Online licenses welcome for casinos, but conditions limit appeal

Thursday 10th of December 2020

The Philippines’ decision to issue online gambling licenses to local casinos is likely to present interesting opportunities for suppliers, but the terms won’t create significant business growth for the operators.

That was the view of igaming expert Mark Gilbert, speaking on Asia Gaming Brief’s “Life After POGOs” webinar.

Philippines Amusement and Gaming Corp. (PAGCOR) Chair Andrea Domingo addressed the session and outlined some of the key criteria for issuing the new category of licenses.

Aside from an attempt to boost Covid-19 battered revenue, she said the government is seeking to stamp out illegal gambling in the country, which has become prolific.

A license has already been issued to Bloomberry Resorts’ Solaire Resort and Casino in Manila and Okada Manila and City of Dreams Manila have also been approved, as well as a casino operating in Subic Bay, Domingo said without naming the property. Two further licenses have been granted to igaming platforms, with one to a unit of DFNN.

All land-based casinos in the country are eligible to apply for the license, but will only be able to accept bets from registered VIP players within the Philippines, curtailing the potential size of the market.

“You cut out the players from China, cut out the players from overseas and then cut out all retail players just to get to the VIP and I’m venturing you’re probably looking at 10 to 15 percent of the business,” said Gilbert, who is a 29-year industry veteran in both land-based and online. “So if we can get back that 15 percent, it’s something better than nothing scenario, but it’s not going to be the bandaid to stop the bleeding for the operators.”

Gilbert argues that the option should be available to all registered players in the country, with the correct know-your-customer and regulatory procedures in place.

For the land-based gaming suppliers, the decision offers interesting potential, providing there is absolute certainty that the Philippines can be geo-fenced to stop players from outside of the country placing bets.

“Once a mainstream company gets into this playing field, if there’s any possibility that a Vietnamese player, or a Chinese player gets through this geo fence then they are out of the game,” he said. “They are not going to put their licenses worldwide at risk to generate some kind of revenue out of the Philippines, so that’s huge.”

At present, most of the major suppliers have been building up their digital businesses, but are only operating in regulated markets and are not seen offering their services in Asia.

“Now you give them an opportunity. They are dealing with customers who are used to their games on the casino floors.” he said.

Another potential sticking point with the new licenses is payment systems. At present, clients need to physically deposit funds in their accounts and withdraw winnings from the casino.

Gilbert said this cuts down initial costs for the operators, however doesn’t offer a true online gaming experience.

Domingo suggested that there may be room for future movement on payments, saying the main concern is that the bet is registered and the government gets its share of revenue.

When it comes to Philippine Offshore Gaming Operators (POGOs), Domingo was keen to stress that the situation has stabilized.

Rising costs in Manila, problems with immigration visas and the need to pay back taxes as a condition for reopening after the pandemic has led to an exodus from the sector.

A total of 35 businesses have resumed operations after the pandemic out of 61 operators prior.

However, Domingo said that business was picking up, enabling PAGCOR to meet its revised revenue targets.

“By the end of the year we will be positive on the bottom line and will make 33-34 billion pesos ($685.4 million - ($706 million) despite being only open for four or five months,” she said. “By the second quarter of 2021 we will be doing as well as we were doing in 2019.”

She said four new POGO license applications have been received and PAGCOR is focusing its attention on markets outside of Southeast Asia.

Asia Gaming Brief is preparing a white paper, discussing the themes of the webinar in greater depth, which will be available to subscribers shortly.