PACGOR Reverses Decision to Sell Its Casino Operations
After talking selling its state-owned gaming assets for two years, PACGOR announced today it is no longer planning to get out of the gambling industry. The Philippine regulator’s director said the gaming industry is growing too fast for the government to give up its lucrative revenues.
PACGOR CEO and board chairwoman Andrea Domingo told Inside Asian Gaming in an exclusive interview that her organization no longer plans to sell its casinos. Sounding like an executive and not a regulator, Domingo said, “You know, [our casinos] are holding up quite well.”
“Last year they contributed Php22 billion (US$405.5 million) to our Php60 billion earnings and this year we’re looking at about Php26 billion to Php27 billion.”
For years, PACGOR has been criticized for its dual role as a gaming regulator and a competitor to the companies it regulates. Philippine citizens on both sides of the political divide have cited the conflict of interest.
PACGOR vs. PhilWeb
When President Rodrigo Duterte came to power in late July 2016, he stated an avowed hatred of gambling and said he would close down all legal gaming operators in the country. Weeks later, he backed off that statement, but targeted PhilWeb, a gaming operation owned by Philip Ong, one of his political opponents. PACGOR stripped PhilWeb of its gaming license, forcing Philip Ong to sell the business at a cut rate price.
To justify his targeting of someone who supported his political opponents, Duterte accused Ong of being an oligarch — which might be the case, though Duterte is also from one of the Philippines’ traditional ruling families. Two months after the sell, PACGOR restored PhilWeb’s gaming license.
In the same time period, Rodrido Duterte said PACGOR needed to get out of the gaming business. Since it was designed to be a regulator and not a casino owner, many Philippine citizens applauded the decision. So did gaming operators in the Philippines, who thought it was a bad idea to have a regulator enforce laws against its own competitors.
PACGOR’s Planned 2018 Casino Selloff
Duterte appointed Andrea Domingo as PACGOR’s chief executive and chairwoman. Domingo echoed her boss’s opinion, suggesting that PACGOR would do a better job if it had one single mission — and that was regulating casinos. Domingo said at the time PACGOR would sell its 47 casinos in waves, starting in 2018, to buy down the national debt.
That was two years ago. Firmly entrenched in power, Philippine officials have reversed their position. In January of this year, Domingo announced 17 casinos that PACGOR planned to sell first, and announced that interested parties could inquire of PACGOR about the sale prices. After two years to study the issue, PACGOR has decided it would be illegal to sale their casinos.
Andrea Domingo Quote on Procurement Law
Despite stating on several times a year their intention to sell, Domingo now says that was never a possibility. In an inspired bit of double-speak, Domingo said, “Actually it is prohibited for us to talk to anybody who wants to buy because of the procurement law. The issues that are being raised about PAGCOR owning casinos as well as regulating privately owned casinos, that it’s a conflict of interest, this doesn’t actually happen because being a government office, I have to go through procurement law — which is a nightmare.”
If PACGOR’s director is to be believed, it now would be a conflict of interest to sell PACGOR’s dozens of casino. Making a point, Domingo added, “So I think the privatization thing, there’s really nothing to sell because all of the casinos that we own and operate are in venues that are not owned by us but only leased by us.”
Andrea Domingo’s Reversal
When asked whether PACGOR would continue as a gaming operator, Andrea Domingo said, “I think for the next few years, because they’re still profitable — because the PAGCOR owned and operated casinos, the GGR they yield goes directly to the government, 100%.”
“With the IRs, our share of the GGR is about 19.5% so if you look into that and the contribution to the national government every year, if you take this out it will take five years for a new IR to contribute that amount which automatically lessens our net contribution to the national government by Php22 billion for at least for the next 10 years.”
The Suki Mentality
Therefore, PACGOR does not plan to sell its casinos for the next ten years at least. To defend her decision, Andrea Domingo pitted PACGOR as a little operation which gives personal service which the big integrated resorts (IRs) cannot produce. Domingo said, “We’re keeping our market because we have a niche in the gaming industry.”
“There’s a certain cultural characteristic of the Filipinos, the ‘Suki’ mentality. They’re so used to dealing with these people, the personalized service, the ‘Hi’, ‘Hello’, they know each other’s first names — those are what the IRs will never be able to take from PAGCOR.”