino and deposited US$100 million in cash, fulfilling all of PAGCOR’s requirements. In 2015, it filed a petition accusing PAGCOR of ignoring its application. In 2017, the Regional Trial Court ruled in Waterfront’s favor, ordering the regulator to act on its license application.
News outlet Rappler reports that the court also ordered PAGCOR to pay Waterfront PHP200,000 in “moral damages and exemplary damages.” The ruling could add a fifth operator to Manila’s Entertainment City, where three IRs are already in business: Bloomberry’s Solaire Resort and Casino, Melco’s City of Dreams Manila and Tiger Resorts’ Okada Manila. Travellers International Hotel Group is developing a fourth IR, Westside City Resorts World.
