PH gaming sector defies regional slump

Pagcor chairman and chief executive officer Cristino Naguiat INQUIRER file photo

PHILIPPINE casino operators defied a massive slump in the regional gaming industry and posted a double-digit growth in revenue in 2015, according to the head of Philippine Amusement and Gaming Corp.

In an interview with the Inquirer, Pagcor chair and CEO Cristino Naguiat Jr. said the gross gaming revenue of all local casino operations—both government—and private licensees-operated, reached P130 billion last year, or an increase of 17 percent.

“We showed a big improvement last year despite the business environment,” he said, pointing to the 35-percent decline in the 2015 gaming revenue of Macau, Asia’s largest gaming center.

Singapore, the other major gaming center in the region, has yet to report its 2015 numbers but Naguiat said early indications pointed to a decline of “a few points” in the city-state’s casino revenue.

“Pagcor, itself, showed a 15.75-percent increase in gaming revenue, while those of the licensees are up 18 percent,” he said.

In 2014, Pagcor reported gross gaming revenue for the industry of P111 billion, but an anti-corruption crackdown initiated by the Chinese government resulted in a sharp decline in the number of casino patrons from mainland China across the region.

Industry watchers had feared that Philippine gaming firms like Solaire Casino and Resort, Resorts World Manila and the newly opened City of Dreams would suffer heavily as a result, but Naguiat said the local industry seemed to have adjusted its business model to adapt to the changing market environment.

“Pagcor, alone, we made P48.5 billion in 2015 while the licensees made almost P82 billion,” he said.

The state-run gaming regulator and operator also exceeded its revenue target set by the Governance Commission for GOCCs (GCG), which monitors the performance of government-owned and -controlled corporations.

“Our target for 2015 from GCG is P109 billion, but we hit P130 billion, including [revenues from] junket operations,” Naguiat said. “Most of the time, our people are conservative and don’t include junket revenues in the gross gaming revenue count because they’re so volatile.”

Excluding casino junkets from foreign high rollers, total gaming revenue would be about P125 billion.

“That’s still big,” Naguiat said. “In 2014, our total junket business was only P2 billion, but we hit P5 billion last year.”

In response to the sharp decline in Chinese casino patrons, the local gaming industry— especially new locators at Pagcor’s flagship Entertainment City project —have repositioned themselves as family entertainment resorts to diversify their revenue streams.

Apart from dining and shopping establishments, Solaire now has a theater for live performances while City of Dreams operates a family-oriented theme park.

Going forward, the Pagcor chief expressed optimism that the regional gaming industry will be able to recover.

“The market is not really weak,” he said. “Macau is down 35 percent, but that’s still a very big base in terms of total revenue. They’re still big and they just opened a huge casino named Studio City.”

“What’s important for us in the Philippines is that we met all our 2015 targets,” Naguiat said.