Would Asia bet on a full house?

Bingo is not a game we hear a lot about in Asia. Legal and regulatory restrictions, coupled with a lack of appetite for the game, mean it is near non-existent in the likes of Korea, Macau, Malaysia, and Singapore. However, bingo is becoming popular in some parts of China, particularly Taiwan where a speed variant is played through the state lottery and in the Philippines where the game has been played in various forms since Spanish Colonialism back in 1521. So could it catch on?

Bingo’s limited reach offers challenges and opportunities in equal measure. The game’s shaky legal status has seen few operators invest heavily in the sector, while those that have are faced with the task of adapting to, and capitalizing on, ever-changing player habits and demands. Indeed, the opportunities presented by bingo have divided market analysts and experts. Shaun McCamley, partner at Global Market Advisors, says the vertical is “tough going” with limited upsides. “Opportunities are few and far between. In the absence of approved jurisdictions, coupled with markets being grey or black, no investments are being made.”

But others believe the sector offers huge untapped potential for those prepared to take the plunge. Fabio Moretti, director of sales and marketing at Ortiz Gaming, says the long-term potential for bingo in Asia is massive. “For those Asian countries with no bingo, the opportunity could be huge. Although I would imagine it would see the rise of electronic and online bingo skipping the paper bingo stage. The electronic version, for both land-based and online operators, seems to be the future of the industry with the traditional paper version of bingo slowly leaving the field. In the near-term the two versions of the game will co-exist, but in the long-run the e-version will likely dominate the market,” he adds.

Cultures collide

To get a better understanding of the challenges and opportunities presented by bingo, it’s important to look more closely at the market where it is most established; the Philippines. The game was first introduced under Spanish rule. The Philippines was Spain’s only colony in Asia, which explains why the game is popular in the country and not others – their cultures simply didn’t collide. But even in the Philippines, bingo’s legal status is a little hazy. James Biron, attorney-at-law for the RiskWise Global Capital Group, says the creation of PAGCOR in 1977 regulated the activity, but recent rumblings from the President suggest that could be about to change.

“With the necessary licenses from PAGCOR one can conduct bingo games, whether land-based or online, with wagers involved,” he says. “But it is important to note that just recently President Rodrigo Duterte made a pronouncement that operations of online games, which may include e-bingo, will be stopped and licenses of operators will be revoked,” Biron adds.

For the time being, however, bingo is still a legal and regulated game and one which continues to generate sizable growth. And while there has been a slight decline in traditional paper-based games, this has been offset by the introduction of newer variants such as electronic bingo. Games are offered through land-based halls and shops, casinos and online, with mobile platforms in the pipeline. In terms of financials, total gross gaming yield increased from US$68m in 2007 to $108m in 2014. The market leader is AB Leisure Exponent, a wholly owned subsidiary of Leisure and Resorts World Corporation (LRWC) which operates as Bingo Bonanza and holds around 40 percent of the market.

In its FY2015 financial results, LRWC reported a 30 percent year-on-year increase in electronic bingo revenues to $73 million, while traditional bingo revenues rose from $34 million to $48 million. But it was the pull tab variant that recorded the most significant increase, with revenues growing from $87,000 in 2014 to $201,000 last year, albeit still representing a small part of the business. And while others remain sceptical about the long-term potential of bingo, LRWC is fully convinced by the opportunities it presents.

"We believe the bingo market will continue to grow in the Philippines because of a couple of reasons,” says Freddie Reyes, head of investor relations at LRWC. “One is the growing middle class. As incomes increase, they do look for venues for entertainment, and bingo played in our malls provides that experience. Furthermore, our sites are accessible and located in various malls all over the Philippines. There is also the social factor where friends spend time together playing bingo in the traditional bingo halls. For those who want a faster paced action, we also have electronic bingo machines in all of our sites.”

For LRWC and Bingo Bonanza, growth will very much come from electronic bingo in the coming months and years. One reason is the pace of the game; traditional bingo can take between 12-15 minutes to complete while electronic bingo can be settled in five seconds. What’s more, Reyes says the cost of operating its Bingo Boutique sites that have only electronic bingo is significantly lower. “Bingo machines need less space and much less personnel to run and maintain. More importantly these Bingo Boutique sites are outside of the traditional malls and can thus operate for longer hours. Malls are closed by 10pm but Bingo Boutique sites are open until 2am or longer if customers request for it,” he adds.   

The next phase?

The Philippine market shows that bingo can be a popular and significant gaming vertical in Asia. But can its success realistically be replicated in other jurisdictions if regulations are cleared up and licenses handed out? Warwick Bartlett, chief executive of Global Betting and Gaming Consultants, thinks not. “Most land-based gambling businesses start from the legalization of a practice that already exists, for example bingo was first found in Italy so there is a longstanding culture for the game there. This tradition does not exist in most Asian countries so for operators to start offering the game, even if bingo legislation existed, would be quite risky.”

Indeed, for operators considering making a play in the bingo sector, the road seems bumpy to say the least. Even if regulatory hurdles can be cleared, the cost of launching and marketing the game in order to build awareness and educate consumers on how the game is played would be significant. But with the rise of electronic bingo and a growing number of operators looking to online gaming as a way of expanding and improving their product offerings, opportunities may start to open up – particularly for European firms who have knowledge and experience of the online bingo sector.

“There is potential to expand the game through the internet and to educate the customer at a lower CAPEX and marketing costs than land-based,” says Bartlett. “The best way for European operators to get involved is to partner with established gambling operators that would prove reliable over time. The lotteries are the most established, have the largest customer base, and are reliable partners. But European operators would have to have a compelling offer, either through expertise or software, to tempt the lotteries to partner with them,” he adds.

Bingo is unlikely to become a key gambling vertical in Asia – casino and sportsbetting are where it’s at for the foreseeable future – but the sector does offer numerous upsides. The Philippines has shown that in the right jurisdiction, and with the right investment in product and marketing – it can generate sizable revenues with a solid player base. But for many the challenges will likely outweigh the potential, and to that end bingo will likely remain on the periphery of Asia’s gambling industry.