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Philippines –Philippines falls short of PAGCOR’s predictions in 2013

By - 21 February 2014

Gaming revenue in the Philippines fell short of expectations missing estimates by 12 per cent in 2013 due to a fall in tourist levels from mainland China and Hong Kong.

Cristino Naguiat, Chairman of the state-run Philippine Amusement and Gaming Corporation (PAGCOR) said that the country, recorded gaming revenue of $2.2bn in 2013, 10 per cent more than in 2012 but below his estimate of $2.5bn gaming industry revenue last year. He wants the gaming industry to earn more than the Las Vegas strip within six years.

He suggested that gaming revenue growth would have doubled last year if it hadn’t been for political problems following a terrorist attack that left eight Hong Kong tourists dead during a bus hostage in Manila in 2010.

He expects gaming revenues to grow by double-digits this year with the opening of Belle Corp and Melco Crown’s $1.3bn City of Dreams in Entertainment.

Enrique Razon, chairman and president of Bloomberry Resorts Corporation, the first of four casino-resorts to open at Entertainment City in Manila Bay, agreed with the Pagcor Chairman. “If not for Hong Kong and China, probably growth would have been 20 per cent,” he said.

In October Bloomberry will open a $400m expansion at the property.

Pagcor’s revenues slipped to P40.5bn, 5.5 per cent below its goal of P40.9bn although GGR from its own casinos increased by less than a per cent. The year saw Pagcor close its casino in Heritage Hotel on Roxas Boulevard. It will close another this year.

Despite generating P180m in monthly revenues, the PAGCOR casino in Parañaque has been making losses in recent times with income not enough to warrant its operating expenses. It is the largest casino in PAGCOR’s portfolio with 800 members of staff.

“Rent, alone, is P23m every month,” Mr. Naguiat said. “I really do not want to close a casino but, for us not to leave that location, there should be a development in that area. There’s just no growth there. Some of them staff will be absorbed by other casinos. It will not be a problem for us because… on average there 50 employees every month who either resign or retire,” he said.

PAGCOR operates 23 casinos nationwide with the casino in Cebu being its most profitable.

PAGCOR channelled P21.20bn of its revenues to the national coffers and other relevant socio-civic and community development projects.

Mr. Naguiat said that the agency’s total contributions to nation-building was more than half of its P40.52bn gross income in 2013. “Our contributions last year were higher by nearly P242m compared to the P20.96bn we gave to the government and other recipients in 2012. This is the highest recorded remittance of PAGCOR to nation-building in the past 28 years of its existence.”

The PAGCOR Chief added that the corporation was able to increase its contributions to the government by spending its resources wisely. “We were able to reduce our actual operating expenses (OPEX) by almost P1 billion in 2013 compared to the previous year. By constantly scrutinizing our expenses, we were able to contribute more to nation-building last year despite the stiff competition in the gaming industry,” Mr. Naguiat stressed.

The biggest chunk of PAGCOR’s 2013 contributions to nation-building went to the National Treasury (P13.1bn) representing 50 per cent of the mandated government share from the agency’s revenues. The amount was higher by P49.65m compared to the 2012 government share of P13.052bn.

Apart from this, PAGCOR also remitted P5.98bn to its various mandated recipients in 2013, an increase of P330m compared to that in 2012.

According to Mr. Naguiat, foremost among the state-owned gaming firm’s advocacies is to help the Department of Education (DepEd) build more decent learning facilities for the Filipino youth. “To date, we have already allocated P5bn for the construction of school buildings nationwide. Of this amount, we allocated P2bn solely for the reconstruction of damaged school buildings in the Visayas which were severely ravaged by typhoon Yolanda,” he added.

The use of funds also enabled PAGCOR to generate a hefty net income of P3.09bnin 2013. “This surpassed our 2013 net income target by P141m or 4.79 per cent. It is also much bigger by P293m (10.48 per cent) versus our P2.8bn net income in 2012,” Naguiat said. “We hope to continue PAGCOR’s good performance in 2014. We know that it will not be easy because competition is getting stiffer. But just like what I keep telling our employees, we always have to do our best so we can reap the fruits of our labour.”

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