The Philippines’ gambling regulator is hunting for new sources of revenue ahead of possible privatisation of its casino operations, including from licensing service providers that support foreign-based online gambling companies.
PAGCOR chairman and CEO Alejandro Tengco told the ASEAN Gaming Summit in Manila on Tuesday (March 21) that the regulator is considering the creation of a special class of business process outsourcing (BPO) licence to support online gambling companies licensed in foreign markets.
“We’re looking into the possibility of regulating other facets of overseas gambling operations, that is, the possible regulation of a special class of BPO [licensee] for those who service legitimate operations licensed abroad.
“We have been receiving numerous inquiries about the possibility of BPOs setting up in Manila to be able to service licensed operators abroad, and that is the reason why I have asked our people to look into this matter and give their recommendations to me immediately.”
Philippine BPOs currently serve locally based, foreign-facing online gambling licensees (POGOs) and in some cases overlap with the services offered by those licensees.
The proposal is one of several potential initiatives and revisions to current projects that Tengco presented to the summit, which he said “aim to capitalise on this booming industry of online gaming” and to ensure that “the corporate life of PAGCOR will continue”.
The changes come as PAGCOR reactivates a long-standing but regularly frustrated ambition within the Philippine government to privatise the nine casinos and 34 satellite casinos that PAGCOR controls under the Casino Filipino brand.
“We are seriously considering the privatisation of all PAGCOR-operated casinos,” Tengco said.
“It is my hope, [and that of] the members of the board of directors, that we will be able to implement this privatisation during my term as chairman and CEO of PAGCOR.”
Tengco’s tenure as PAGCOR boss is expected to last until at least the end of Philippine President Ferdinand Marcos Jr’s term in 2028.
Aside from the issue of privatisation, Tengco said that Casino Filipino branches and satellites will be upgrading slot machines this year in anticipation of new electronic gaming machine (EGM) technical standards in force from January 1, 2024.
The new EGM standards, which PAGCOR announced on Monday, apply market-wide and are being updated for the first time in almost a decade.
EGMs that do not comply with the standards will be allowed to enter the market before the end of the year, but it remains unclear how much damage the higher costs will inflict on smaller casinos after that date.
Other changes underway include updates for various operator and supplier manuals, gaming employment licensing and pushing the major online gambling operators to enhance corporate social responsibility via contributions to a foundation.
On the nation’s nascent domestic online gambling market, Tengco said PAGCOR is considering increasing the number of sports and live dealer games that Filipinos can bet on online, including e-sports, virtual horseracing and arcade games to “maximise player engagement and entice them to play even more”.
Perhaps alluding to a widening corruption scandal involving PAGCOR’s former external online gaming auditor, Tengco said the regulator is aiming to change its culture and mindset, increase transparency, be on par with international regulatory standards and increase engagement with the industry.
But in his mostly bullish presentation, Tengco noted that 2022 was a “year of recovery” for PAGCOR, with a 68.7 percent year-on-year jump in gambling-related revenue to 55bn pesos ($1bn), a figure amounting to 73 percent of the gaming haul for 2019’s record-setting result.
For 2023, Tengco projected gambling-related revenue of 68.5bn pesos, or a 25 percent year-on-year gain.
“We are really gaining enough ground for a better future,” he said.