MANILA, Philippines – The country’s gaming industry is showing signs of maturation on the back of growing supply and heightened competition, Fitch said in a report.
But the Philippine Amusement and Gaming Corp. (Pagcor), the gaming regulator, said the market continues to improve, translating to an 18.1 percent increase in Pagcor’s net income last year to P4.46 billion as revenue from gaming operations increased 22.9 percent to P53.31 billion in 2016.
In its special report titled “Eye in the Sky Series: Philippines Gaming Jurisdiction Surveillance Monitor,” Fitch said Resorts World Manila, the first private resort to open in the country, has shown steep declines amid the ramp-up of the newer resorts.
This, Fitch said, is a reflection of the maturation of the gambling market in the greater Metro Manila area.
“We expect high single-digit gross gaming revenues in 2017 driven by the opening of the $2.4 billion Okada Manila and the continued economic growth in the Philippines. Longer term, competition from Macau and other Asia Pacific countries will restrain growth,” Fitch said, noting that junket-sourced VIP business makes up about one-third of the private casinos’ gross gaming revenues.
Fitch noted while the initial results of the first three casinos operating under the licenses granted by Pagcor are encouraging relative to the investments made, this may not be the case in the long term.
These major participants include Travellers International Hotel Group, which is a joint venture between Genting Hong Kong and local conglomerate Alliance Global, Enrique Razon’s Bloomberry Resorts Corp., Melco Crown and Henry Sy’s Belle Corp. and Kazuo Okada’s Tiger Resorts.
Pagcor is the main regulator in the Philippines and operates 13 casinos, three of which are in Manila.
In 2007, the legislature extended Pagcor’s franchise through 2033 and allowed it to enter into subfranchise agreements with private investors. This led to the development of Resorts World Manila and four large-scale casino resort developments in the area dubbed Entertainment City.
Analysts said gaming companies may still stand to benefit from the Duterte administration’s stronger ties with China as more tourists from the mainland come to the Philippines to play.
Last year, President Duterte went on a state visit to China, bringing with him a 400-strong business delegation.
COL Financial, the listed market research firm, said among the listed companies, gaming companies, particularly casinos, stand to benefit the most from stronger ties with China as the growing number of tourists from China should boost gaming revenues.
In the past four years, the number of tourists coming from China to the Philippines increased by 19.2 percent.
During the first eight months of 2016, Chinese tourist arrivals jumped 50.3 percent to 484,567.
According to COL Financial, China is now the Philippines’ third largest visitor market, accounting for 12 percent of total tourist arrivals during the first eight months of 2016. The value of Philippine exports to China have also grown at a CAGR of 4.2 percent during the past 10 years, making it the third largest export market with a 10.9 percent share in 2015.