License moratorium set to stay, but growth continues

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. 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, PAGCOR President Alfredo Lim held out little hope that the ban would be lifted while Duterte is still in office.

Speaking at the ASEAN Gaming Summit, Lim said Duterte had told the regulator it could begin looking at new licenses again “after his watch.” The president’s term ends in 2022.

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.

Operators say they expect most future growth to come from regional casinos, in particular in Clark and the island of Cebu.

“I think regional Philippines will be the growth area for the future,” said David Lawrence, vice president of casino operations at Thunderbird Resorts, which operates casinos in Rizal and Poro Point. “The Philippines offers so many different types of experiences.”

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.