A warning light has turned on for the Philippine casino and gaming industry. PAGCOR (Philippine Amusement and Gaming Corporation), the state-run casino operator and regulator, saw its revenue for the first nine months of this year drop by more than 23% compared to the same period last year, with net profit plummeting by nearly 85%.
In particular, the e-gaming sector, which had previously shown strong growth, saw its revenue decline by over 37%, serving as the primary driver for the overall poor performance.
According to official performance data released by PAGCOR on the 29th, total revenue for the first nine months of this year was 64.41 billion pesos (approximately $1.01 billion), a 23.41% decrease from the 84.09 billion pesos recorded during the same period last year.
Net profit saw an 84.85% sharp decline, falling from 14.32 billion pesos last year to 2.17 billion pesos this year.
The biggest cause of the revenue decline is the sluggishness of the e-gaming sector.
Revenue from the e-gaming sector, which includes electronic bingo and online e-games, fell by 37.23% from 44.03 billion pesos last year to 27.63 billion pesos this year.
While the Philippine e-gaming industry had been highlighted as a key growth engine for the casino sector, it has recently been affected by stricter online gaming regulations and a contraction in consumer spending.
In particular, the shift in the online gaming and payment environment following the Philippine Central Bank's move last year to block direct connections between e-wallets and online gambling platforms is analyzed as a background factor for the poor performance.
The land-based casino sector also failed to avoid the slump.
PAGCOR's revenue from privately licensed casinos fell 3.22%, from 23.87 billion pesos last year to 23.1 billion pesos this year.
Revenue from Casino Filipino, which is directly operated by PAGCOR, also decreased by 8%, from 7.91 billion pesos to 7.28 billion pesos.
Poker revenue also saw a decline of 4.60%, totaling 105.86 million pesos.
Consequently, PAGCOR's total gaming revenue fell by 23.44%, from 75.93 billion pesos last year to 58.13 billion pesos this year.
Related service revenue also recorded a 38.59% decrease to 3.04 billion pesos, while other income remained at a similar level to the previous year at 3.23 billion pesos.
In addition to the sluggish gaming business, the increase in mandatory government contributions also impacted the sharp decline in net profit.
This is because the burden increased significantly following a Philippine Supreme Court decision requiring PAGCOR to contribute 5% of its gross revenue to the Philippine Sports Commission (PSC).
PAGCOR paid 3.01 billion pesos to the Sports Commission from January to September this year.
Despite the deterioration in profitability, financial contributions to the government and public projects continued.
The total amount paid or supported by PAGCOR to the national treasury and various public projects during the same period reached 45.28 billion pesos.
Of this, 27.61 billion pesos went to the national treasury (representing the 50% government share), 2.9 billion pesos to franchise taxes, and 11.19 billion pesos to social contributions and public project support.
Alejandro Tengco, Chairman and CEO of PAGCOR, stated, "We are aware of the impact of declining gaming revenue on our financial performance," but added, "We will continue to promote responsible and sustainable operations and ensure that the gaming industry complies with regulatory standards."
Previously, Chairman Tengco had projected that annual revenue for this year would reach only about 86.95 billion pesos, an 18% decrease from last year.
The Philippine gaming industry is facing a new business environment as it is affected by recent stricter online gaming regulations, changes in the consumption environment, and international instability.
In particular, the rapid contraction of the e-gaming sector shows that changes are occurring in the growth structure of the Philippine casino industry.
However, this performance data tracks PAGCOR's own revenue and net profit, and does not necessarily mean that the Gross Gaming Revenue (GGR) of all casino operators in the Philippines has decreased by the same ratio.
Attention is focused on whether the Philippine casino industry can overcome the e-gaming slump and recover its performance during the year-end tourist peak season.
