PAGCOR sets $300-M tag for new casinos
THE PHILIPPINES is open to issuing gambling licenses outside the capital of Manila and plans to require the minimum investment for new casinos at about $300 million to ensure world-class properties are in provincial cities and towns, its gaming regulator said.
“There are areas which I think are very ripe for a casino,” Cristino L. Naguiat, Jr., chairman of the Philippine Amusement and Gaming Corp., said in an interview, declining to disclose those locations. The agency is “open to giving out a casino license if it can help boost economic activity and if the people in the area want it. We’re developing a template to ensure that no one would be granted a license unless an investment commitment is made.”
The Southeast Asian country, which is aiming to compete with Macau and Singapore casinos amid plunging revenues, has already allowed four resorts being built in the 120-hectare seaside Entertainment City complex in the capital with a minimum investment of $ 1 billion each. Japanese tycoon Kazuo Okada will be constructing the country’s biggest property in the Las Vegasstyle casino hub by spending as much as $2 billion.
The minimum investment, which could vary depending on the location, will likely be implemented by the new president after incumbent leader Benigno S. C. Aquino III’s six-year term ends in June, Mr. Naguiat said. Mr. Aquino’s administration followed his predecessor Gloria M. Arroyo’s guidance on investment requirements for the casinos operating in the Entertainment City.
COMPETITION CREATED
“They are trying to replicate Entertainment City on a smaller scale. This will create competitors,” Jonathan L. Ravelas, chief market strategist at BDO Unibank Inc. “Operators in Entertainment City will have to be on their toes because if they are complacent it’s not impossible that some of the traffic will go to these provincial casinos if the properties are world class”
Bloomberry shares fell as much as 3.4%, the sharpest intraday loss in more than a week. Melco Crown Philippines Resorts Corp., operator of City of Dreams Manila, sank 5.7%, biggest intraday decline since Jan. 26. The benchmark Philippines Stock Exchange Index lost 1.8%.
The regulator, or Pagcor, also runs 13 casinos in the country, 10 of which are outside Manila.
Philippine gaming revenue is expected to more than double this year’s estimated 135 billion pesos ($ 2.83 billion) by 2025 when all four projects are operating, the regulator said. Philippine billionaire Enrique K. Razon Jr.’s Bloomberry Resorts Corp. was the first to open in the hub in 2013, followed by the project of Macau operator Melco Crown Entertainment Ltd. which opened a year ago.
Mr. Okada’s casino is scheduled to start operations in December, while Westside City Resorts, a venture of Philippine billionaire Andrew L. Tan and Malaysian billionaire Lim Kok Thay, may open by 2020, Mr. Naguiat said in Manila on Feb. 1.
Gaming revenue from governmentrun and privately owned properties could reach P45 billion and P90 billion, respectively, in 2016, Mr. Naguiat said. That represents an 8% increase from a combined P125 billion last year, he said.
Revenue from Pagcor casinos rose 9% in 2015 to P43.5 billion, making up 35% of total takings. Nine privately owned casinos posted revenue of P81.9 billion, up 18%. Private casino revenue last year came mainly from Bloomberry’s Solaire, Melco’s City of Dreams Manila and Resorts World Manila, a venture of Messrs. Tan and Lim.
Mr. Aquino in 2010 said splitting the company’s regulatory and operations functions would be “a good direction.” Mr. Naguiat said it will be up to the next government to decide if the state-run casinos should be privatized.
Major casinos outside Manila include Euronext-listed Thunderbird Resorts Inc.’s 65-hectare property in northern La Union province and its mountain resort in Rizal province near the capital.