Philippines Casino Revenue Soars 14% in 2017

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Wednesday, April 4th, 2018 | Written by Adam Brown

The Philippines casino market generated gross gaming revenue (GGR) of PHP152.55 billion (US$2.92bn) in 2017, with that figure higher by an impressive 13.8% compared to the prior year. Furthermore, the integrated resorts located in the capital of Manila accounted for 71.5% of all revenues generated in the country, according to the latest information released by the Philippine Amusement and Gaming Corp (PAGCOR).

Industry Background

Casinos in the Philippines are either state-owned and run by the country’s regulator, PAGCOR, or alternatively are privately owned and operate under a casino license granted by PAGCOR. This latter category includes the City of Dreams Manila (Melco Resorts and Entertainment Ltd); Solaire Resort and Casino (Bloomberry Resorts Corp); Resorts World Manila (Travellers International Hotel Group Inc); and Okada Manila (Tiger Resort, Leisure and Entertainment Inc).

At one stage, PAGCOR owned 46 gambling venues across the country, but the organization is currently in the process of selling its land-based properties, including 11 fully-fledged casinos, which according to Finance Secretary Carlos Dominguez, “should be sold within the next few months.” Once all the country’s land-based casinos are divested, PAGCOR will subsequently be renamed the Philippine Amusements and Gaming Authority.

Taxes

While the government currently charges commercial casinos in the country a tax rate of just 15%, PAGCOR facilities, on the other hand, have to pay 50% of their GGR to the state. Needless to say, this amounts to a great deal of tax revenues for state coffers, with the government currently exploring ways to preserve the important revenue stream after its privatization program is fully completed. Commenting upon the situation, PAGCOR Chairwoman Andrea Domingo explained last summer:

“Privatization is like selling your assets. Let’s say you own an apartment, I’ll sell it but I still want the rental. The revenue stream will still come, because they have to pay taxes.”

State versus Private Casinos

Last year, the country’s state-run casinos generated revenues of $660 million, up by 8% compared to 2016, while the industry’s privately owned integrated casino collected a combined $2.09 billion in revenue, higher by 26% from 2016’s result. Meanwhile, online and electronic gaming, which includes sports betting, bingo, and electronic games, accounted for a further $450 million of the Philippines’ gross gaming income.

As mentioned, Travellers International Hotel Group Inc (TIGHI) owns the Resorts World Manila, which on June 2nd of last year suffered a devastating attack by a crazed gunman which left 38 people dead and 70 people injured. The incident subsequently led to the company’s 2017 net profit plunging by a severe 92% to PHP241.7 million (US$4.61m) last year, versus the PHP3.40 billion ($64.84m) collected in 2016. The casino has since started to recover, though, and in Q4 its GGR was up by 22%, with TIGHI International President and Chief Executive Kingson Sian stating:

“We are pleased to see continuous improvements in our quarterly results and expect to sustain this upward trend, especially with the partial opening of Phase 3 development’s gaming area in the near future.”

Investing in Tourism

Similar to the model originally pioneered in Las Vegas, and now being followed in the Chinese gambling hub of Macau, the President of the Philippines, Rodrigo Roa Duterte, has instructed PAGCOR to place a greater emphasis on growing tourism in the country and transforming it into “the top gaming and entertainment destination in the Association of Southeast Asian Nations” by the year 2020.

Recent developments in this direction include Megaworld Corporation announcing a doubling of its investment inside the Westside City Resorts World complex, with the $2.3 billion project expected to be completed by 2021. In addition, Galaxy Entertainment has been given the greenlight to build a $500 million integrated resort on Boracay Island, an area which Duterte has referred to as a “cesspool” on account of its waste and sewer system problems. While the Department of Environment and Natural Resources has recommended that the region stays close for a year while the clean up operation takes place, Galaxy vice chairman Francis Lui has expressed his optimism for the Boracay once the program is complet, explaining:

“What excited us, one of the reasons, has to be the new airport which has been built last year, giving direct access to international market to bring in some high-end customers.”

$3.57bn GGR in 2018

According to PAGCOR, the Philippines is forecast to produce GGR of PHP186 billion ($3.57bn) this year, representing a 9.4% increase over 2017. Furthermore, the growth is expected to be driven by the country’s online casinos and electronic-gaming sector. Currently, just gamblers based abroad are permitted to gamble with those firms operating with a Philippine’s offshore gaming license, and while there are presently 53 offshore gaming operators (POGOs), the majority of which are Chinese, Andrea Domingo, CEO of PAGCOR, has expressed her belief that that number would double this year.