Pagcor may quit as casino operator

MANILA, Philippines - The Philippine Amusement and Gaming Corp. (Pagcor) is open to spinning off its casino operations and retaining its regulatory role, to enable it to focus more on monitoring and policing the growing gambling business in the Philippines.

Pagcor chairman Cristino Naguiat stressed however that doing so would not be easy and that a closer study should be done.

The scheme, if implemented, will have an impact on Pagcor’s financial commitments to national government and sports agencies.

There was renewed discussion on the possibility of Pagcor separating its regulatory and casino operator roles following the board room battle between gambling tycoons Steve Wynn and Kazuo Okada.

Wynn ousted Okada from the Wynn Casino board following allegations he had engaged in improper business practices in setting up his resort-casino business at the Pagcor Entertainment City. Wynn had accused Okada of paying off Pagcor officials, a charge which Naguiat dismissed.

Naguiat is also under fire for allegedly receiving freebies from Okada on his trip to Macau. Naguiat did not deny the trip or the courtesies extended by Okada, saying these were industry practices followed by resort-casino operators worldwide.

Presently Pagcor has two hats: one as regulator of all gambling and games of chance and the other as operator of several land-based casinos nationwide. Naguiat said such an arrangement is not unusual as there are several countries in the world that have the same arrangement.

“Pinag-aaralan natin mabuti ang (We are carefully studying) the separation of Pagcor as operator and regulator,” Naguiat said, admitting this cannot be done overnight due to Pagcor’s present financial obligations.

Under its charter, Pagcor is mandated to remit a percentage of its earnings to the national government, such as the President’s Social Fund as well as support sports organizations and local governments.

Pagcor is the third largest revenue earner for the national government, next to the Bureau of Internal Revenue and the Bureau of Customs. Since he took over in 2010, Naguiat boasted they have remitted P2 billion to the national government, half of which went to the Department of Education’s classroom project.

For January 2011, Pagcor’s gaming revenue reached P600 million. “This will be the highest performance of Pagcor if tuloy-tuloy (it continues).”

Naguiat believes the best time to carry out such a review is when the four resort-casinos lined up for Pagcor’s Entertainment City are up and running. At this time, Pagcor will be acting as regulator – “as a regulator, you will look into the casino revenues to see if they are complying with gaming rules and regulations.”

“Ang proponents nasa construction stage pa, malayo pa ito sa regulations ng gaming (The proponents are still in the construction stage and far from the regulations of gaming),” he added.

Naguiat also said he has asked the Office of the Government Corporate Counsel (OGCC) to review all the contracts for the Pagcor Entertainment City.

Apart from Okada, the three other groups or proponents planning to build casino-resort complexes at the Pagcor Entertainment City are Travellers, Bloombury, and Belle Resources.

Naguiat gave assurance the Okada group would be given opportunity to explain their side but that “wala po silang makukuha sa akin kasi yung kontrata or lisensya (They can’t get anything from me because the contract or the license) was signed prior to my stint.”

He explained they had to revise the terms of reference for the four Pagcor Entertainment City proponents to protect the government’s interest. Under the original contract, each of the four proponents committed to invest $1 billion. But no deadline was given to the proponents to produce the money.

“Parang kang lulutuin sa sariling mong mantika nyan (It’s like getting fried in your own lard),” he said.

“We set a guideline that they should invest at least $650 million before they can start, naging istrikto tayo rito (we’re strict on this) and after three to four years – they should finish the $1 billion,” Naguiat said.

“I’m not making things difficult for them. I am looking at the economic advantages these contracts will bring,” he added.

Despite questions over Okada’s deal with Pagcor, Naguiat argued the Entertainment City project should still be pursued. “Definitely (it is a go) because it has a very big economic impact,” he said.

He said they project gaming revenues of $10 billion a year and $2.5 billion will go to the national government alone. Up to 100,000 jobs are expected to be created by the four casino-resort projects.

He said many gaming investors believe the Philippines “is the market to watch” and that it can easily upstage Singapore, and eventually Las Vegas.

“The analysis is very confident, if this pushes though we can beat Las Vegas,” he said.