PHILIPPINES

License moratorium clouds growth prospects

Philippine Gaming and Amusement Corp. Chair Andrea Domingo’s efforts to further expand the country’s booming gaming industry look set to be thwarted by the continuing hardline stance of President Rodrigo Duterte, who is refusing to budge on his casino ban.

Duterte, who came to power in 2016, has repeatedly expressed his dislike of gambling, both online and land-based and put a moratorium on new casino licenses in January 2018.

However, that ban is threatening foreign investment into the Philippines’ tourism sector and restricting a lucrative revenue stream for the government. It also comes at a time when other Asian jurisdictions, such as Cambodia and Vietnam are expanding rapidly, creating an increasingly competitive environment for IRs in the Philippines.

Domingo recently told Bloomberg News that she hoped to be able to persuade the president to impose a selective ban, rather than the blanket ban that is currently in place.

“Gaming seems to be the sunrise industry now in Asia,” she said. “There are still areas in the Philippines that can still absorb and benefit from these investments, which won’t go here with the current ban.”

Domingo said she would recommend that the ban would remain in force in areas not accessible to foreign travelers, thereby alleviating the issue of problem gambling amongst Filipinos. However, as of the time of going to press, Duterte has made no pronouncements on the issue and officials say that means that the moratorium remains in place.

At present, there is no sign that the lack of new projects is slowing growth in the Philippines, which saw gross gaming revenue from its casinos gain almost 23 percent in 2018 to P187.5 billion (US$3.6 billion).

The majority of this revenue was generated by the casinos in Entertainment City, which include City of Dreams Manila, Okada Manila, Solaire Resort and Casino, and Resorts World Manila, which chalked up gains of 29 percent to P141.4 billion over the year.

Those in the former Clark naval base recorded gains of 22.4 percent to P8.6 billion, while Thunderbird dipped slightly to P1.58 billion from P1.7 billion the year before. PAGCOR’s own casinos only saw marginal growth in 2018, up 4.4 percent to P35.9 billion.

Equally strong gains were observed across the VIP, mass and EGM segments.

For 2019, PAGCOR expects gross gambling revenue in the country to gain 8.5 percent to PHP217 billion ($4.1 billion) putting it in contention to take over Singapore’s title as Asia’s second-biggest gaming jurisdiction.

The Philippines saw a surge in visitor numbers in 2018, recording 7.1 million tourist arrivals, up 7.7 percent from 2017, according to a statement from the Department of Tourism.

The growth came despite the closure of Boracay Island between April and October 2018 for an environmental cleanup.

Tourism Sec. Berna Romulo-Puyat said the record number was due to the appreciation for other destinations in the country.

“The challenging act of closing down Boracay- a flagship destination, the country’s top sun-and-beach destination has evidently become a blessing in disguise for secondary tourism spots to have a share of the limelight and attention they truly deserve,” she said.

“It shows that turning off the faucet when the water is unclear can bring a fresher flow in just an unexpected period of time,” she added.

South Korea remained the top tourist market for the Philippines, making up for 1.6 million arrivals. China came in second at 1.3 million arrivals – up 29.6 percent from the prior year period. USA came in third with 1 million arrivals.

The closure of Boracay and subsequent statements by Duterte that he won’t allow casinos on Boracay has put plans by Macau’s Galaxy Entertainment Group to build an IR on the island into doubt. The company is still expressing confidence it will ultimately get the go ahead, though publicly at least, the president is standing firm.

Another project from Hong Kong-listed Landing International Development is also up in the air after the government cancelled the land lease contract for the Manila resort.

Bloomberry Resorts

Bloomberry Resorts’ Solaire was the first IR to open in Entertainment City and is now planning a second IR to the north of Manila to cater for the local mass market in Quezon City. However, the company has been asked to address concerns raised by local church and parent groups with regards to its Quezon City casino plans. Newspaper advertisements from “concerned citizens of Quezon City” have pointed out that the planned resort is in close proximity to schools such as the Philippine Science High School and the Quezon City Science High School.

This prompted a response from the Philippines gaming regulator chief, Andrea Domingo, who has now asked the casino operator to address the concerns before they can be given the notice to proceed (NTP). Bloomberry maintains that its QC casino does not violate any local or national laws and regulations.

It is now completing the requirements for the casino after securing financing for the project earlier this month via a P40 billion (US$767 million) loan from local lenders.

Solaire 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.

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. The new Grand Wing will have three international luxury hotels – Hilton Manila, Sheraton Manila Hotel, and Hotel Okura Manila, adding approximately 940 rooms. It will also include new gaming and retail spaces, as well as six basement parking decks. Further down the road, it will open the fourth and final IR planned for Entertainment City, which is scheduled for 2020.

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.”

Parent company Universal Entertainment recently announced it will be working with Chinese a state-owned travel agency to develop package tours to Okada Manila.

It has executed a “Letter of Intent” with CTS Shanghai Zhongqiao International Travel Service Co. Ltd, one of the three largest stateoperated travel agencies in China.

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, a 4,612.44 square meters family entertainment center in collaboration with Dreamworks Animation, a live performance stage, two international nightclubs and a multi-level car park.

Tax authorities target POGO licensees

The Philippines Tax agency has set its sights on Philippines-based offshore gaming operators, or POGOs, requiring the companies to register with the Bureau of Internal Revenue before their licenses can be renewed.

It is understood that more than 50 companies, many of which target Chinese gamblers, will be affected by the new rules. According to a statement from the Department of Finance, the tax bureau will also be monitoring the number of Chinese nationals working in the gaming industry.

Between 2015 to 2017, there were 51,000 permits issued to Chinese nationals allowing them to work in the country, according to a Labor Ministry official in November.

However, more than 3 million Chinese have entered the Philippines since 2016, with many applying for work permits.

Patagonia enters online bingo market

Patagonia Entertainment has entered the Philippines online gaming market, after a number of its popular Video Bingos were certified for the market. The company said it has expanded into the market through two significant operator partnerships.

Patagonia Entertainment’s Global Business Development Manager Victor Arias said: “The Philippines is an exciting opportunity for Patagonia as it represents a huge growth area for the business. Video Bingos are very popular in the region and the games will be a major asset for any iGaming companies expanding into this territory.”