The Market Monitor Minding the Nation's Business
By Luis Leoncio
State gaming firm Philippine Amusement Gaming Corp. (Pagcor) will start issuing new licenses for online gaming firms provided the client would be “non-locals,” in response to President Duterte’s sudden turnaround on online gambling.
Last week, Mr. Duterte softened his stance against the business saying he would allow online gambling as long as the right taxes were paid, thus offering new hope for the online gaming firm Philweb Corp to resume operations.
The President earlier singled out former Trade Minister Roberto Ongpin, majority owner of Philweb, as an “oligarch” who, he said, he wanted to destroy the country. The statement was believed to have pushed Pagcor not to renew the license of Philweb.
Pagcor said it was in the process of “readying application forms” for online gambling licenses.
“We don’t know yet how sellable it is, there might be no takers,” Pagcor Chairman and CEO Andrea Domingo said.
Earlier, Mr. Duterte said online gambling “had to stop” because too many Filipinos were choosing to gamble instead of working for a living.
At the beginning of August, Philweb was forced to announce it would wind down its operations due to Pagcor’s rejection of its application to renew its license.
Ongpin then stepped down as president of the company and, as a last-ditch bid for approval, offered to transfer almost his entire majority stake in the company to Pagcor in what he said an attempt to save the business and its 6,000 employees. Due mainly to Mr. Duterte’s position, Pagcor refused Ongpin’s offer.
Last Wednesday, the President surprised the media with his more tolerant mood.
“Pay the correct taxes… Gamble until you die. I do not really care,” he said.
He added that he would allow online gambling provided “taxes are correctly collected and (online gambling cafes) are situated or placed in districts where gambling is allowed, which means to say, not near church or schools.”
“I was mad because even the youth are gambling and there was no way of collecting the proper taxes,” he said.
“Just pay taxes and this will add to a special trust fund for medicine of poor people,” he added.
Mr. Duterte’s softening of position came after Ongpin issued another bid to save PhilWeb by offering to have his donation used exclusively for the establishment of a nationwide network of drug rehabilitation centers.
“I hope you will forgive me for this one final attempt at not only saving the livelihood of some 6,000 individuals and their families but also to make effective use of my donation, which has now been rejected by Pagcor,” Ongpin said in his letter to the Pagcor chief early this week.
Ongpin said a comprehensive drug-rehabilitation program should complement the Duterte administration’s war on drugs.
PhilWeb is also seeking permission from Pagcor to operate a new SMS-based lottery business, which it said has nothing to do with online gaming.
In a letter to Domingo, PhilWeb President Dennis Valdes said the company is reviving the so-called Pagcor Text Bonanza, proposed several years ago to the gaming regulator but was not acted upon.
The proposed business is an SMS or text-based scheme that would supplement the current lotto betting business in the Philippines, which is run by the Philippine Charity Sweepstakes Office (PCSO).
Under the proposal, lotto bettors could text their lottery numbers using their Smart mobile phones to Pagcor-PhilWeb servers based on a proprietary software developed by PhilWeb.
The bettors would then receive confirmatory message, which effectively becomes their ticket.
This has the potential to earn revenues of from P50 billion to P100 billion, to be shared among Pagcor, PhilWeb and Smart, Valdes said.
Valdes said Smart has agreed to the text revenue-sharing formula of 70 percent for PhilWeb and 30 percent for the mobile company, in contrast to the normal sharing of 70 percent for Smart and 30 percent for the service provider.
“It should be possible also to include Globe in this project if they would agree to the same 70 percent PhilWeb and 30 percent to Globe formula,” Valdes said.
The existing lotto, which is operated by the PCSO through the sale of thermal paper printed tickets in some 4,000 outlets nationwide, earns for PCSO approximately P30 billion per year.
The bettors are required to physically queue at Lotto outlets in order to buy their tickets; during times when the lottery jackpot is large, the lines can extend up to a kilometer long, Valdes said.
“It is not difficult to see the advantage of Pagcor Text Bonanza. The potential revenue could easily hit P50 billion to P100 billion a year. Pagcor Text Bonanza could supplement government income many times over,” he said.
The P50 billion to P100 billion revenue estimate is based on a P15 bet price per text, which translates to P27.37 billion in revenues at 5 million text messages per day and P54.75 billion at 10 million text messages per day, according to PhilWeb’s proposal.
Of the amount, the net win is P4.275 per SMS or P7.80 billion per day at 5 million text messages and P15.60 billion per day at 10 million text messages per day.
Pagcor would then get 60 percent or P4.68 billion a day based on five million text messages and P9.36 billion based on 10 million text messages.