PHILIPPINES

PAGCOR’s targeting of Europe hits the spot

The news at the start of the year that PAGCOR was promoting the advantages of gambling operators from the UK and Europe basing themselves in the Philippines comes at an interesting time in the development of Europe’s jurisdictional map.

PAGCOR’s move – taking the opportunity presented by the ICE expo in London in February to extol the virtues of using Manilla as a hub – coincides with public concerns in the Philippines over the influx of Chinese workers among holders of Philippine Offshore Gaming Operator (POGO) licensees.

The latest news at the start of April was that at least three POGOs had shut down their operations amid a clampdown on tax avoidance by foreign workers. In response to reports, PAGCOR Chair Andrea Domingo was cited as saying: “I was told that they got scared because they might be over-taxed or something like that. But we don’t worry because what we’re doing now is that we’re marketing outside Asia; we started marketing in London.”

On the face of it, this jurisdictional raiding party would have found some willing listeners during its trip. While Europe remains a complicated regulatory patchwork quilt, there can be no doubt that in many of the regulated jurisdictions the level of scrutiny now involved in being an operator has become heightened.

In particular, the UK has within the past two years become a tougher market to negotiate as the UK Gambling Commission has moved to tighten up its oversight and more clearly flex its regulatory muscles.

This has had an effect on many of the offshore jurisdictions that are notionally within its ambit, particularly the Isle of Man which in recent years has become the jurisdiction of choice for many, mainly Asian-facing, brands which hope to take advantage of the marketing potential of advertising on English and Scottish Premier League football shirts.

“The news from the Philippines comes at an interesting time for the UK and largely Asian-facing brands,” said one legal source who preferred to remain anonymous. “188bet, for instance, will be pulling its UK operations at the end of the UK football season. We don’t yet know why that has happened.”

The source added that there were rumours circulating in UK regulatory circles of a “completely different approach” being adopted by the Commission with regard to issues around, for instance, the source of funds for any business with a UK licence.

“Certainly, the rumour is the Commission is looking more closely at the business plans it sees from its potential licensees,” he added.

Service centre

Of course, the Philippine already hosts many largely UK or European-focused brands for various aspects of their business, including in particular customer service centres. But as Keith McDonnell, consultant with KMI Gaming, points out this is largely unrelated to whichever territories a company is operating into.

“This is all related to geographical location of service centres and the licensing required for that,” he says. “It doesn’t affect their target punter markets, whether serviced from Manila, Cambodia, Vietnam or Isle of Man. The Philippines is still a very attractive option given the costs and vast supply of knowledgeable resource available to operators setting up there.”

Indeed, the point about the number of Chinese workers at the POGOs is that they form only a part of the massive army of gambling-related employees throughout the Philippine-based gambling operator eco-system.

One experienced online gambling executive currently working in Asia suggests the numbers involved now is in the region of 400,000 employed in the Manila region alone.

“These people have been here a long time and they generate a huge amount of money in the local economy and the vast majority are legitimate, paying taxes and behaving themselves,” the source says, again opting for anonymity.

It is also not entirely clear what the aims were of the PAGCOR ICE fishing expedition. It is, after all, one thing to offer non-core customer services from Asia; it is entirely another thing to look to launch operations into Asia.

As McDonnell says, while the Philippines offers attractive cost cuts in some areas, Asia is “not an easy market to crack.”

“Those who thought it was have usually found out the reality through their pocket,” he says, adding that Asia also won’t provide any regulatory option for targeting the UK or Europe.

“Of course, they could also decide to target Asia but their licensing structure is far from the greatest challenge in building a successful strategy for that.”

On a closing note, the experienced online gaming executive offers a word of caution regarding whether the pressure regarding Chinese workers at POGOs will continue and hence whether PAGCOR will feel the need to fill any kind of gap.

“(The business is ) not going to go away because there is a dispute between two official agencies at a local level. That dispute will resolve itself, as it did a few years ago. There is too much invested here and there are too many people employed in the industry for all of that to go south.”

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. For 2018, the company reported a 16.9 percent increase in gross gambling revenue, boosted mainly by the VIP sector.

GGR came in at P20.01 billion ($378.5 million). Casino drop gained by 36.8 percent, driven by a 59.1 percent gain in the VIP segment and a 3.7 percent increase for the mass market.

Net profit jumped to P1.4 billion compared to P279.8 million in 2017.

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.

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. It is also waiting for planning permission to build a $308 million cruise port in Paranaque City. Once construction begins, it sees the facility opening in 18 to 24 months. For 2018, full-year profit gained 18 percent to P7.2 billion, while net revenue gained 16 percent to P38.2 billion. Solaire’s gross gaming revenues were up 14 percent to P50.87 billion, driven by mass tables and slots. Mass table revenue was up 27 percent at P15.2 billion, while EGM revenue gained 18 percent to P13.8 billion.

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.

City of Dreams

The $1.3 billion City of Dreams Manila is owned by Belle Corp and Melco Crown Entertainment’s local unit. Belle President and CEO Manuel Gana recently confirmed that the partners are considering expanding the City of Dreams brand elsewhere in the Philippines, potentially in a regional location. However, the company said there are no definite plans as yet and it would involve applying for a second license from PAGCOR. For Q1, Belle’s Premium Leisure Corp unit, which earns a share of gaming revenue from City of Dreams Manila, registered a 9 percent increase in gaming earnings, reaching P725 million.

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.

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.”

The company reports gross gambling revenue figures monthly and for March posted a surge of 68 percent to P3.3 billion (US$63.9 million) , with a recovery in both domestic and international players. The company added a further junket in March, further helping boost VIP revenue.

Suppliers asked for Filipino-themed games

Suppliers have made significant strides in developing slot products for the Asian market in recent years, though so far there has been no real attempt to produce content themed for the rapidly growing Philippine market, an executive from a leading operator in the country said.

Much of the focus has been on incorporating Chinese themes and designs to gain a foothold in Macau, where the play is dominated by table games. Despite the efforts, slot machine revenue still only makes up about 5 percent of gross gambling revenue, compared with 30 percent in the Philippines.

“We have a lot of popular games all over the Philippines, variations on card games, we want to see some of these things in our culture recognised,” Sandy Amida, senior director – casino operations at Resorts World Manila said at the ASEAN Gaming Summit in Manila.

“The industry is expanding and it won’t be confined to the four IRs. It’s going to expand so I think the potential is there and we need some games and themes that Filipinos can easily relate to.”

Philippines should consider online gaming for locals, politician says

The Philippines will eventually need to regulate online gaming for locals to control rampant illegal gambling and generate revenue, the Hon. Gus S. Tambunting, representative for the 2nd District of Paranaque City and chair of the Committee on Games and Amusement said.

“I know that it is still happening,” he said at the ASEAN Gaming Summit in Manila, referring to locals gambling online. He acknowledged given the strength of opposition from Duterte and the Catholic Church that the prospect of regulation isn’t imminent. However, he says it is something that is needed.

“Right now opening it up would not be a good idea,” he said. “I think we are just delaying the prospect, but eventually we will have to go that way,” he said, referring to regulation. “In about five years after the current administration.”