Philippines Casinos Predicted To Earn More Than Macau Gaming Operators, Financial Firm Says

Posted on: May 15, 2019, 09:43h. 

Last updated on: May 15, 2019, 09:43h.

Ed Silverstein @casinoorgedsilv Read More

Expertise: Legal, Tribal Gaming.

The Philippines is seeing “faster” growth in casino gambling than such well-known gaming destinations as Macau or Las Vegas, a new analysis predicts. It is welcome news for Philippines President Rodrigo Duterte who increasingly supports gaming.

In a note to investors, Morgan Stanley Asia predicted a 16 percent jump in earnings before interest, taxation, depreciation and amortization (EBITDA) during 2019 at Philippines-based Bloomberry Resorts. The company operates Solaire Resort and Casino in Manila.

That amount would “exceed that of regional peers,” Praveen Choudhary, a firm analyst, was quoted by GGRAsia. For instance, it is much higher than the EBITDA growth of 4 percent forecast for the six gaming venue operators in Macau, Morgan Stanley adds.

Macau witnessed a 0.5 percent drop in Q1 gross gaming revenue (GGR) — MOP76.15 billion (US$9.4 billion) — when weighed against the first quarter of 2018. Noticeable was a 13.4 percent decline in Macau’s VIP GGR.

Caution Urged

Yet, David G. Schwartz, a professor at UNLV who specializes in the gaming industry, urged skepticism when comparing some of the numbers.

“I’m not sure that the Philippines and Macau would be in the same market, since they are over 1,000 km [about
621.37 miles] apart,” Schwartz told Casino.org. He also posed the question:

Is it likely that people gambling in Filipino casinos would be in Macau if there were no casinos in the Philippines? I don’t know the answer to that.”

Nationwide, the Philippine Amusement and Gaming Corporation (PAGCOR) — a regulator and operator — said total income, net of taxes, was close to PHP9.69 billion (US$185.1 million) during the first quarter of 2019. That represents a 14.7 percent jump when compared to the same months in 2018.

“Our net revenues and EBITDA were driven by our highly-profitable mass gaming segments …,” Enrique Razon, chairman and CEO of Bloomberry Resorts, said in a statement about Q1. Mass-table play GGR specifically at Solaire jumped by 23.5 percent, which totaled almost PHP4.0 billion (US$76.3 million) year versus year.

The company also reported that revenues increased in all operating segments during the recent quarter. Still, profit at Bloomberry Resorts dropped 40 percent when comparing Q1 of this year to the same quarter last year.

The drop was blamed on “meaningfully” lower foreign exchange gains. Another culprit was “higher interest expenses,” according to the company statement.

In contrast with Macau and the Philippines, GGR during Q1 in Clark County, Nevada, which includes the Las Vegas Strip, edged up 3.8 percent to almost US$2.71 billion when compared to Q1 of 2018.

Duterte Champions Gaming

The Morgan Stanley analysis comes as President Duterte admitted last Saturday that he can no longer “control” gambling in the nation. It looks like he will let individuals decide for themselves about taking part in popular forms of gaming.

Earlier in his administration, Duterte made it a priority to scrutinize “illegal” online or in-person gaming. But the recent comments appear to be his clearest statement so far to signal his government will take a more hands-off policy.

Duterte also has proclaimed he wants to make the Philippines “the top gaming and entertainment destination” in Southeast Asia by 2020.

During Q1 of 2019, total income — net of taxes — was close to PHP9.69 billion (US$185.1 million). That represents a 14.7 percent jump when comparing the same months in 2018.

Philippine casinos last year won $3.6 billion, and the four integrated land-based casino resorts in Manila generated the lion’s share of GGR. These include: Solaire, as well as City of Dreams, Resorts World and Okada.

The four won $2.71 billion. E-gaming parlors reported GGR of more than $500 million.

The Philippines government gets a significant cut from legal casinos. PAGCOR shares some 50 percent of its gaming income.

This week, President Duterte’s supporters surpassed opponents in the race for the Philippines Senate. Early returns suggest his allies will take each of the 12 Senate seats up for election in the 24-member body.