Philippines sets US$300m tag for casinos outside Manila

[MANILA] The Philippines is open to issuing gambling licenses outside the capital of Manila and plans to require the minimum investment for new casinos at about US$300 million to ensure world-class properties are in provincial cities and towns, its gaming regulator said.

"There are areas which I think are very ripe for a casino," Cristino Naguiat, chairman of the Philippine Amusement and Gaming Corp, said in an interview, declining to disclose those locations.

The agency is "open to giving out a casino license if it can help boost economic activity and if the people in the area want it. We're developing a template to ensure that no one would be granted a licence unless an investment commitment is made."

The Southeast Asian country, which is aiming to compete with Macau and Singapore casinos amid plunging revenues, has already allowed four resorts being built in the 120-hectare seaside Entertainment City complex in the capital with a minimum investment of US$1 billion each.

Japanese tycoon Kazuo Okada will be constructing the country's biggest property in the Las Vegas-style casino hub by spending as much as US$2 billion.

The minimum investment, which could vary depending on the location, will likely be implemented by the new president after incumbent leader Benigno Aquino's six-year term ends in June, Mr Naguiat said.

Mr Aquino's administration followed his predecessor Gloria Arroyo's guidance on investment requirements for the casinos operating in the Entertainment City.

Competition Created

"They are trying to replicate Entertainment City on a smaller scale. This will create competitors," says Jonathan Ravelas, chief market strategist at BDO Unibank Inc.

"Operators in Entertainment City will have to be on their toes because if they are complacent it's not impossible that some of the traffic will go to these provincial casinos if the properties are world class."

Bloomberry shares fell 4.5 per cent at 4.25 pesos at the close of trading in Manila, the biggest loss in more than two weeks and halting a three-day rally.

Melco Crown Philippines Resorts Corp, operator of City of Dreams Manila, sank 5.2 per cent, its biggest retreat in two weeks.

Travellers International Hotel Group Inc, which will open a casino in Entertainment City by 2020, slid 1.1 per cent. The benchmark Philippines Stock Exchange Index lost 1.8 per cent.

The regulator, or Pagcor, also runs 13 casinos in the country, 10 of which are outside Manila.

Philippine gaming revenue is expected to more than double this year's estimated 135 billion pesos (S$4.05 billion) by 2025 when all four projects are operating, the regulator said.

Philippine billionaire Enrique Razon's Bloomberry Resorts Corp was the first to open in the hub in 2013, followed by the project of Macau operator Melco Crown Entertainment Ltd which opened a year ago.

Okada's casino is scheduled to start operations in December, while Westside City Resorts, a venture of Philippine billionaire Andrew Tan and Malaysian billionaire Lim Kok Thay, may open by 2020, Mr Naguiat said on Feb 1.

Gaming revenue from government-run and privately-owned properties could reach 45 billion pesos and 90 billion pesos, respectively, in 2016, Mr Naguiat said. That represents an 8 per cent increase from a combined 125 billion pesos last year.

Mr Aquino in 2010 said splitting the company's regulatory and operations functions would be "a good direction." Mr Naguiat said it will be up to the next government to decide if the state-run casinos should be privatized.

Major casinos outside Manila include Euronext-listed Thunderbird Resorts Inc's 65-hectare property in northern La Union province and its mountain resort in Rizal province near the capital.

BLOOMBERG