Pagcor explains Manila Bay casino ‘losses’

The Philippine Amusement and Gaming Corporation (Pagcor) would like to shed light on the recent Commission on Audit (COA) report citing that the Casino Filipino (CF) Manila Bay has incurred P2.11 billion worth of losses in the last five years.

COA’s Audit Observation Memorandum (AOM) No. 2019-011 (18) dated April 29, 2019 stated that CF Manila Bay’s aggregate losses for five consecutive years cast doubt on its ability to continue operations.

Foremost, Pagcor cannot cease its operations in CF Manila Bay because of an existing contract entered into by the previous Pagcor management with Vanderwood Management Corp. In the meantime, we want to focus on how to strengthen the branch’s revenue generation capacity.

Another point of clarification, CF Manila Bay only commenced operations in August 2017, less than two years to date.  The P2.11 billion worth of losses cited by COA, which dated back to 2014, was not accurate as it included the revenue deficits of CF Pavilion, which ceased operations last March 2018.

CF Pavilion is a branch independent of CF Manila Bay.

In its AOM, COA cited that “the decrease in the net income is a combination of a declining total income and a steady rate of mandated contributions and Corporate Social Responsibility financial assistance.”

As acknowledged in the AOM, CF Manila Bay has been operating “on a profit level after deducting the franchise taxes and the operating expenses (OPEX).”  It is only after deducting the mandated contributions and corporate social responsibility financial assistance, “which are independent on the income from gaming operations”, that negative figures are registered.

While it is true that the local gaming landscape is becoming increasingly competitive due to the opening of integrated resorts in Metro Manila, among other factors, we deem it necessary for COA to consider CF Manila Bay’s steady contributions to Pagcor’s mandated beneficiaries – as part of the branch’s profits and contributions to nation building – and not as losses.

Since the start of its operations in 2017, CF Manila Bay has already contributed a total of P875.58 million for Pagcor’s mandated beneficiaries including the 50% government share, the Philippine Sports Commission, the Bureau of Internal Revenue for the 5% franchise tax and the host cities’ share.

It may be noted that CF Manila Bay’s gross gaming revenue has in fact been steadily increasing since it opened 23 months ago.  This has resulted to a rise in net operating income from a monthly average of P4.22 million in 2017 to P13.38 million in 2018.

To stay on a profit level and to avert revenue deficits, Pagcor is rationalizing CF Manila Bay operations and reducing OPEX.   It is currently focusing its marketing efforts on the branch’s potential niche, the high limit and VIP table games. 

Also, to generate additional revenues, CF Manila Bay is now pursuing the sublease of its second floor area to junket operators.  Furthermore, an income sharing scheme is being seriously contemplated for a guaranteed positive bottom line.

Pagcor maintains that its casinos which have a distinct gaming market continuously contribute to its overall income, thereby supplementing efforts in fulfilling its mandated commitment to build the nation. – Philippine Amusement and Gaming Corp.