The New Filipino President Is Taking his Country and Gaming in Hand

Rodrigo Duterte was sworn in as president of the Philippines on June 30th and he hit the ground running.  In his first few days, Duterte set up a national complaint line, changed the emergency call number to 911 and delivered a speech: “I am sorry for my country.”  He revealed the names of hundreds of government officials, including 23 mayors of cities and 5 top police officials who he said were involved in illegal drug trading.  The newly minted president called for a reinstatement of the death penalty and encouraged ordinary citizens to kill drug “pushers and addicts.”  It is estimated that as many as 1000 people have been killed by the government and citizens in just two months.  The killings have shocked the world and is virtually unprecedented in a country with a constitutional government.

When the supply of drug lords dwindled, President Duterte turned his attention to public officials singling out 150 he said should be removed from positions of authority.  The statement caused a constitutional crisis and Duterte backed down, although not before threatening to declare martial law.  He apologized to the chief justice of the Supreme Court; for the moment the rule of law has been preserved – except for those “drug lords” executed mob style without a trial or an opportunity to plead their innocence.

President Rodrigo Duterte’s is also after business tycoons who he has termed “oligarchs.”  One of his first targets was Roberto Ongpin.  He is chairman of the electronic gaming firm PhilWeb and a minister of trade under former President Ferdinand Marcos. Ongpin offered to sell his shares of the company, but that was not enough.  The company license was not renewed and it was forced to close.  Duterte assures other business leaders they do not have to worry: “The campaign against oligarchs must not impose fear to the business community.” Unfortunately for those who are not supposed to be concerned, the president is the only person who knows exactly who the oligarchs are.  It’s rather like trying to guess who the flies and tigers are in China, isn’t it?

After unleashing a crackdown on drugs, Philippine President Rodrigo Duterte is turning his guns on a booming online gaming industry, abruptly scrapping one firm’s 13-year monopoly this week and denouncing its billionaire chief as a corrupt oligarch. Neil Jerome Morales/ Farah Master, 8-11-16

Former PhilWeb Corp. Chairman Roberto Ongpin has been singled out by Philippine President Rodrigo Duterte in a campaign to end the influence of big businesses on the government, said he will sell his stake to protect the electronic gambling company and its workers. Duterte on Aug. 3 named Ongpin as among the businessmen he says have undue influence on the government and whom the newly installed head of state wants to “destroy” as he seeks to end online gambling in the country. Macau Daily Times, 8-11-16

In fact, on the surface the “clean up” of the Philippines and campaign against crime and corruption in China have much in common.  Both presidents took office on the promise of cleansing their countries of bad people doing bad things.  Both presidents have had a major impact on gaming.  In Macau, revenues have declined for 26 months since President Xi started his efforts to improve Chinese political culture.

The situation is still unfolding in the Philippines and it is hard to know what else might happen or what the impact on the country’s casinos will be. In the midst of the turmoil, the Philippine Amusement and Gaming Corporation (Pagcor) reversed a previous position and raised casino tax rates. Four casinos have been put on notice that the tax rate increase is effective immediately.  It has a new governing board appointed under Duterte’s direction.  In a rapid series of announcements, Pagcor denied licenses to 124 online gaming sites, announced a merger with the national lottery and then put itself up for sale. The changes can be seen as part of Duterte’s polices as Pagcor answers directly to the president.

Philippine president Rodrigo Duterte is pushing for the merger of state-owned gaming companies, Philippine Amusement and Gaming Corp and lottery operator Philippine Charity Sweepstakes Office.  Asia Gaming Brief, 8-26-16

The Philippines government has directed Philippine Amusement and Gaming Corp. to sell its casinos in order to raise funds to support the proposed P3.4-trillion 2017 national budget. she said. Asia Gaming Brief, 8-29-16

And then as if intended to confuse everyone even further, Duterte changed his mind about online gaming.  In a very personal statement, he said “he would restore online gaming” as long as the operators paid their taxes and stayed away from schools and churches.

“I will restore online provided taxes are correctly collected and they are situated or placed in districts where gambling is allowed, which means to say, not within the church distance or schools,” Mr Duterte told a briefing. Gross Gaming Revenue Asia, 8-25-16

Duterte might appear to be a crackpot, but he has a long and distinguished political career behind him.  He has been consistently against crime, drugs, alcohol, and tobacco. Even if he has not attacked legal gambling in the past, he has traditionally maintained an anti-crime and corruption position. He has also always shown support for minority ethnic groups in the Philippines and to Islam and a willingness to negotiate with communists.  Duterte is trying to move his country into the 21st century and leave its 20th century persona behind. He is also establishing to create a new identity for the Philippines in the Pacific region.

Unlike Macau, there are no major American casino companies invested in the Philippines. As a consequence, the gaming industry and its dance with Duterte does not get much coverage here. However, the Philippines is developing into an important international casino destination.  The Philippines, Cambodia, Korea and Vietnam along with Macau are all competing for the Chinese gamblers.  The Chinese/Asian market is huge, but each jurisdiction has its own unique idiosyncrasies that make operating a casino challenging.  However, the potential rewards are so great that many are willing to take the risks.  At the moment, things in the Philippines are unstable, maybe even life-threatening.  But once they settle down, I think the gaming landscape will be predictable and stable.  It will never be as lucrative as Macau, but in the long run, it will be an easier place to operate than Macau or even Vietnam.



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