PHILIPPINES

Pagcor grapples with POGO concerns

The Philippines is continuing its crackdown on its online gaming companies, tightening work visas and stepping up tax collection efforts in a delicate balance between enforcing the rules and not killing the goose that lays the golden egg.

The Philippines Amusement and Gaming Corp received PHP3.9 billion ($74.8 million) last year from Philippine Offshore Gaming Operator licenses and expects that number to double in 2019.

Pagcor said that its overall gross revenue in the first four months increased to P25.1 billion (U$482.9 million), up from just P22.5 billion in the first four months of 2018.

The number surpassed the regulator’s P23.6 billion target for the four-month period, helped by fees from licensees and offshore gaming operators.

“Right now, we are recording a monthly average of P6.27 billion revenues. Of this amount, we remit an average of P4.57 billion to the national coffers and Pagcor’s other mandated beneficiaries,” said Pagcor chair and CEO Andrea Domingo.

The influx of money, mainly from Mainland Chinese investors, is also buoying Manila’s property market, with rentals up 27 percent in the first quarter of the year.

However, the government is concerned that many of these companies are not paying the correct taxes and its workers have entered the country on tourist visas. The influx of Chinese is also creating resentment among locals, who see them as taking jobs and pushing up prices.

Pagcor recently warned its POGO operators to comply with regulations and pay correct taxes in the wake of intensifying monitoring and enforcement measures from the government.

Jose Tria Jr., Pagcor vice president, has warned operators that concerned government agencies are closely monitoring how they conduct business in the country.

“Let this serve as a final warning for everyone to strictly comply with all the rules, regulations and directives of all other government agencies which may have jurisdiction over the other aspects of your operations,” Tria said.

“Finally, for those under-declaring the income tax of their employees, be sternly warned that you will be placed under strict scrutiny by the Bureau of Internal Revenue (BIR) for such actions. The practice of declaring income tax below industry standards will not be tolerated by the BIR and will be dealt with accordingly,” he added.

Domingo has, however, stressed that POGOs should not be overtaxed by the government, warning that there is increasing competition around Asia for the lucrative operators.

“I hope we don’t overtax them so we don’t lose the good” that comes with the POGO boom, Domingo said.

Earlier this year, Pagcor issued a directive ordering POGOs to submit lists containing the names of all their employees, along with their salaries and visa statuses.

It is understood that there are many that have not submitted their lists and will be subject to penalties and demerits, or may even have their operations seized, should they remain non-compliant.

The Philippines also plans to impose further restrictions on foreign migrants as Chinese workers flood into the country. Migrant workers will now need a working visa and a tax number, together with a permit from the Labour Department.

More than half of the 45,000 work permits issued by the Labor Department in 2017 were given to Chinese nationals, according to the agency’s latest available data. The number of Chinese workers who secured permits doubled in 2016 to 18,000.

To make it easier to oversee and regulate the POGO operators, Oriental Group has taken the bull by the horns, suggesting the creation of two online gaming hubs. The hubs will help to ease social tensions created by the influx of Chinese and will hopefully lure more illegal operators to seek licenses.

The group will build two online gaming hubs, one in Clark City in the north and one in Cavite City in the south. As an incentive, Pagcor has agreed to allow operators in the hubs a five-year license instead of the threeyear permits currently being issued.

Resorts World Manila

Travellers International Hotel Group, a joint venture between Genting Hong Kong and Alliance Global, is the owner and operator of Resorts World Manila. The hotel room count for the group’s three hotels (Maxims Hotel, Remington Hotel, and Marriott Hotel Manila) remains at 1,226. The property is currently in the third phase of its expansion, which will add approximately 940 rooms. It will also include new gaming and retail spaces.

Travelers reported a 46.5 percent gain in net revenue for Q1, helped by gaming and non-gaming activities. Net profit, however, fell in the quarter, due to increasing costs.

President Kingson Sian has said he was confident the strong revenue growth would continue into Q2.

Alliance Global is embarking on a digital transformation strategy to “future proof ” its business, which will include its gaming operations, such as the RWM app.

Bloomberry Resorts

Bloomberry Resorts’ Solaire was the first IR to open in Entertainment City and is a 16-hectare integrated resort. The Bay Tower of Solaire consists of a casino with an aggregate gaming floor area of approximately 18,500 square meters (including 6,000 square meters of exclusive VIP gaming areas), with about 1,400 slot machines, 295 gaming tables and 88 electronic table games. The Sky tower consists of a 312 all-suite hotel, additional ten VIP gaming salons with 66 gaming tables and 223 slot machines.

According to analysts from Morgan Stanley, the group is expected to post an 11 percent rise in gaming revenue in 2019, driven by strong Chinese visitation and junket expansion in the ASEAN region. During the first quarter of 2019, Bloomberry Resorts saw its net profit shrink 40 percent, due to lower foreign exchange gains, higher interest expenses and weaker gaming revenues.

City of Dreams

The $1.3 billion City of Dreams Manila is owned by Belle Corp and Melco Crown Entertainment’s local unit. City of Dreams Manila has six hotel towers with approximately 950 rooms in aggregate, including VIP and five-star luxury rooms and high-end boutique hotel rooms, a wide selection of restaurants and food & beverage outlets and a 4,612.44 square meters family entertainment center in collaboration with Dreamworks Animation.

CEO Lawrence Ho has said the company has turned more cautious on the Philippine market, given increasing competition in the region.

For Q2 revenues edged higher to $176.1 million compared to $173.9 million, while adjusted EBITDA slipped to $82.8 million from $87.3 million in the comparable period of 2018. Rolling chip volumes totaled $1.9 billion down sharply from $3.0 billion in the second quarter of 2018. Mass market table games drop decreased to $192.8 million from $196.9 million.

Tiger Resort Leisure and Entertainment

Okada Manila, owned by Japan’s Universal Entertainment, is the largest resort in Entertainment City and the last to enter the market, with a soft opening in 2016. The property spans 44 hectares and at the completion of Phase One, Okada will have 994 hotel rooms and operate 500 tables and about 3,000 slots. Its centrepiece is the world’s largest coloured fountain, as well as a giant inner city beach complex, known as “Cove Manila.”

Okada Manila saw a 26 percent increase in gross gaming revenue for the month of June, reaching P3 billion (US$58.9 million).

The increase was driven by a rise in revenue across all three gaming segments, with VIP revenue rising 10.5 percent, mass table games by 58 percent and gaming machine revenue by 26.8 percent.

Non-gaming revenue also grew during the month, rising 41.3 percent.

Adjusted segment EBITDA reached P424 million, up from a loss of P91 million in the prior year period.

PH Resorts seeks $600m financing for Cebu resort

PH Resorts Group is looking to raise around $600 million in funds to support the construction of its $600 million integrated resort in Mactan, Cebu.

In an interview with local media, PH Resorts president Raymundo Martin Escalona said the company was looking to raise debt and equity to finance the construction of The Emerald, which is scheduled for completion by the end of 2020.

The company was originally planning to sell around P12 billion (US$228.8 million) worth of shares through the Philippine Stock Exchange but said the new method was more strategically suitable for its funding requirements. “The intention of PH Resorts is to really go to the market.

We have the option until the end of 2020, depending on the market situation,” he said.

Palmary buys stake in Philweb

E-bingo operator Palmary Corporation has purchased a 6.78 percent stake in Philweb Corporation and has signed a cooperation agreement with the company to develop its electronic and e-bingo business.

Speaking about the purchase, Gregorio Ma. Araneta III, chairman of PhilWeb said, “I welcome the Palmary Group’s investment in our company, a great sign of faith in the positive developments we have attained in the past year. I believe this investment will result in positive gains for both over the next few years.”

PhilWeb is an accredited service provider to PAGCOR, the Philippine Amusement, and Gaming Corporation, for its network of electronic gaming outlets.