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Now that's entertainment!

Article - June 4, 2012
PAGCOR is set to transform the Philippines into a world-class leisure and gaming mecca through its Entertainment City project
Outside of Asia, the Philippines is perhaps better known as an archipelago of beautiful tropical islands. In the region, however, it’s gained a reputation as an exciting gaming destination, which albeit still behind Macao and Singapore, is rapidly closing the gap and could soon surpass Las Vegas in revenues.

The worldwide gaming industry is worth some £73.5 billion and the Philippines is eager to raise its piece of the pie to 10 per cent. Currently, the industry earns revenues of some £511.2 million but plans to develop Entertainment City, a brand new mega-centre on reclaimed land in Manila Bay, should turn this ambitious aspiration into a reality. 

The state-run Philippine Amusement and Gaming Corp (PAGCOR) is both regulator of all gambling and games of chance and operator of several land-based casinos. Its chairman, Cristino Naguiat, took the helm in 2010 under the banner of President Aquino’s zero tolerance to corruption and rapidly made the agency more profitable and transparent than ever. Mr Naguiat also renegotiated contracts with Entertainment City’s investors to ensure that the country benefits even more from the project.

The beauty of PAGCOR and legal gaming is that about half of gross revenues go to the government and special development programmes. In March 2012, PAGCOR posted a phenomenal P3.67 billion (£53.5 million) gross income which was higher by P686 million compared to the P2.98 billion earnings in the same period last year. This is the 10th time under its new management that the agency was able to break its previous monthly income record.

PAGCOR’s March record feat, according to Mr Naguiat, now goes down in history as “PAGCOR’s highest total income ever posted for a single month since the Philippine government went into the direct management of casino operations 26 years ago.”

Its robust income performance enabled PAGCOR to increase its contributions to nation-building by P556 million or 43 per cent from P1.29 billion in March 2011 to P1.85 billion in March 2012. Among the recipients of PAGCOR’s funding contributions last March were the Bureau of Internal Revenue (P125 million for the 5 per cent franchise tax); the National Treasury (P1.18 billion); the Philippine Sports Commission (P59 million); cities hosting PAGCOR casinos (P41 million); the President’s Social Fund (P200 million); socio-civic projects (P221 million); Board of Claims (P3.5 million); and contributions to the BIR in fringe benefits tax amounting to P13 million.

“PAGCOR, a sure bet for progress in gaming, entertainment and nation-building.”

Naguiat Jr,

Thanks to superior management, better marketing and an improved gaming mix in its casinos, PAGCOR has broken records for revenues continuously since May 2011 and as a result, has been able to earmark an additional P1 billion for a special project: ‘Matuwid na Daan sa Silid-Aralan’, or ‘Straight path in the classroom’. The money will be used to build 1,000 classrooms and 100 learning centres for kindergarten students and out-of-school youths nationwide.

Indeed, corporate social responsibility lies at PAGCOR’s very core. Ongoing projects include medical and dental missions for the archipelago’s underprivileged regions and indigenous communities, a feeding programme to provide undernourished children with balanced meals, and disaster relief outreach operations, among others.

Once Entertainment City is up and running, PAGCOR expects revenues to surge exponentially. Yet gaming won’t be the only winner; Entertainment City will also offer state-of-the-art MICE (meetings, incentives, conventions and exhibitions) facilities and plenty of family-oriented activities and venues, too. The result will only add to the attractiveness of the Philippines as a tourist destination and Mr Naguiat has made certain that the development will be able to accommodate the surge of tourism.

Under PAGCOR’s previous management, four investors were licensed by PAGCOR to develop Entertainment City: Bloomberry Hotels and Resorts Inc, Tiger Resort Leisure and Entertainment Inc, SM Consortium and Travellers International Hotel Group Inc. Since the terms under which they were granted licenses were rather vague, Mr Naguiat imposed stricter guidelines in terms of spatial distribution and investment.

Each resort must cover at least 250,000 square metres (excluding the parking lot) and include at least 800 rooms. Moreover, the resorts may not dedicate more than 7.5 per cent of floor area for gaming. “This will ensure that tourists will have access to not only casinos, but also to a variety of resort amenities and attractions,” says the CEO.

“We are changing the casinos into something more than just a gaming place; they will be a host, entertaining place.”
The renegotiated contracts also called for an investment of at least $650 million (£406 million) before the developers can open their casinos. After three to four years, their investment should hit the $1 billion mark. 

All in all, the Entertainment City can accommodate 1 million tourists. The operation of the four integrated resorts will also generate direct employment of at least 40,000.

However, despite the grand plans to turn the Philippines into Asia’s new playground, Mr Naguiat doesn’t wish to see the Philippine tourism sector dominated by the gaming industry. Instead, he envisions casinos as an added value for the country.

“The master plan of Entertainment City is just a small part of the tourism package for the country,” he says. “We could bring the Chinese, the Koreans and the Japanese here. This is just a stopover. We want them to go outside Manila. We want them to go to Palawan. We want them to go to Boracay, to Bohol, to Cebu, to Ilocos Norte. This is just a stopover, and a place to start, but this is where the money is.”