A seismic shift

Philippine President Rodrigo Duterte has made it clear he’s not concerned about rocking the boat. His actions since taking office have raised alarm bells across the globe due to his heavy-handed crackdown on the drug trade. While foreign investors are wary, some steps may prove positive for the gaming industry. 

Since taking office in June, Duterte has made a series of pronouncements that have shaken the established order in the Philippines, including rejecting long-term ally, the U.S., in favor of closer ties with China. The gaming sector hasn’t escaped his reach with a crusade, since reversed, against online gaming companies and a call for The Philippine Amusement and Gaming Corp. (PAGCOR) to shed its casino assets and focus on its role as a regulator.

The position on PAGCOR is likely to be applauded by most foreign investors, who have been uneasy about its dual role. The potential sale of PAGCOR’s assets not only opens up the chance of a properly licensed and regulated market, it also throws up opportunities for operators and investors, both domestic and international, to buy casino real estate in one of Asia’s best-performing markets last year. But what exactly does PAGCOR have on its books, and what sort of revenues is the regulator-come-operator generating from its casino properties?

Big business

PAGCOR is understood to operate 13 casinos across the country; three in Metro Manila, five in Luzon, and a further five in Visayas-Mindanao – all of which come under its Casino Filipino brand. In addition, it also runs 20 PAGCOR Clubs, a more upscale proposition where local residents are permitted to gamble. In terms of revenues, PAGCOR’s share of table game, EGMs and bingo topped US$466.2 million for FY15, while licensing and regulatory fees for the same period were a little less at $430.2 million, according to Widus International Leisure. 

Despite the turbulence caused by Duterte’s reign, in the first half of the year license and regulatory fees increased 32 percent YoY to $297.1 million, while game revenues were up 8 percent to $242 million. The huge rise in regulatory fees came during the second quarter, with revenues from licensed casinos increasing from $87.5 million in 2Q15 to $124.1million in 2Q16. The impact of the President’s clampdown on e-bingo operators and online gaming sites in recent months has yet to be reflected in the numbers. The property portfolio and balance sheet is likely to pique the interest of other operators and investors, but behind the numbers things are a little less impressive. 

Government ends war on online gaming

The Philippines government has formally ended a war on online gambling, with the government now focusing its attention on opening up the online gaming industry to more players. However, regulator PAGCOR says measures will be stringent, especially with regard to location. No eGaming cafes will be allowed within 200 meters from schools and churches. PhilWeb has formally reapplied for its license.

Concern over FATF blacklist 

Julia Abad-Bacay, executive director of the Anti-Money Laundering Council (AMLC), has said that the Philippines might be blacklisted by Paris-based anti-money laundering watchdog, the Financial Action Task Force (FATF) if it fails to include casinos in the coverage of the Anti-Money Laundering Act (AMLA). Abad-Bacay also pointed out that the next mutual evaluation of the Philippines would be in 2018 and inclusion of casinos in the AMLA would be one of the major focuses of the mutual evaluation.

“Most of PAGCOR’s properties are dated and in need of renovation,” one industry expert who declined to be named said. 

“They don’t compare to most private casino operations, especially Entertainment City. The majority are in good locations, but will require significant investment to be viable operations in the current market,” he adds.

An inspired move

Duterte’s request for the operator/regulator to divest its bricks-and-mortar assets could be seen as something of an inspired move. The value of its portfolio is undoubtedly significant, thought to be around $679 million, so the money raised from the sale coupled with the cash saved by not renovating its properties will provide a welcome boost to government coffers. What’s more, whoever buys its assets will cover the modernization costs, which in turn will drive revenues and the amount PAGCOR takes in fees and taxes. So who will be looking to get out their chequebook?

“The advantages to a private operator are significant,” says Andrew Klebanow, partner at Global Market Advisors. “They would be buying a successful business in an environment where there is limited competition. While most major western operators may not be interested, there are a number of large Asian operators as well as some smaller, more nimble, mid-cap gaming companies that would find the acquisition of some of these casinos very appealing,” he adds.

PAGCOR would undoubtedly like to sell its assets as a job lot, but in reality most investors will want to cherry pick the best. 

That said, the value of the license is massive, so even current poor performers have huge potential so long as investors are prepared to pump in significant capital in order to bring these properties up to standard.

PAGCOR’s role in the Philippine gambling industry has been a hot, and, at times, uncomfortable topic. There is a conflict of interest – despite PAGCOR chair Ms Andrea Domingo saying otherwise – in having an operator also acting as regulator. Their products and propositions may not directly compete with each other – but the blurred lines have been enough to deter more established gambling firms from entering the fray in the past.

Separation of roles

“It has long been argued that PAGCOR needs to define itself as the primary regulator of casinos and not as a regulator-come-operator,” says Klebanow. “A casino operator would prefer not to have a regulator as a competitor – this is what has kept most major casino investors out of the Philippines,” he adds.

Stability on the horizon?

The end result could be a fully licensed and regulated Philippine gambling market spanning both land-based and online gaming. 

However, concern over Duterte’s mercurial approach to government, which in the industry has so far manifested itself in a ban on online firms targeting Filipinos which has since been reversed, may cause concern for overseas investors. 

“President Duterte has made it clear he is not a fan of casinos that target Filipinos,” says Klebanow. “There remains uncertainty about how he will treat those gaming operators (who acquire PAGCOR’s assets) once they are no longer owned and operated by a government entity.”


Solaire is a 16-hectare gaming and integrated resort complex along Asean Avenue in Parañaque City owned by Bloomberry Resorts. Bay Tower of Solaire consists of a casino with an aggregate gaming floor area of approximately 18,500 square meters (including approximately 6,000 square meters of exclusive VIP gaming areas), with approximately 1,400 slot machines, 295 gaming tables and 88 electronic table games. Bay Tower has 488 hotel rooms and 15 specialty restaurants. Contiguous to the existing Solaire Resort and Casino, the Sky tower consists of a 312 all-suite hotel, additional ten VIP gaming salons with 66 gaming tables and 223 slot machines. It also includes a certified 1,760-seat lyric theatre.

The company’s plans to sell its South Korean property, Jeju Sun Hotel & Casino, to Macau’s Iao Kun Holding have hit a stumbling block after a deadline lapsed with no accord having been reached. The operations have been seen as a drag on profitability. 

An international tribunal also recently ruled against the company, saying it was wrong to terminate the management contract of former partner Global Gaming Philippines. 


The $1.3 billion City of Dreams Manila is owned by Belle Corp and Melco Crown Entertainment’s local unit. The grand opening was held Feb. 2 last year.

PAGCOR has approved the operation by City of Dreams Manila of up to a maximum of approximately 380 gaming tables, 1,700 slot machines and 1,700 electronic table games. 

As of December 31, 2015, City of Dreams Manila had 261 gaming tables, 1,579 slot machines and 83 electronic table games in operation. 

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. It includes an approximately 260 room Crown Towers hotel, Hyatt City of Dreams Manila, a 365 room hotel managed by Hyatt International Corporation and Asia’s first Nobu Hotel with 321 rooms. 


Travellers International Hotel Group, a joint venture between Genting Hong Kong and Alliance Global, is the owner and operator of Resorts World Manila. Total room count for the group’s three hotels (Maxims Hotel, Remington Hotel, and Marriott Hotel Manila) remains at 1,226 with the occupancy rate in Q2 at 87 percent. 

Phase 2 at RWM is nearing completion with the addition of 228 rooms in the Marriott West Wing in Q4 this year. Phase 3, which will consist of three hotels, Hilton Manila, Sheraton Manila Hotel, and Maxims II, will be completed by 2018. It will also include an additional gaming area, new retail spaces and six basement parking decks. As of June, PHP8.7 billion of its offering proceeds had been released and used for Phase 3. 

PAGCOR has approved new gaming capacity of 420 gaming tables and 4,148 gaming machines at the resort. 

The company recently said it expects to finalize a blueprint for its second resort by June next year. 


Tiger Resorts and Entertainment, the Philippine unit of Japan’s Universal Entertainment, plans to open the first phase of its Okada Manila project in December, with an investment of $2.4 billion. Parent company Universal Entertainment recently raised $400 million through a note sale and said it has secured a “significant majority” of the construction costs.

The company may invest as much as $4 billion once all phases are completed. A recent jobs fair attracted 10,000 applicants for 8,000 positions on offer. Once fully operational, Okada Manila will feature two luxury hotels, a 30,000 square meters casino floor with 3,000 slot machines and 500 table games, as well as a number of dining, leisure and entertainment options. It will include an indoor manmade beach and club covered by a huge glass dome, high-end and casual dining restaurants, upscale retail shops, trade halls and cinemas.

Tiger president Steve Wolstenholme has said the resort, which will feature a huge fountain as its centrepiece, aims to provide Manila with a must-see icon, as well as retail options not yet available in the Philippines.