Dark clouds over online gambling in the Philippines

Alongside his deadly war on drugs, Philippines President Rodrigo Duterte recently started his anti-gambling campaign. “Online gambling must stop,” were Duterte’s words during his very first cabinet meeting on June 30, 2016. The Philippine President has vowed to destroy online gambling and electronic gaming parlors that have been loosely regulated.

Accordingly, on February 2, 2017, he passed an executive order (EO 13), directing law enforcement agencies to step up the fight against illegal gambling and clarifying the authority of online gambling operators. “The license to operate online gambling granted to qualified operators shall not be assigned, shared, leased, transferred, sold or encumbered to any other party. Any gambling operator desiring to operate outside the jurisdiction of the government authority which issued its existing license shall apply for a separate license with the appropriate authority,” the EO read.

Silver lining for Casinos

While this does cast dark clouds over online gambling operators in the Philippines (EPHE) (PIE), it raises hopes for casinos owners and operators. Casinos in the Philippines should gain more prominence with online gambling being curbed, as casino operators in Asia attempt to cash-in on the entertainment needs of the rising middle class of the region.

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Within Asia, casinos operators (BJK) (PEJ) have long focused on Macau as their revenue earner. Companies such as Las Vegas Sands (LVS), Wynn Resorts (WYNN), and MGM Resorts (MGM) already operate properties there. Being the only Chinese territory where casino gambling is legal, Macau has long held the reputation of being one of the most popular and profitable gambling destinations.

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However, the last three years haven’t bagged much windfall for gaming and casino operators in Macau. Reasons for this slowdown include:

  1. Overall economic slowdown in China
  2. China’s massive anti-corruption campaign launched in 2013, affecting the wealthy Chinese who previously, have been the biggest spenders at Macau’s casinos

Could Macau’s slide become Philippines’ swing?

With sliding revenues from their Macau-based casinos, we may see operators shifting their focus toward the Philippines, which stands to swing to prominence as an alternate entertainment hub. The country is already contending with Macau and Singapore to become a major gambling hub.

Business Tycoons At the Helm

  • Billionaire ports magnate Enrique Razon Jr.
  • Philippine business tycoon Andrew Tan
  • Philippines’ richest man, Henry Sy and family

The next article in this series looks more closely at the owners of these gaming companies and their revenue growth prospects.

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