Higher casino entrance fee pushed

The state-run tax think tank is pushing for a higher qualifying fee to enter and play in casinos to further shore up revenues and support the Duterte administration’s ambitious infrastructure program.

“The proposal to impose an entrance fee in casinos is no longer necessary since there is already a qualifying fee being collected by Pagcor (Philippine Amusement and Gaming Corp.) since 1993. It is recommended that the same be strictly enforced in all casinos operating in the Philippines. Also, the existing rate of P100 may be raised to P500 to factor in the effect of inflation when the fee was first imposed in 1993,” the National Tax Research Center (NTRC) said in a report titled “Proposed Imposition of Casino Entrance Fee.”

“Higher rates of, say, P1,500 can also be an option to discourage low-income earners from engaging in casino gambling,” the NTRC added.

The NTRC noted that under Executive Order (EO) No. 48 issued in 1993, Pagcor may collect from casino players a qualifying fee not less than P100 a player in the form of coupons.

Citing Pagcor data, the NTRC said collections of qualifying fees have been declining in recent years, from a high of P20.2 million in 2005 to a range of P8-10.6 million from 2008 to 2015.

In 2016, qualifying fee collection increased to P14.4 million, the latest Pagcor data showed.

“Albeit EO 48 requirement of the collection of qualifying fee from casino players, it was gathered that said fee may be waived as is being done in Waterfront Airport Hotel and Casino Mactan as well as those located in Entertainment City, such as City of Dreams, Okada Manila, and Resorts World Manila. In fact, under Regulation 15 of the Casino Regulatory Manual for Entertainment City, Clark, and Fiesta Casino licensees, there is no amount of qualifying fee indicated,” according to the NTRC.

“It is likewise noted that as presently worded under EO 48 the collection of the qualifying fee may be viewed as optional. The EO provides the following: ‘Whereas, to raise additional revenue for the government, Pagcor may collect a qualifying fee from players entering the casinos,’” the NTRC pointed out, emphasizing the word “may.”

“In view of EO 48, there is no need for a bill that would mandate Pagcor to collect a casino entrance fee. Perhaps what can be done is to make the collection of qualifying fee compulsory for players in all casinos operating in the Philippines whether Pagcor-operated casinos or licensed casinos. The amount may also be increased since it has not been adjusted for more than two decades now. If indexed to inflation, the amount would be around P320 but may be rounded off to P500 or to as high as P1,500 similar to what Quezon City is proposing. The rates proposed by the bills may also be an option but said amounts may already be considered too high by casino players,” the NTRC said.

Last year, Quezon City’s council passed on second reading a proposed “responsible gaming” ordinance under which a P500 entrance fee will be imposed on everyone who enters electronic bingo establishments and a higher P1,500 for those who enter casinos in the city.

Also pending in the Lower House are two bills proposing to either slap an entrance fee of P3,000 for all persons who will enter casinos or collect P3,500 from Filipinos who patronize these gaming facilities.

With an average of about 5.6 million local entrants in licensed casinos as well as Pagcor-operated slot machines and table games yearly during the period 2014 to 2016, the NTRC said strict collection of the P100 qualifying fee could generate P556 million in revenues a year.

“On the other hand, a qualifying fee of P500 may discourage local people from entering casinos, particularly low-income earners, hence, the number of local entrants would be reduced. Assuming a 50-percent reduction in the number of entrants, the estimated revenue would be P1.39 billion,” the NTRC added.

“Aligning it to Quezon City’s proposed rate at P1,500 could greatly discourage local people from playing in the casino since even without gambling yet, they could already lose in a sense P1,500. Assuming an 80-percent reduction in the number of local entrants, the revenue that would be generated would amount to P1.67 billion. On the other hand, the proposal under the two bills to impose P3,000 or P3,500 is seen to be too high and will effectively restrict entrance to casinos of residents except for those who have extra money to spend,” according to the NTRC.

For the NTRC, the government may take advantage of the country’s vibrant gaming industry to help raise needed revenue to finance its development projects such as its ‘Build, Build, Build’ program as the country gears toward achieving the ‘golden age of infrastructure.’

Under “Build, Build, Build,” the government plans to roll out 75 flagship, “game-changing” projects, with about half targeted to be finished within President Duterte’s term, alongside spending a total of up to P9 trillion on hard and modern infrastructure until 2022.

Also, “notwithstanding its contribution to the country’s economic growth and potential to generate government revenue, gambling also has its attendant social costs which must be managed carefully” such that “the collection of higher qualifying fee in all casinos could be a practical way to discourage those who do not have enough money to spend in casinos,” the NTRC said.

Pagcor data showed that as of 2016, 54 casinos operate in the country, of which the state-run firm operates 44, while the 10 others are licensed to private gaming giants.

Casinos’ gross gaming revenue or gross bets less payouts jumped to P128.4 billion in 2016, of which four-fifths or P102.8 billion came from licensed casinos, compared with a total of only P35.53 billion in revenues a decade ago.

The combined gross gaming revenues of licensed casinos have been exceeding those of Pagcor-operated ones since 2009.

“Installed capacity of casinos in the Philippines also shows tremendous increases from 2007 to 2016. From a total of 9,069 in 2007, the number of table games and slot machines more than doubled to 20,551 in 2016 where installed capacity are generally slot machines,” according to the NTRC, citing Pagcor data.