The Philippine Amusement and Gaming Corp. (PAGCOR), the Southeast Asian country’s state-run gaming regulator and operator, has announced that it will stop issuing most new licenses for land-based and online casinos.
“We want to rationalize so that everybody with a license has a good chance of being successful,” PAGCOR Chairwoman Andrea Domingo said at the G2E Asia @ the Philippines forum last week in Manila.
The Philippines could easily have benefitted from Cambodia’s recent ban on online casinos, but instead has opted for restraint, and is watching to see if gaming service providers in the country are hiring workers from Cambodia, MSN.com reported.
According to Inside Asian Gaming, the suspension will give PAGCOR time to fully develop its regulatory policies regarding Philippine Offshore Gaming Operators (POGOs), which have exploded in the country.
“Where POGOs are concerned, we have stopped acceptance of new applicants,” Domingo stated. “This is to give us time to mature ourselves at PAGCOR so we can put in all of the regulations that we need to put in. The offshore gaming here is two-and-a-half years old and we have learned 90 percent of what we need to but the remaining 10 percent is so reliant on technology that we just have to learn more about it.” She predicted that by 2020, “We will have addressed 95 percent if not 97 percent of POGO, including the dark side—prostitution, kidnapping, financing.
“By next year, first quarter, you will see us going into a more sophisticated way of operations in our own casinos and of regulation of the licensed operations.”
Domingo added that PAGCOR “doesn’t want to overburden the industry by blatantly giving out licenses.” In January 2018, President Rodrigo Duterte called for a moratorium on new casino licenses, which is expected to last until 2022. Duterte made a similar move to limit POGO licenses in August 2019.
“So we are allowing two casinos in Cebu, there will be six here in Metro Manila (including Westside City Resorts World and Solaire North) and a maximum of nine or 10 in Clark,” Domingo observed. “The president lifted the ban in Clark last year and PAGCOR has observed that, but now we think Clark has enough casinos. …. These are the things we have been discussing with the board and will be implementing in 2020.”
At the same time, PAGCOR President and COO Alfredo C. Lim warned against overtaxing POGOs, which could drive the business elsewhere. In November, the government approved a new 5 percent tax on the gross income of POGOs, which Lim deemed reasonable. “One of the things the agencies have already discussed is how to tax POGOs without killing the industry,” Lim said at the Manila forum. “It’s a very good move to balance everything—you do not kill the hen that lays the golden egg.
“The POGO industry is growing and as far as I am concerned I do not want this to stop because it is bringing good to the country in terms of increasing real estate,” he said. “A lot of people are happy, the owners of real estate are happy because income is being generated.”
Meanwhile, Philippine President Rodrigo Duterte last week ordered POGOs to pay past-due taxes or face fines and shutdowns. Duterte gave the operators three days to make good on their tax liabilities, and told CNN Philippines that the entities had paid less than PHP2 billion (US$39,000) in taxes this year, a fraction of the PHP 21.62 billion (US$424 million) total.
“I’m giving you at least three days,” Duterte said during the interview. “That’s good enough, fair enough. Do you think it’s fair, three days? What do you think as a Filipino? Three days would be a kind of a good grace period for them.”
The Philippines Bureau of Internal Revenue (BIR) has already shut down three POGOs for tax arrears this year, and Duterte’s hard line has already borne fruit; according to MSN.com, Finance Secretary Carlos Dominguez says the BIR has wrung an additional PHP1.2 billion (about US$25 million) in tax revenues from a delinquent POGO that was temporarily shut down in September. The Great Empire Gaming and Amusement Corporation was required to cough up these funds after initially paying PHP250 million, and making a commitment to settle the remaining PHP1 billion in three monthly payments.
Since that time, the task force has moved against two other POGOs, Altech Innovations Business Outsourcing in October, and New Oriental Club88 Corporation in November. Both of these POGOs are expected to be given permission to operate after they reach an agreement with the tax authorities. “Basically we’re going hard against people who are evading taxes,” Dominguez said.
In typical combative fashion, the president also promised that POGOs that didn’t pay would be “punched” and “shot.”
“I’m giving you three days to pay your debts,” the president declared. “If not, you POGOs, I will shoot you with air guns. Because from where I come from, pugo (quail) is a small bird that does not fly and only runs about.”
There are thought to be several hundred POGOs employing well over 100,000 foreigners in the country, most of them Chinese and often illegally, reported Asia Gaming Brief.
Colliers International Philippines reported last week that “POGOs now occupy about 10 percent of total leasable office space in Metro Manila or 1.14 million square meters.” The BIR collected PHP175 million from POGOs in 2017 and PHP579 million in 2018.
In other Philippine gaming news, despite the supposed suspension of new gaming, Macau casino operator Galaxy Entertainment Group may be allowed to move ahead with its proposed casino resort project in Boracay in the Philippines, said Lim.
“I think it is the belief of the president that casino is not good for Boracay. They want to project a wholesome image for Boracay. That is the position at this moment,” Lim told GGRAsia. “If they can come up with certain measures that will convince the president, maybe there will be reconsiderations of the regional suspension of the casino license in Boracay.”
The so-called “holiday island” was closed in April 2018, after Duterte decried environmental pollution caused by industry, including casinos.
Galaxy management had pledged that their Boracay project would be “an environment-friendly resort” with about 200 villas and “only 50 to 60 gaming tables.” The investment, in partnership with local firm Leisure and Resorts World Corp., would come in at US$300 million to US$500 million.
“We do not know if there will be some changes or some modifications to the ban,” Lim said. “We do not know if the president will allow casinos to be opened.” He said the moratorium policy on new casino resort projects in the country is “indefinite.”
