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Philippines – City of Dreams helps boost Philippines results by 17 per cent

By - 25 January 2016

Despite revenue slumps in some of Asia’s leading casino market, Gross Gaming Revenue in the Philippines surpassed PH$130bn (US$2.75bn) in 2015, marking a huge increase of 17 per cent from 2014’s results.

Cristino Naguiat, PAGCOR Chair and CEO, said that the state-run gaming regulator and operator generated PH$48.5bn in GGR in 2015, representing a jump of 15.75 per cent increment from previous year. The licences which include the big names in Manila Bay saw revenues up 18 per cent with GGR coming in at PH$82bn for the year.

The target for the total market, set by the Governance Commission for GOCCs, was PH$109bn.

Mr. Naguiat revealed that the PH$130bn total also included revenues from junkets but that they only accounted for around PH$5bn.
Mr. Naguiat said: “In 2014, our total junket business was only PH$2bn, but we hit PH$5bn last year.”

He played down the affect that China’s anti-corruption charge has had in the Philippines. Speaking in the local press, he said: “People have such a misconception of the problem with the Chinese gaming market. We had Chinese coming from Macau, Hong Kong, and we developed a good market in Taiwan. We have a very good market in Malaysia, and then other countries followed.

He believes that the local gaming industry will also recover from the current downturn.

“The market is not really weak,” he said. “What’s important for us in the Philippines is that we met all our 2015 targets.”
The local gaming industry in the Philippines has been repositioning themselves as family entertainment resorts to diversify their revenue streams.

The market would though be adversely affected by a new bill that would introduce a casino entry fee on all Filipinos who live in the country. The National Tax Research Center (NTRC) has already said it would welcome the bill.

If approved, it would cost $75 to enter casinos in the Philippines although this would still be free for foreigners.

The NTRC said: “Under Section 14(3)(b) of Presidential Decree 1869, Filipino residents with gross income of at least PHP50,000 in the previous year, as certified by the Bureau of Internal Revenue, are allowed to play in casinos. However, the said provision is neither observed nor imposed. Thus, the bill aims to discourage Filipinos from playing in casinos.”

Analytical group CLSA said that Philippine casino operators were ‘not immune to the collapse in the Chinese VIP space, but we estimate the impact to be 10 per cent to 15 percent at most.’
It added: “Philippine gaming is a much more domestically focused sector.”

The US1.3bn City of Dreams held its grand opening on February 2 2015 with 365 gaming tables, 1,680 slot machines and 1,680 electronic table games. Whilst it clearly delivered a huge impact on GGR in the Philippines over the last year, the US$1.2bn Solaire Resort and Casino, owned by Bloomberry and which opened in March 2013 at Entertainment City, reported losses for the first three quarters of 2015. It posted a PH1.5bn loss for the nine-month period, compared to a PH3.3bn profit for the period in 2014.

Bloomberry Resorts Corp, Enrique Razon said to the Philippine Inquirer that this was due to expenses incurred while building Solaire. “Our quarterly performance doesn’t really reflect the top line. It’s the bottom line. We’re ramping up Phase 1A, and that means additional costs. Now we have to generate the revenues to cover all those costs, and the growth is providing that. So the problem is not the top line, it’s the bottom line. But slowly, they are narrowing, quarter-on-quarter.”

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