According to Maybank Securities research, the sale of Philippines gambling regulator PAGCOR’s casinos is projected to face challenges due to an increasing number of domestic players shifting from PAGCOR casinos to integrated resorts in Manila and Clark.
Market Share Shift
According to Maybank analyst Miguel Sevidal, the market share of licensed casinos in the Philippine gaming sector will expand significantly during the first quarter of 2023. Entertainment City in Manila raised its market share from 70% in 1Q18 to 80% in 1Q23, while Clark increased its market share from 5% to 12% during the same period. PAGCOR casinos, on the other hand, saw their market share fall from 24% in 1Q18 to 8% in 1Q23. According to Sevidal, domestic players are turning away from PAGCOR’s Casino Filipino outlets and towards integrated resorts, which corresponds to the reported increase in Entertainment City’s proportion of local recreation and entertainment spending.
Miguel Sevidal noted “a significant increase in the market share of the nation’s licensed casinos, with Manila’s Entertainment City seeing share rise from 70% five years ago (1Q18) to 80% in the first quarter of 2023, while Clark has risen from 5% to 12% over the same period. By comparison, market share held by PAGCOR casinos dropped from 24% in 1Q18 to 8% in 1Q23.” He added: “This suggests some movement by domestic players from PAGCOR’s Casino Filipino outlets to the integrated resorts, and is consistent with our observation of Entertainment City’s increasing wallet share in recreation and entertainment spending by locals. This combination of decreasing market share and below-average industry growth make PAGCOR’s Php80 billion (US$1.44 billion) valuation expensive. These trends were seen again in 1Q23.”
PAGCOR President and CEO Alejandro Tengco has prioritized the privatization of PAGCOR casinos, allowing the agency to focus on its regulatory role and address concerns about conflicts of interest. Analysts, on the other hand, are concerned about the potentially high asking price and warn that it may discourage interest in acquiring PAGCOR’s 41 casinos.
Aside from PAGCOR’s concerns, Sevidal emphasized that “the Philippines gaming industry as a whole is booming, with sector-wide GGR up 107% year-on-year and 21% quarter-on-quarter in 1Q23. Compared to the same quarter in 2019, Entertainment City GGR is up by 38% and Clark by 193%.”
In this regard, Sevidal said: “We retain our positive view on the Philippine gaming sector following 1Q23 results, which showed sustained industry GGR growth … outpacing the growth of state-run casinos.”
The Philippine Amusement and Gaming Corporation (PAGCOR) is a government-owned and controlled corporation based in the Philippines. It is an important source of revenue for the government, coming in third after the Bureau of Internal Revenue and the Bureau of Customs. PAGCOR is administered by the Office of the President of the Philippines.
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