GAMBLING has always been a contentious issue in the Philippines. Some have asserted that illegal gambling is directly responsible for the massive corruption in the government and the police, while others point out that legal gambling generates massive revenues to the government.
We like to think of basketball as the national sport, but cockfighting, both legal and illegal, is a multibillion-dollar business here. Last year the Philippine Charity Sweepstakes Office earned more than P80 million a day.
The current focus for Philippine gambling is the Philippine Amusement and Gaming Corp.’s Entertainment City complex in Parañaque City, which was first conceptualized in 2002. Five integrated resort and gaming complexes are expected to rise there by 2018; the first of these, Solaire Resort & Casino, opened last year. Total investment will run about $15 billion as the various projects there come on line.
While thousands of jobs have been created by gambling and many thousands more are in the wings, it can’t be denied that the Philippines is, once again, late to the party, so to speak. It is decades behind Macau and Malaysia, and years behind Singapore. However, analysts see a bright future for the country as the Asian gaming-tourism market continues to grow.
JP Morgan Securities (Asia Pacific) recently released a research report that says the Philippines will see the fastest market expansion of the gaming business in Asia.
Part of this is due to a general increase in the gaming business. “We forecast Asian gross gaming revenue to grow [about] 50 percent to $85 billion by 2018, from $59 billion this year,” the report said. Fourteen major gaming resorts will open in the region by 2018, up from only three since 2011.
But the Philippines, due, in part, to the fact that it is just entering the business, will see the greatest growth. Our gaming-business compounded annual growth is expected to be over 15 percent between 2014 and 2018.
“We expect Philippine gaming revenues [to] double to $4.5 billion by 2018, from $2.2 billion in 2013,” the report said.
Two other factors favor the Philippines. The first is its penetration of the Chinese VIP market, and the second is Entertainment City’s cluster approach, which gives gaming tourists several choices in terms of accommodation and facilities at several price levels.
Also noted is the fact that foreign investors have financially stable and reliable local partners to invest with, and that the government’s participation is limited to licensing and revenue-sharing. Both South Korea and Singapore are viewed by foreign investors as having restrictive regulatory issues.
While there are those opposed to increasing gaming in the Philippines, we believe that the government’s regulatory approach to bringing in credible and large operators mitigates many potential problems. This business is both capital- and labor-intensive, and is good for the country.
Image credits: Jimbo Albano