The Philippine Amusement and Gaming Corporation (PAGCOR) is the regulator of the Philippines thriving gaming industry. In this interview, Chairperson and CEO, Andrea D. Domingo, speaks about how PAGCOR contributes to the socioeconomic development of the country and why the Philippines is the unrivalled gaming destination in the region
On May 9th of 2016 president Rodrigo Duterte was elected with more than 39% of the vote giving him a 15-point victory over the second best performing candidate. It seems that the people of the Philippines truly believe in the message of social inclusiveness, economic decentralization and social order; as shown by his 91% approval rating shortly after the election. What would be your analysis of the election results and what were the main drivers behind it?
When we had a meeting with all the campaign leaders and we always felt that introducing Rodrigo Duterte to the public was a lot easier than other candidates. He seemed like a magnet, he would attract voters because he has the charisma. He is so real and so different from the other candidates and that is what makes him special. People were saying “we need a working man, we need someone like us”. He has the ability to talk to the people and find the basis of what they need.
He was able to gain an exclusive right to fight crime, drugs, corruption, right from the beginning. Nobody else had the vision of doing it and knew how to solve it permanently. People got tired of people with prestigious family names and foreign education and seeing that things didn’t change. So, when he first thought about it, he was reluctant but saw that he had to do it because he understood he could be the solution to our problems. I’ve seen many presidents and I think that he is the kind of man that we need at this point in our history.
How important is social inclusion and economic decentralization for the Philippines and what role does PAGCOR play in contributing to it?
We are a very religious country so in 1983 there was a lot of debate about gambling and we decided to legalise it, put some taxes on it and take profit to use it for social civic programs. In our mandate, there is a specified use for the money that PAGCOR collects and it is to fund social development projects.
We opted for this option instead of making it illegal and giving room to illegal gambling lords. So, something like gambling that people might see as dangerous redeems itself by offering social projects to help the most needed. My vision is that in the end when you work for PAGCOR or for a casino you are working for the poor man that can’t afford medicines or the orphans that need education.
The amusement and gaming industry a is a very important pillar of the economy already and by 2017 the sector expects USD 3 billion revenue.
Yes, that is PH 155 Billion from which we would collect around PH 65 billion. There are three criteria for what we control. First is how do we regulate the sector, second, how do we collect taxes, and third, what have we done for social development with that money.
We have to regulate so there is control and not a wild proliferation. We do not allow e-gaming, there are certain rules on where can you establish a casino or a gaming facility. We are careful on where and how we allow casinos to open. That is why we are working on integrated casinos with hotels and entertainment so that we have a combination of tourism, gaming and leisure. We only allow projects that have 20-30% of their total area as the casino. The rest has to be restaurants, shops, rooms and other leisure spaces.
How do you think you contribute to the country’s tourism goal of reaching 12 million visitors by 2020?
To contribute to tourism, we are focusing on Entertainment City so that when people think of going to Las Vegas they can also come here, which is much cheaper for them, especially for the ASEAN nationals. We are working very hard on providing a personal touch and great service to customers so that they feel most welcomed.
Because of our historic relation with foreign countries, we are very used to sharing with foreigners, there is no discrimination at all in the Philippines and we think that our Asian culture and values are very appreciated because we know how to combine that with the understanding of the occidental way of thinking.
We are naturally a good cross-cultural society. Our overseas Filipino workers also bring back a lot of knowledge that stays here and helps cultural integration. That is one of our strong points when attracting tourism, everyone can feel at home here.
How do you see the Philippine gaming sector in comparison with other neighbouring countries?
We have been in this for a long time, I know there are some countries that are nowadays developing gaming but it takes a long time to be like us. Our government does not put a single peso in us, we are the third largest revenue generating body in the Philippines.
The Philippine entrepreneurial spirit is the reason why we have grown so much in this time, we have been fighting every year and now we know the business very well because we have grown with it. We are mature.
I see the Philippine gaming and amusement sector as strong. We are managing all our 44 casinos, we are regulating the operation of the private casinos which are now 11, so I think we know how to run the sector.
PAGCOR had a very good year in 2016 with a growth in revenues of 16% compared to 2015. How do your 11 licensees actually contribute to that growth compared with the 44 PAGCOR casinos?
They contribute a larger portion. The benefit of having the 44 owned casinos is that when you analyse the revenues, you can see how they contribute to our country. 72% of our income actually goes directly to other government institutions. Part of this is what we recently remitted to the Office of the President in the amount of PH 5 billion, which allotted PH 1 billion for free medicines, PH 3 billion for free hospitals and the another billion for subsidies to families of police who were either killed or wounded. Only the remaining 28% is used for our operating expenses.
Mandated contributions are defined by law and this is very unique. But we are happy to give back to the people.
Are you planning on getting more licensees? Is there room for international companies to come and invest in the sector?
Attracting other licensees is something that happens, even if we don’t advertise; we have a lot of companies applying. We are very careful of what we approve because we are grateful to the ones that came when this was starting when there was more risk and they chose to trust the Philippines. It wouldn’t be wise for us to jeopardise their operations.
We see a lot of people willing but we want to grow organically and create a sustainable sector. Now with Okada coming in with USD 2.2 Billion and employing over 7000 people, we don’t want people like this to get scared by welcoming every other project that applies so we are very selective.
Entertainment city is technically full but in other regions, we are looking for options so we can open some licenses.
For us it is very important to analyse the quality of those companies and what services they are going to provide but also the kind of people behind them. We don’t want anyone with a criminal record, we check all applicants to avoid fraud, and that includes the ones that already have licenses, if they don’t successfully pass the report they will see their license revoked. There is also an independent audit of all casinos and online gaming companies.
There are some Japanese companies that are interested in expanding their operations to the Philippines. What is your evaluation of the opportunities here and why should they apply to PAGCOR instead of Cagayan Free Zone for example?
PAGCOR is 100% transparent and has clear rules that you know as a licensee that you can trust. Our transactions are controlled so there is no middle-men, all licensees are fairly and equally treated and all the money we generate goes to public services and, of course, it is publicly audited.
With the recent approval for the entertainment business in Japan, the opening of a potential USD25 Billion market could become a reality very soon. How do you see the synergies that PAGCOR and Japanese market can establish?
I am sure there will appear some synergies as in manpower exchange, information and knowledge exchange. Our mandate says clearly that we operate in the Philippines and we should analyse the legal possibilities in the future but it is not a thing that we have in mind yet.
We have already rejected a proposal from another country to manage their sector. Since we have not reached our maximum here in the Philippines, we have enough to care about and better concentrate and keep doing it as well as we do.
But of course, we would be happy to share our experience and knowledge in management with the Japanese.
In a more personal approach, what would be the effect that you want to produce as Chairman and CEO of PAGCOR?
When the President nominated me for the position he only told me two things. That we needed a level playing field for the sector and to eliminate corruption. And he gave me advice for it, “When you don’t know what to do, just read the law and follow it.” I think that those two will be two very good goals that I want to achieve and it would be great for any other sector too.