Pacific Online to add terminals for Visayas, Mindanao lotto operations

Listed gaming firm Pacific Online Systems Corp., the government’s lottery equipment supplier for Visayas and Mindanao, has signed a fresh deal that would expand its network of outlets across the country.

In a disclosure to the Philippine Stock Exchange, the company said it had signed a new deal with the Philippine Charity Sweepstakes Office (PCSO) for the rollout of an additional 600 lottery terminals in the company’s concession area.

The new terminals would go on top of the 2,039 lotto outlets the company already operates on the PCSO’s behalf.

“For 2011, the PCSO announced [plans for] generating over P30 billion in revenues mainly from its lotto operations nationwide,” Pacific Online said in its disclosure.

“Historically, Luzon operations contribute about two-thirds of PCSO’s lotto revenues, while Visayas and Mindanao contribute the remainder,” the company said.

For the 600 new stalls, Pacific Online said it would get a lease fee equivalent to 7.85 percent of each terminal’s gross revenue.

In the same deal with PCSO, Pacific Online agreed to have its lease fee for existing terminals reduced to 9.85 percent for the year 2012, from the 10 percent the company used to get.

“The 0.15-percentage point reduction represents the cost of maintenance of lottery equipment subject of the lease which the corporation has agreed to shoulder in consideration of its longstanding relationship with PCSO,” the company said.

The reduction of the lease fees for existing terminals and the lower rate approved for the new terminals mean savings for the government, if fees are computed on a per-terminal basis.

Pacific Online earlier reported a 9-percent drop in net income for the first quarter of 2012, due largely to a drop in investment gains.

Pacific Online said its investment gains in 2011 reached only P20.7 million, significantly lower than the P157.8 million posted in 2010.

This, the company said, was a “result of more volatile global market conditions.”

Despite this, the firm’s operating profit, which strips out the effects of changing valuations on its assets, rose by 21 percent to P460 million in 2011 on the back of stronger sales of lottery tickets.