A goose that’s laying less golden eggs

It is now time to take a serious look at privatizing the assets of the Philippine Amusement and Gaming Corp. (Pagcor), a government entity established in 1977 and eventually given the franchise to operate gaming in the Philippines since.

While it has been able to bring in substantial revenues to the government coffers till today, and still holds a renewed franchise until 2032, renewable for another 25 years, there is a new wind in the business environment that just cannot be ignored.

Last month, Pagcor finally bit the bullet and closed down the Airport Casino Filipino, which has been losing substantially, and weighing down on the total profitability of the state-owned gaming company.

While Pagcor  has attributed the loss mainly to its unfavorable location, it should not also forget that the casino, which is located near the Ninoy Aquino International Airport in Paranaque City (NAIA 1) and the Centennial Terminal (NAIA 2), is now facing stiff competition from nearby privately owned and operated casinos.

More exciting

Located just around the new (but still controversial) NAIA 3 is two of the hottest gaming venues in the country now. These are not just competing against Pagcor’s casinos in the metro, but against each other – two powerhouses that will likely devour everything around them in their fierce contest.

Even before the $1.2-billion Razon-owned Solaire Resort & Casino opened last year, Resorts World Manila (RWM) was already operating quite profitably and almost pulverizing any attempts of the Pagcor casino nearby to attract patrons.

Why? Because RWM, which opened in 2009, is more exciting. Not only does it have some of the grandest entertainment packages to entice patrons to visit, it also has the newest gaming consoles that offer the Las Vegas dream without having to make the trans-Atlantic journey.

As a privately-owned and operated gaming establishment, RWM benefits from the international connection of the Resorts World chain, in particular, Resorts World Genting in Malaysia and Resorts World Sentosa in Singapore.

RWM, located in Newport City right across the NAIA’s Terminal 3 in Pasay City, is a joint venture between Alliance Global Group and Genting Hong Kong. Both companies are well-entrenched in the international gaming industry and with very deep pockets.

Privately-run

More importantly, RWM is privately run, without the baggage that government-owned Pagcor carries. Pagcor has started to become a burden with the increasing growth of gaming in the country with the establishment and promotion of Entertainment City in that reclaimed land fronting Manila Bay.

RWM is capable of bringing in entertainers from different parts of the world at the flick of a finger, something that Pagcor will need a lot of thinking and budget reallocation to pull off. A look at Pagcor’s upcoming “attractions” makes one cringe to think of how these stand against the glitz and flamboyance of the recent and upcoming RWM offerings.

Of course, for hard-core gamers, going to RWM not only means three expansive floors filled with world-class gaming tables and slot machines, but the service of well-trained gaming staff and support amenities such as bars and restaurants.

Do you get that in any of Pagcor’s casinos? Heck, no. So if you’re out to have fun with your money, it’s really a no-brainer what you’ll choose. One even gets the opportunity to get a free ride from several strategically located pick-up points in the metro.

More competition

We can expect the same, if not better, attractions offered in the near future, not only from the new Solaire, but from upcoming casino complexes like Travellers International Hotel Group, City of Dreams, and Tiger Resorts in the very near future.

Solaire, for example, capitalizes on the famous Philippine seaside view of Manila Bay and its equally famous sunrise and sunset. But more than this, the first phase already guarantees to astonish visitors, from luxuriously appointed rooms, suites and bayside villas as well as resort-style pool facilities, bars and entertainment lounges.

Already, the casino is earning a reputation for offering an ultimate Las Vegas gaming experience offering the latest and most popular gaming tables and slot machines. Of course, Solaire has its own world-class dining experience with international and local chefs to serve its many restaurants.

This is likely the new standard that the next batch of casinos seeks to set and even surpass, and this will only make the Philippines a more exhilarating destination by world thrill-seekers and high-stake rollers, who after all have the real money to burn on gaming.

Dwindling revenues, earnings

Pagcor may have grossed P40.5 billion in 2013, still an impressive figure even if this is slightly lower than the previous year and way off the target during the year. But its earnings ratios are dropping following a marked shift in customer preferences.

More and more, gamers are finding the service of the four licensed privately-owned casinos to be a better experience than those directly run by Pagcor under the Casino Filipino (CF) brand. It shouldn’t be a surprise if the 11 remaining CF facilities will be threatened with closure due to losses in the near future.

Most Pagcor staff are demoralized because of the inability of CF branches to offer better services. Being a state-owned agency running a business, it’s difficult to buy new machines or gaming tables without the usual and time-consuming bureaucratic processes.

One goose, more geese

Some argue that Pagcor’s revenues may not be earned if the assets are sold. On the other hand, taking into consideration the new business environment, there may be no substantial assets to sell in the future if these become non-performing.

We might as well lose the goose that lays the golden egg today at a good price rather than losing this goose in say, 15 years, for almost nothing. If all focus will go to promoting and strengthening a privatized gaming industry, who knows? We may harvest more golden eggs from more geese.

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