Yes We Can
Change is happening in Philippines gaming—it just takes time, say insidersWednesday, 14 April 2010
There's a saying among civil attorneys that possession is nine tenths of the law. In that sense, the Philippines needs to be on the radar of gaming investors as the only jurisdiction in Asia in possession of a comprehensive portfolio of legal gaming products open to all of legal age (at least 21 years, in the case of casino gaming).
As well as the land based casino product, the country offers licensed bingo parlours to a mainly domestic audience and online gaming licences for operators serving customers outside the country.
In that sense, the Philippines gaming market can be seen as having great potential, both as an attractor of local players as the country develops economically and as a stop off for foreign (probably mainly) mass market players visiting for a holiday. Resorts World Manila, the joint venture between Genting Hong Kong (formerly Star Cruises) and Alliance Global Group, the conglomerate headed by Philippines entrepreneur Andrew Tan, is only a stone's throw from Terminal Three of Manila International Airport.
The Philippines gaming market does, however, face significant public relations challenges internationally. That's particularly in terms of business transparency over issues such as unofficial 'fees'. Such issues have in the past proven a major hurdle for outside investors.
In addition, a business model that sees the Philippine Amusement and Gaming Corporation (Pagcor) acting as both regulator of land based gaming and an operator in its own right is questioned by some investors as producing inherent conflicts of interest. If Pagcor has its own casinos, how can it act as an honest broker in regulating the private casino sector? That's one of the most frequently heard queries from the sceptics.
'Look at the general trend, not the individual case', is a favourite saying of Sheldon Adelson, the chairman and founder of Las Vegas Sands Corp. On that basis, the trend in the Philippines is for increasing levels of private investment and an open debate on the future direction of gaming regulation in the Philippines. An example is Resorts World Manila, a casino and multi-hotel project at Newport City near Manila's international airport.
If recent reports of a tie up between the US casino company Harrah's and Philippines bingo operator Leisure & Resorts World Corp for land based casino gaming in the country come to fruition, it will be a major milestone in the maturing of the local industry.
The country's leaders are not deaf, however, to persisting, more sceptical commentary on the local market by some outsiders. Some politicians are now said to be actively considering privatising Pagcor. Senator Benigno 'Noynoy' Aquino III of the Liberal Party, one of the three front-runners in the country's presidential elections to be held in May, is said to be the keenest on the Pagcor privatisation option. He is running on a general platform of reform for the public sector. But it's not clear how Pagcor privatisation would work in practice.
Sen. Aquino is the only son of the late former President Corazon Aquino and the late former Senator Benigno Aquino, Jr. The latter was a frontrunner for the Philippines presidency to replace Ferdinand Marcos, until Sen. Aquino's notorious (and filmed) murder on the tarmac at Manila International Airport as he returned from a three-year exile in the United States in August 1983. The airport now bears his name.
Whether a separate public body would be set up to regulate the whole Philippines land based gaming industry if Pagcor were privatised isn't certain at this stage.
Several gaming executives at the recent Asia's GEM Congress and Expo organised by Pagcor said Dr Efraim Genuino, the incumbent chairman of Pagcor, and Rafael 'Butch' Francisco, the President of Pagcor, deserved credit for moving Pagcor and the Philippines market in the right direction.
"You can't change a place like the Philippines overnight," one senior industry figure suggested to Inside Asian Gaming.
"Western investors tend to approach a developing market such as the Philippines with a fair degree of tub thumping and a 'this is how it should be done' attitude.
"In this part of the world, you get more done by approaching things in increments and trying to work with the top people to improve standards of corporate governance than by trying to make the top people look bad. Few people respond well to that," added the source.
"Dr Genuino knows what needs to be done. I think he deserves a lot of credit for initiatives to bring in outside investors—for example, at Newport City and soon Manila Bay," the source added.
Another source among the suppliers exhibiting at Asia's GEM said: "We've certainly noticed we do more business at Asia's GEM now that there are more private operators in the Philippines market."