PAGCOR’s Chairman and CEO, Alejandro H. Tengco, says that he’s most excited about the growth in the eGaming sector in the Philippines, with expectations that gross gaming revenue generated from the segment could even top that of its land-based casinos. The official also laid out the sale plans for Casino Filipino, saying they haven’t yet settled on a final price.
We’re joined today by Alejandro Tengco, the Chairman and CEO of PAGCOR. Thank you for being with us.
Thank you Kelsey. Thank you for the opportunity to have a one-on-one with you.
We saw that you opened up our last ASEAN Gaming Summit with some bombastic news about the sale of Casino Filipino. Do you have any other surprises coming for us this year at ASEAN Gaming Summit 2024?
For this year, no surprises. I believe what’s important is for me to be able to fulfill whatever I had said one year ago. And I’m focused on that. The privatization will happen towards the end of 2025, and probably spill over to early ‘26, or up to mid ‘26. My focus now is really to be able to make sure that everything I’ve said last year is validated this year and implemented by next year.
Speaking again of Casino Filipino, what is the price tag you’re putting on it? And do you think that you can still achieve that price tag?
I have not met with the people who would help me with the valuation of the said properties. I am talking to a few who I believe are more than qualified to value all the 41 properties. And basically, we’re just in the introduction process. And we have not really dwelled on what price will be, how it will be done. It’s just basically more of the general concepts of privatization. And hopefully, maybe towards the third quarter of this year or towards the fourth quarter, I would have a better sense of what and how it will be done.
Now, a major part of the divesting of that is to move into only being a regulator. That being said, within your speech at the opening of the ASEAN Gaming Summit, you did say that the regulator wants to make the majority of its revenues from GGR. And then recently, you also said that you’re expecting the Philippines to become the second largest gaming market in Asia. How?
So, if we are successful in the efforts to privatize all the Casino Filipino properties, then we will purely focus on regulation, we will be basically purely a regulatory body. So, we will derive revenues from the license fees of all the integrated resorts and the 41 casinos, because if we’re successfully able to bid out all of them, then we will generate license fees from these properties now in private hands, so that will be the major component.
But if you heard me earlier, what is growing really exponentially is the eGame sector – I’m referring to the electronic games, electronic casinos, sportsbook. And the segment is growing exponentially. I honestly believe in the medium term there is a very big chance that the GGR being generated from the eGame sector, eGaming side might be at par or even overcome now of all our licensees because last year, it grew almost 100 percent.
In the first two months of this year, it still has not stopped growing. So coupled with the fact that I also made an announcement that starting April 1st we’re bringing down the license fees from past 50 percent when I assumed (the role) we’re bringing it down to 35 percent, and for the IRs who will be also having dot.com business, it will be 30 percent.
Because there will be a difference between a licensee who is only basically using a brick-and-mortar system versus an IR who will be investing in the facility or in other structures. So, by doing so, I think that segment or that sector that we license in PAGCOR will definitely continue to grow.
Because prior to my decision to bring down the rates, we were having applications or notices of closures of about an average of between five to six licensees a month. With the announcement that I’ve been telling everyone, you will not believe it, we were down to almost no requests for closure. And we are overwhelmed with new applications. Because with the new rates, we will already be at par with major jurisdictions around the world.
But are there any more plans to further lower the rates? And would you be focused more on the online side? Or would you lower the rates across the board?
Well, I think lowering the rates, the license fees already to 35 percent for regular licensees and about 30 percent for IRs is something that can remain in the medium term. And then probably as it continues to operate and grow hopefully, then we can study whether there is a need to further bring it down. But as it is, I think that should be the rate where it should be. Because comparing it to all the other jurisdictions most specially in the United States, 30 to 35 percent is the rate that everybody is using now.
We saw that Thailand recently announced a very low rate that they’re considering for taxation. They seem to be moving pretty quickly towards that. You do have the prediction that very likely the Philippines will become the second largest gaming market in Asia. What would Thailand do to influence that when it eventually, or if it eventually, comes online?
If Thailand pursues their plans of also issuing licenses, then I would consider them as a direct competitor. But before they’re able to execute all their plans, it will still take maybe another five years. So, between now and the time they open may foundation will be a lot stronger than something that is only going to be set up five years from now.
Same with Osaka. I had the opportunity to meet the members of the City Council of Osaka. And they’re telling me that their opening date will be still somewhere in 2030. So that gives me a six-year window to address, maybe to restructure, and to be able to make sure that we are a stronger regulatory body.
So that maybe as competition comes in, you have the possibility of Thailand, you have Osaka already set for 2030, you have Cambodia seriously considering issuing licenses too. So that window I should take advantage of, so that when they come in basically, I am already more experienced, I would have given the current and future licensees everything that they want. Or as Tom Arasi said earlier: the best sauce so that the broth, or the meal, will be appetizing. So, by then, while they’re only starting, I should already be more stable.
Looking at the regulatory side, the Philippines is still on the FATF grey list. I know that the President has also commented that he wants to make that a priority to get off of the grey list. How much of a component is gaming in regards to the attempts to get off the grey list?
Definitely one of the items that has to be addressed, or one of the things to be addressed is the gaming industry. More particularly, I would refer to the junket operations. I want to assure you that we are continuously monitoring the situation, all the junket operators are being really monitored very well.
We have a good anti-money laundering group now within PAGCOR, that is actively coordinating between these operators, and the Anti-Money Laundering Council of the Philippines. So, the last report I got about, I should say, two/three weeks ago, is that we are on the right track. Meaning what we are doing is the right thing, in order for the financial body, the body that is international looking into this can appreciate the fact that everything is being done to address whatever has to be addressed. So that is exactly where we are at today.
There’s a lot of things which have happened. And as you mentioned, you’re trying to always fulfill on the promises and make sure they’re in a timely fashion.
I think that’s the best thing that a leader of an organization can do: have a vision, have a plan and be transparent and tell everyone about it, so that I myself am pressured to make sure that whatever you commit, whatever you say, happens. And that is where we are today. I was just listening to a few of those who were in the panel. And truly they recognize the efforts of PAGCOR now. Alex (Leese) mentioned earlier that the final straw that before he made that decision was really trying to figure out whether all the problems of the past are gone today.
And if you heard him, he said that one thing they really were very happy about was the fact that we have set aside the bureaucracy. It’s not as difficult anymore to deal with the regulatory body, which is PAGCOR. And I think that this is an important factor for us to entice more investors to come and take a look at the possibility of doing business in the Philippines. And the panelists earlier are living examples of those who were frustrated in the past and now have decided that they will do business in the Philippines. I think that that in itself would already be the best compliment that PAGCOR got in this morning’s program.
Well, the floodgates are now open. Thank you so much for being with us. We’re very happy to have you open the ASEAN Gaming Summit. Yet again, thank you, Chairman Al Tengco from PAGCOR.
Thank you, thank you so much too for the opportunity. And as always I will be supportive of the ASEAN Gaming Summit. I look forward to being part of it – not as a keynote speaker next year, but just a part of the conference.
