A proposal to part-privatise the Philippine Amusement and Gaming Corporation (Pagcor), that country’s gaming regulator-cum-operator, has been put to its senior management, Asian Gaming Intelligence understands.
The idea is to introduce more market discipline to Pagcor, while still providing a revenue stream for the government in the form of tax levied on gaming and from licensing fees. Under the proposal, up to 49 percent of Pagcor would be floated on the Manila stock exchange.
There is a precedent in Asia for doing something similar. Last November, Grand Korea Leisure, a state-owned casino operator in South Korea under the Seven Luck brand, floated 30 percent of its stock on the Seoul bourse.
Whether the new proposal will find favour with Pagcor’s new management team is another matter. A proposal from a vice-chairman of San Miguel Corporation, a Philippines conglomerate, to sell the whole of Pagcor to the private sector, appears to have gone away. But there’s certainly a feeling in the industry that some reform of Pagcor is necessary if the country’s gaming market is to move beyond boutique status with foreign investors.
Part-privatisation doesn’t address the inherent conflict of interest involved in having a regulator as an operator. Without reform on that, another change of national government could potentially take Pagcor back to the bad old days of alleged rickety accounting and unauthorised spending.
Pagcor’s dual role has always looked like a fudge, and a risky one at that. The gamekeeper counting gaming chickens at the front door also has incentives to act as a poacher sneaking birds out of the back door. That’s certainly the substance of allegations made against the previous Pagcor chairman Efraim Genuino, but he denies acting improperly, saying the claims against him are politically motivated.
The relatively new administration of Philippines’ president Benigno Aquino appears sincere in its efforts to reform the management of its land-based gaming industry. President Aquino showed the importance he gave to the Pagcor issue by appointing Cristino Naguiat, one of his long-standing friends and allies, as Pagcor chairman to replace ex-president Gloria Arroyo’s appointee, Dr Genuino.
Members of Pagcor’s new team management team recently visited Macau to learn more about regulatory and management practices in the world’s biggest casino market by gross revenue. Macau is itself still a work in progress in regulatory terms, however, with no slot machine regulations yet published even though it is eight years since market liberalisation.
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