Philippine investment bank First Metro Investment Corp. (FMIC) said in a report that a further slump in the Philippine casino industry is expected as a result from the gaming slowdown in Macau by the end of the year. According to experts for the investment bank, the Philippine gambling market is highly related to the one in Macau. Yet, an improvement could be expected next year, the report said.
FMIC noted that even though gross gaming revenue generated by the country’s casinos has increased over the past eleven months, Philippines-listed gambling operators have seen share prices go down more than 50%. Experts attributed the declines to the current situation in Macau, where gross gaming revenue has been falling for seventeen consecutive months amidst an anti-corruption campaign, led by China President Xi Jinping.
The crackdown on corruption in Mainland China as well as a number of different regulations introduced by local authorities, including a full smoking ban at casinos, has resulted in VIP players withdrawing from Macau. And FMIC analysts noted that this has led to wealthy Chinese players avoiding Philippine casinos as well and opting for other popular Asia-Pacific gaming destinations, such as Singapore.
According to people with knowledge of the matter, the ongoing territorial dispute between the Philippines and China over the South China Sea has also discouraged some Chinese VIP players to visit Philippine casinos. Yet, experts for FMIC commented that the said dispute is not such a major factor for the current state of the country’s casino industry.
Despite the slowdown, casino operators believe that an improvement will be registered next year. Bloomberry Resorts Corp., the company behind Solaire Resort and Casino, the first of four casino resorts to open doors as part of Entertainment City, expressed hopes that earnings will recover in 2016.
City of Dreams Manila, a joint venture between local Premium Leisure and Melco Crown, also expects to report a profit and revenue growth from both gambling and non-gambling options offered at the property.
FMIC experts said in their report that both segments will be “in full blast” in 2016 and a revenue boost could be expected at the two integrated resorts.
With Solaire and City of Dreams Manila already operational, there are two more such resorts to open doors at the multi-billion Entertainment City complex. FMIC analysts noted that once those are launched, Resorts World Manila, the country’s first integrated resort, would see a further decrease in its market share as gambling customers are expected to transfer to the Entertainment City gaming properties.
The report also pointed to the fact that Philippine casino operators have altered their strategy by attracting more mass market players in a bid to increase revenue. According to experts, this change would result in lower (as compared to what could be generated from VIP gambling customers) but stable revenue in the long term.
