Philippine Casino Privatization Advances with PAGCOR Involvement
Efforts by legislators in the Philippines to reduce the size of the Philippine Amusement and Gaming Corporation (PAGCOR) are progressing. A definite plan has been developed to strip PAGCOR of its state-operated casinos and enable it to act solely as a gaming regulator.
The start of privatizing casinos remains a strong desire for PAGCOR, as indicated by its CEO, Alejandro Tengco. At a House of Representatives Committee on Management hearing on Monday, Tengco, who also supports the privatization, declared that the plan will begin in mid-2025.
Imagining a potential profit of PHP60 to PHP80 billion (US$1.05 to $1.4 billion) from the sale, Tengco is hopeful about the outcome. Nevertheless, this figure is less than what certain legislators have projected, with Representative Joey Salceda estimating a possible PHP128 billion (US$2.25 million) from the privatization.
Changing the Gaming Landscape
During the hearing, Tengco mentioned that PAGCOR is taking steps to redefine its place in the industry. Instead of continuing to manage state-owned casinos as part of a dual role, the organization aims to mainly pursue its regulatory function.
Tengco emphasized that both private investment and the efficiency of casinos are critical to PAGCOR's goals. He stressed that the approval of President Ferdinand Marcos, Jr. guarantees privatization will proceed without opposition.
There was also opposition to the privatization plan during the hearing. One person who is against the idea is Representative Rufus Rodriguez, who announced his intention to introduce a resolution opposing the private initiative.
Rodriguez is against giving up state-run casinos to private operators because it would mean giving away the money the government currently receives from them. In his view, dividing PAGCOR and giving away the lucrative casinos is the same as giving away "the goose that lays the golden egg."
During the event, Tengco shared that PAGCOR anticipates generating PHP72 billion (US$1.26 billion) in revenue in 2023. This revenue projection comes from the PHP36 billion (US$633.24 million) earned during the first half of the year. Notably, Tengco underscored that the 2023 revenue forecast is nearly equivalent to the level PAGCOR was earning before COVID-19 harmed the global gaming industry in 2019.
PAGCOR Wants Restitution
One factor in urging the splitting of PAGCOR is the perception that it has not been effective in managing oversight of the gaming industry. Lawmakers, such as Senator Sherwin Gatchalian, argue that PAGCOR has failed to properly deal with the scandals surrounding the Philippine Offshore Gaming Operator (POGO) segment, which damaged its standing.
These scandals, which involve human trafficking, money laundering, illegal gambling, and more, have occurred due to a lack of proper resource allocation by PAGCOR.
To assist with its regulatory accountability, PAGCOR hired a third-party auditing firm, Global ComRCI, to keep an eye on the POGOs. Unfortunately, the firm allegedly misrepresented its financial solvency to secure the five-year, PHP5.8 billion (US$102 million) contract.
PAGCOR terminated the contract five months ago when these accusations surfaced. It now wants the company to repay PHP1 billion (US$17.6 million) for its deceit, but it's unlikely to receive the money.
It's also improbable for PAGCOR to collect the PHP2.2 billion (US$38.7 million) owed by a defunct POGO. The company closed its doors and left the country, leaving behind the unpaid fees and taxes.
PAGCOR recently announced that it intends to step up its regulatory efforts across several areas, including regulating how POGOs operate. All the remaining licensed operators are being assessed during this process, which is due to conclude next month. This review might lead to several licenses being revoked.
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Source: www.casino.org
