Are the chips down for the casino industry in the Philippines?

At the moment, casinos and other gaming venues look set to bring in US$3 billion in revenue, with projections of US$7 billion expected by 2020. Source: Shutterstock

PRESIDENT Rodrigo Duterte, the flamboyant leader of the Philippines, is shaking up the country’s casino industry yet again.

In recent weeks, Duterte announced the national gaming agency, the Philippines Amusement and Gaming Corporation (Pagcor), is set to sell its share of the casino industry and privatize the casinos and gaming centers it currently covers.

This also comes on the back of a confused attack on one of Manila’s most famous casinos, Resorts World, when a lone gunman poured gasoline on gaming tables and set them alight.

The attack, which killed 36 people and injured 54, was praised by IS who claimed responsibility although there are other theories the gunman was a disgruntled former patron or that he had been trying to rob the casino.

Taken together, the new move to privatize casinos in the Philippines and the possible terrorist attack could send a message the gaming industry in the Philippines is in trouble.

But are the chips really down?

This is not, after all, the first time Duterte has sought to overhaul the gaming industry, having clamped down on online gambling in 2016 and effectively wiping it out completely.

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Rather than harming the casino industry, the new move by the president, which includes a bill in the Senate facilitated by Senator Panfilo Lacson, looks set to strengthen its profits even further.

At the moment, casinos and other gaming venues look set to bring in US$3 billion in revenue, with projections of US$7 billion expected by 2020.

The issue, however, is that Pagcor currently acts as part owner of the gaming industry as well as the country’s gaming regulator, posing a potential conflict of interest as the industry flourishes.

In putting forward the new bill in the Senate, Lacson touched on this issue, stressing the need for Pagcor to act as a government department and not a casino operator.

“In order to promote a level playing field in the gambling industry and avoid conflict of interests, Pagcor should cede its role as operator of all gambling and gaming activities. Through such manner, it can focus and put premium to its regulatory authority, which is its governmental role,” he said.

There is also a potential conflict in the way revenue from gaming venues is currently carved up. In the first quarter of 2017, three of the Philippines’ top gambling venues, the City of Dreams, Resorts World, and Solaire, brought in US$283 million which was directly funneled back and used as half of the government’s income.

Pagcor also paid US$300,000 to the Dangerous Drugs Board, which could raise the question of whether casino players are helping to fund Duterte’s controversial “drug war”, which has so far claimed the lives of over 7,000 alleged drug suspects.

The move seems to be good news for the casinos and a great business opportunity for anyone looking to run one privately, although quite when and how Pagcor will start selling off its gaming venues are unclear.

Sensing this may be a long and laborious process, Pagcor chairman Andrea Domingo announced a five-year moratorium on new casinos in the Metro Manila area, which she explained at a press conference at the Asean Gaming Summit on March 21.

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“In the Manila area, we listened to our investors. They gave us a position paper to give breathing space for the market space to mature in the NCR) National Capital Region), so we listened.”

On the face of it, the move seems to have been well thought through, and the issues with Pagcor both regulating and operating casinos is clearly problematic.

Less understandable, however, is how the government are going to make up the shortfall, as the gaming industry currently provides half its income. The answer may be that gambling venues will be heavily taxed to keep the government’s coffers full.

Either way, it’s unlikely the user experience will suffer, whoever is in charge, and with casinos now able to focus on their own growth, the industry looks set to go from strength to strength.

Rather than throwing in his hand, Duterte seems to be making good on his promise to transform the Philippines into one of the top gaming and entertainment destinations in Southeast Asia.