Playtech Receives Online Casino Software Monopoly in Philippines
The Philippine Amusement and Gaming Corporation (PAGCOR) announced this week that UK gaming technology supplier Playtech has a monopoly as a provider of online gambling technology for Philippine licensees. PACGOR certified Montford Inc., which is affiliated with Playtech.
Montford Inc. will be the gaming software provider for all Philippine Offshore Gaming Operator (POGO) license holders. In the memo, dated September 26 but only published on Monday, said that Montford is a “distributor of RNG-based games developed by Playtech.”
The same memo announced that Montford/Playtech will have exclusive right to provide RNG (random number generator) casino games to the country’s online casino site owners. The monopoly will apply to online slots (pokies), table games, video poker, and specialty games.
While land-based casinos use live dealers for table games and specialty games like Keno and Bingo, online casinos use RNGs to provide results for almost all of its games (besides live dealer games).
Playtech Decision “Effective Immediately”
PACGOR announced that the new policy is “effective immediately”, putting license holders in the unenviable position of having negotiate licensing terms within a short time frame and with the certain knowledge that the only other choices are fines or ouster from the country.
The PACGOR memo stated that licensees “found to be using games developed by an unauthorized service provider, or those who engage the services of a gaming software provider not accredited by PAGCOR, shall be imposed the corresponding demerits and administrative penalties.”
Non-Compliance Leads to Demerits
The Philippine gaming regulator did not spell out the time frame for the “corresponding demerits and administrative penalties” will be, but did note that the first penalty will be 20 demerit points. That is the policy under the PAGCOR’s Offshore Gaming Regulatory Manual (OGRM).
If operators do not comply within a timely period, their license will be stripped and they can no longer operate in the country. PACGOR noted that “continued non-compliance…shall warrant the temporary cessation of your operations and the eventual cancellation of the offshore gaming license of erring POGO licensees.”
PACGOR has not said if the Playtech monopoly will be permanent or if this week’s announcement will be followed by a list of other accredited RNG software suppliers. At present, POGO license holders also have no direction on whether Playtech is their only option.
Those who have spoken on the announcement expressed bewilderment. As one anonymous POGO license holder told CalvinAyre.com, “We can’t pull everything and only offer Playtech. That’s ridiculous.”
While the operator noted that Playtech is a fine software platform, that does not mean operators want to use one software provider. Most operators have longstanding contracts with one or more online software design companies. Even if they use Playtech software, many like to sample from other top design houses and B2B suppliers, mainly for the sake of online slots and scratch card games.
Having such a cozy relationship with national governments can be a double-edged sword. It leaves a company at the whims of government officials in a way that business competition does not.
If a country has a full industry, that industry forms a business lobby in that country’s political system. They can band together for mutual support when government officials try to ban their products. The system has proven successful in many industries and on a global scale.
Playtech’s Asia-Pacific Negotiations
Earlier this year, Playtech told shareholders that its Asian business operations had caused national governments to take steps to protect local business operators. After Playtech shares lost 25% of its value due to setbacks in China, Playtech said it faced “a particularly aggressive pricing environment” in Asian countries.
Playtech’s gray market operations in Singapore and beyond had led to a backlash from regulators. At the time, Playtech told shareholders to have patience, because it was taking measures to “protect Playtech’s position in the [Asia-Pacific] region and to drive revenue generation.”
Now, it appears that Philippine monopoly certified by PACGOR and POGO could be what Playtech’s executives were talking about in July.