Dowinn Group: from junkets to IRs, potential in the Philippines

The Philippines offers an exciting landscape, as operators thrive amongst a solid regulatory framework. Lorraine Koo, Corporate Chief Operating Officer for Dowinn Group explains how the company is expanding its roots beyond a junket base into IRs, the shifting focus on clientele – from Chinese to Korean, and the company’s evolving role.

We’re joined today by Lorraine Koo, Corporate Chief Operating Officer at Dowinn Group. Thank you for being with us.

It’s my pleasure.

You have extensive experience all across Asia. But I need to ask what is the most exciting market for you right now?

To be very honest, I’ve had experience in Singapore, Macau, and the Philippines. All three markets are exciting for me in many different ways. For Singapore, because I was the opening team. And then Marina Bay Sands was my first casino at that point of time, we just opened up Singapore’s gaming market, which is Resort World Singapore as well as Marina Bay Sands. That was exciting. Then, after which I went to Macau Galaxy also has a pre-opening team.

That was also exciting. Because Macau, when I went there about 10-15 years ago, was the gaming center for Asia. So, from Macau I learned what is gaming all about, unlike Singapore which we have a lot of rules and regulations that are completely different from the rest of the gaming world, even the US.  So Macau was an extremely interesting learning experience for me.

And the Philippines, when I came to the Philippines to build Solaire, it was extremely difficult. Extremely challenging. Because, aside from – then it was called Resort World Manila, right now it’s called Newport – there were no other integrated resorts.

So Solaire didn’t have any name, because the owner Mr. Enrique Razon, his expertise was ports. So Solaire was the second integrated resort in the Philippines at that point of time. And we were encountering a lot of challenges, there was very little trust with regards to how safe the Philippines is, and everybody’s concentration when they talk about gaming was Macau and then they have the concern about the Philippines being in a lot of scams and there was some anti-Chinese sentiment at that point of time.

So there were difficulties and challenges. However, we did overcome that and at that point in time we went door to door in Macau to knock on the doors of all the top junket operators in Macau.  And after we managed to convince them to come over and try and Solaire was miraculously able to ROI within a year. So that was an accomplishment.

So if you ask me, which is the most attractive market, from then until now, to me it’s still the Philippines. Because due to whatever is happening in Macau, and the strict gaming regulatory laws in Singapore gaming, the Philippines has immense gaming potential.

And even up to today, the Philippine government is actually supportive of legitimate gaming, which is casinos, integrated resorts, online gaming. The Philippines is extremely supportive. The government PAGCOR regulatory authorities are extremely supportive of gaming, and they are clamping down on the illegitimate ones, which is the ones creating a bad name for gaming.

So, the Philippines still has immense growth potential. So, aside from Metro Manila, they are developing other gaming hubs, which is not only one, they’re also developing Clark as the next gaming hub, aside from Metro Manila.

We’ve seen the growth in the numbers themselves. And obviously, it came out of COVID, much quicker than Macau did. Both Singapore and the Philippines were kind of leading examples as compared to Macau.

But a huge component of what is still happening, and one of the major changes within Macau is that Macau has basically lost its VIP, a lot of those of them relocated to other regions. Having spoken to various operators in the Philippines, VIP is very important for the market. What are the prospects for this year for VIP growth?

Well, the VIP growth in the Philippines is going on very strong. That’s why more and more companies are opening integrated resorts in the Philippines. Even, smaller companies like ours, which is Dowinn Group, we have two of our own casinos. But we also have projects ongoing.

We are exploring and looking at several integrated resort projects as well. So there’s huge growth potential in the Philippines, not just in Metro Manila, in other areas as well. And then we have got so many casinos opening in the Philippines. So, the junket operators are all coming to the Philippines. But having said that, Dowinn’s target market, even way before COVID, we have really shifted our target market. While the whole world is still targeting China, which was the big pie at that point of time, we have really shifted our database to basically Korea.

The reason was that Koreans have the biggest local population in the Philippines as foreigners. The numbers for visitations have also changed. In 2022, China was still the top visitors to Philippines. In 2023, China is not even in the top three.

There’s been a massive slowdown overall in terms of the China outbound tourism, even though we were expecting to see more of it. It’s been good for Macau. But it hasn’t been so great for the rest of the gaming jurisdictions around Asia. Speaking of which, there is still a junket-centric focus. There is a need for junkets.

But what what role do you think that these junkets are going to be playing in in the Philippines in the future? Are they going to continue to be as necessary or do you think that they’re going to kind of trail off in a sense like they did in Macau?

Well, junkets in the Philippines will not trail down. Because, where in Singapore junkets is not something which is not common. In fact, before a couple of years before there were no junkets, there were agents in Singapore casinos. Macau was the junket center. And then with the demise, or the closure, of the majority of the junkets in Macau itself, a lot of them have actually shifted to the Philippines. But the difference is that in the Philippines the junket operators are not so much Chinese-centric anymore. There are some Taiwanese-centric.

We basically diversified, already five years/six years ago to the Korean market. And from last year, we’re expanding our database to Southeast Asia, US and the UK, so basically the entire international market. We also blocked our IP address for all our websites in China, in order not to infringe the law. So Dowinn is a very unique company, whereby we actually managed to make the shift way before everyone else did.

Now we’ve seen transitions between a junket-centric focus and then moving into IRs. It’s happened with other previous junkets, which were based in Macau, as we saw within Vietnam, for example, and then also in the Philippines. I’m wondering, how is your transition? How is the Dowinn Group’s transition into IR? What are the timelines? What can we be looking at for that project?

Well, we are actually making a very slow transition. And within the last five years that I’ve been with Dowinn we were still a junket, then. But over the last two years, we have opened up two of our own casinos. You know, one in Rizal Park and one in Heritage. We just had our soft opening.

Is your attractive potential more about being able to offer them the lines of credit or being able to give them the other amenities which would come along with being in an IR with you, for example?

To be very honest, in Dowinn Group we do not really give out credit, which is a distinct difference from Macau junket operators. Macau jacket operators use credit to lure the whales from China. But given the fact that gaming is illegal in China, you cannot collect the debts in China. For Dowinn, after risk assessment and the risk management, we rarely give out credit, even if it’s to the whales. Our transaction is mainly cash transactions.

So their agents or our agents will basically deal with their own players. And then on our site, we deal with the Korean agents themselves. So that basically protects us from AML issues, we do the KYC on the players and then there is no credit link issue that lowers our credit risks for our company.

At the same time, the monetary issues, or credit, is just strictly between the agent and the player itself. So for us, we receive the cash, and then we issue the chips. So we basically do not infringe any AML problems.

Credit is very risky. The numbers look big, but how much are actually are you earning? We would have a lower, so called, GGR on paper, and have actual money.

And have less exposure.

That’s why we rarely give out credit, unless it’s a very, very trusted player, which it probably has been with us for an extremely long time. And then we know the person’s background extremely well. And we’re comfortable with that. Other than that, we rarely ever give out credit to players.

There’s some super exciting developments which are happening for the Dowinn Group. Thank you again for taking the time to speak with us. We’re talking to Lorraine Koo, the Corporate Chief Operating Officer at Dowinn Group. Thank you for your time.

Thank you so much Kelsey. Pleasure to meet you again. And hope to see you in Manila very soon.