Inside Asian Gaming

inside asian gaming September 2015 48 In 2011, Wynn Resorts could cite its then-largest shareholder and vice chairman Kazuo Okada’s intention to open a casino in the Philippines as a threat to its gaming licenses in Nevada and Macau. The Philippines’ regulatory environment was considered lax and corrupt, with former Pagcor Chairman Efraim Genuino and associates facing graft charges. In September last year, Caesars Entertainment used Philippine President Benigno Aquino III’s visit to the US for a personal appeal to build a $1 billion integrated resort at Manila’s international airport. Having an American brand among the handful of private casinos in the Philippines would boost Manila’s appeal. Caesars seemed like a great idea to President Aquino and his revenue-hungry Finance Ministry. But Pagcor Chairman Cristino Naguiat saw things differently. Pagcor already had four licensees committed to invest some $6 billion on IRs in Entertainment City on Manila Bay. The second IR, Melco Crown’s City of Dreams Manila, a partnership with the Philippines’ richest family, the Sys, opened in December. Even though there’d been no promise of exclusivity, Pagcor felt it would show bad faith to bring in another competitor before those IRs got established. The Caesars story highlights how Pagcor has changed under Mr Naguiat. The Philippines has become a more respectable gaming jurisdiction, and Pagcor amore professional regulator that understands the operator’s perspective. After all, the government-owned company— formally Philippine Amusement and Gaming Corporation—operates 11 casinos of its own and two-dozen smaller gaming venues across the archipelago. On Mr Naguiat’s watch, Pagcor closed two of its four casinos in Metro Manila, one near Entertainment City and the other near Resorts World Manila, a joint venture of Genting Hong Kong and local billionaire Andrew Tan that’s also building in Entertainment City. Competing with Entertainment City is “not our role,” Mr Naguiat says, while asserting, “Pagcor is still viable, very viable, especially if you look at our operations in the provinces.” Last year, Pagcor cut license fees, in effect the gaming tax, to offset court-imposed income taxes that it promised licensees would not have to pay, but it’s not always a soft touch. Pagcor confiscated a P200 million ($2.2 million) performance bond from Manila Bay Resorts for failing to meet its opening deadline of 31st March, while granting an 18-month extension. The regulator has let law enforcement handle bribery and fraud allegations surrounding Mr Okada’s project, while insisting the resort must comply with land ownership laws to get Pagcor’s permission to open. A former Pagcor auditor who left to run a hospital, Mr Naguiat was handpicked to head Pagcor in July 2010 by President Aquino. He’s likely to leave office when Mr Aquino does in the middle of next year. Even Cristino Naguiat Chairman and CEO Philippine Amusement and Gaming Corporation though Entertainment City’s concept and licensee selections date back to his predecessor and its completion will occur under a successor, its birth with Philippine billionaire Enrique Razon’s Solaire Resort and Casino in March 2013 will be Mr Naguiat’s legacy. Entertainment Ciy and RWManila’s ongoing expansion have helped the country maintain gaming revenue growth—albeit not at the heady rate of Macau’s early post-monopoly era—from around $2 billion when he took office to $2.5 billion last year and perhaps $3 billion this year. His other potential legacy, of a more credible and professional Pagcor, seems less assured. But Mr Naguiat is confident that the reformist spirit will outlive the Aquino administration (and his own). “There have been a lot of good people joining the government and changes in the way the government operates,” he says. “It’s hard to break that chain of positive developments.” MGM Resorts International pulled out as management partner of Vietnam’s The Grand Ho Tram Strip on the eve of the US$500 million resort’s much-anticipated opening last July. That it got open at all is a tribute to the reputation, the steady hand and the lobbying skills of Colin Pine. Mr PineheadsHoTramProject Company, which took thehelmafter MGM’s exit as a subsidiary of Asian Coast Development (Canada) Limited, the investment consortium that conceived The Grand and whose backers include American hedge fund tycoon Philip Falcone. Mr Pine is well-known and respected in Vietnam and was Colin Pine General Director Ho Tram Project Company