- State will nationalize casino interests next year
- Strong interest in Asian market creates oversupply risk
The Philippines’ blossoming casino sector is performing almost too well, reports Reuters, with high levels of interest from foreign and national investors creating what some are calling an “oversupply” scenario.
The Asian nation will open state-run land-based casino interests to commercial bidders next year, raising interest from operators already active in the Macau and Singapore markets.
Nationalization of thriving casino industry
The Philippines is already home to some privately-owned casino resorts, including the Solaire in Manila Bay, but more than 40 of the country’s gambling facilities are currently owned by the state.
The Philippine Amusement and Gaming Corp currently acts in a regulatory capacity as well as operating the state’s casinos, but as of early next year its gaming licenses will be open to commercial bidders. PAGCOR will continue in its role as chief regulator for the gambling industry after the nationalization process is complete.
Bloomberry Resorts, which owns the Solare, is interested in the license. Chairman Enrique Razon Jr told Reuters confirmed that the company has expressed interest (pending details of sale conditions) and hoped that a presence in Manila would give the brand an edge over foreign investors. However, Razon expects Macau operators to bid for licenses in Manila.
Growing gambling market attracts investor attention
The gambling scene in Asia is making significant gains, especially in Macau where records profits were posted in the first half of this year. Plans to legalize gaming in Japan and blossoming revenues in Singapore have boosted the appeal of this Asian market to foreign operators. The Philippines is also seeing gambling gains, with year to date revenues from Morgan Stanley showing a 27% increase for the country’s casinos.
Concerns of ‘cannibalization’ within gambling market
Gaming revenues in Asia are growing, and operators all want a slice of the profit for themselves. The fast turnover of a profit makes casino investment one of the hot tickets in 2017, and this planned nationalization of Philippine state casinos creates an ideal opportunity.
The government wants its Entertainment City project to rival Macau and Las Vegas, attracting visitors from all over the world, and it is keen to pull in big names who can invest well.
However, industry insiders like Razon say this fast-paced investment ramp up could lead to a problem of oversupply and overinvestment, which would cause “cannibalization” of the industry over time.
Casino construction projects are already underway at the Entertainment City site and game operators say they are expecting the number of smaller casinos to rise after the state asset sale. With strong competition already inside the Manila market, foreign investors may struggle to find their way in.
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