The Philippines' PAGCOR Liquidation Controversy Gives Rise to Examination of the Organisational ModelPublished July 18, 2020 by Lee R
The new economic circumstances in the Philippines may force an adaptation of the PAGCOR model and authority.
We often hear Philippine Amusement and Gaming Corporation PAGCOR referred to as the governing regulatory authority.
The PAGCOR Pressure
In the time of COVID, the hybrid nature of PAGCOR has emerged as a possible economic solution for recovery of lost tax revenues--through privatization of certain gaming assets and industries under PAGCOR control.
The PAGCOR charter originated with President Ferdinand Marcos' decree in response to the proliferation of illegal casino operations.
In 2007, the Philippine Congress' Republic Act No. 9487 extended the PAGCOR charter by 25 years to “regulate and operate games of chance, to issue licenses, and to enter into joint-venture, management and investment agreements with private entities.”
Emergent Privatisation Interests
This extension gave rise to the Entertainment City as well, where PAGCOR earns massive profits from the tourism industry.
Scope of Supervision
The regulator of all games of chance in the Philippines also oversees privately owned casinos and integrated resorts in Entertainment City and other resort-placed casinos; as well as 200 e-game cafes featuring 50-100 machines dispersed in malls and storefronts; sports betting; and electronic bingo outlets offering some 26,000 electronic bingo machines.
PAGCOR's Online Jurisdiction
PAGCOR also regulates offshore operations including the country's 60 online casinos, or POGOS. Philippine Offshore Gaming Operations which are only open to foreign nationals, available directly from their mobile device.
The POGO Factor
Driven by the rise in the popularity of iGaming, the rapid growth of POGOs is a key driver of pressure for PAGCOR to devote more resources to better regulate this industry.
PAGCOR certainly has the revenue to do so: in 2019, PAGCOR saw an 11.2 percent year-over-year growth in gaming revenue.
Hybrid Model, for Now
PAGCOR is both a for-profit organisation and a major contributor to the National Treasury: while PAGCOR’s Casino Filipino properties serve locals and provide direct taxation benefits to the government, the bulk of PAGCOR reinvestment goes into privately run commercial casinos in Entertainment City and other resorts.
At this point, the government has come to rely on PAGCOR's robust contributions to the National Treasury. The risk of disrupting the stead contributions of PAGCOR over time versus the immediate urgency of covering general COVID-related extreme shortfalls appears the decision facing Congress that will determine the new model that PAGCOR will be adapted into.