Philippines Takes a Hit Hard Enough to Delay Recovery Indefinitely
Published August 7, 2020 by Lee R
The H1 net losses in the Philippines have transformed a once promising market into a pink elephant.
While a hit from Covid was expected, 2020's H1 impact on Philippines gaming authority Philippine Amusement and Gaming Corporation (Pagcor) was severe enough to delay the reopening of Integrated Resorts in Manila.
H1 Income
For the six months to June 30th, PAGCOR has reported gaming income of PHP18.44bn (£286.6m/€318.2m/$375.6m); for a massive year-on-year decline of 49.6%, off H1 2019’s total of PHP36.6bn.
Q1 Generates the Majority
The bulk of income was generated in Q1 pre-COVID in Q1: PHP17.22bn.
The Shutdowns
Philippines casinos were shut down 15 March, with iGaming licensees Philippines Offshore Gaming Operators (POGOs) shut down three days later.
Paltry Re-Opening
A June partial re-opening allowed four casinos to resume at 50% capacity, but casinos in the capital of Manila where early IRs are set to be established are entering their fifth month of total closure, amid weekly pushbacks of scheduled (and ardently hoped for) re-openings, with mid-August currently projected as the earliest possible re-opening.
Lack of Recovery
As far as iGaming is concerned, all POGOs with tax affairs up to date were granted permission to resume operations from May, with few taking the offer.
Government Revenues Fall Commensurately
As for government revenues, PHP 9.68bn in taxes and fees of the original 18.44bn taken in represented a year-on-year drop of 49.6%.
Remittance to government included PHP922.2m through the 5% franchise tax on licensees; PHP8.73bn to the government; and PHP30.0m to the Dangerous Drugs Board, with overall H1 net income at PHP9.73bn for a 48.5% drop.
Insufficient Expenditure Drop
An understandable expenditure drop was not equal to the H1 revenue shortfalls.
Pagcor’s H1 expenditures of PHP11.32bn were down compared to 2019's PHP15.80bn. The 2020 H1 totals were divided across staff related costs (PHP3.77bn); maintenance and operating expenses (PHP2.57bn: and while finance expenses of PHP11,429.
Social Benefits
As far as social benefits revenue, H1's PHP4.53bn, amounted after a 438m levy to a pre-tax loss of PHP158bn.
Net Gain: Big Loss
But most telling is the net profit after income taxes. A 2020 tax deduction of PHP11.7m left the H1 Philippines market with a gaping net loss of PHP1.60bn, after a PHP3.08bn profit for H1 2019. Ouch.
Outlook
Some IR openings in Manila could certainly expand incoming revenues--a remedy delayed by the very thing that caused the losses in the first place.
