Proposed local online gambling ban to hurt NG revenues — analysts

THE PROPOSED BAN on Philippine inland gaming operators (PIGOs) may hurt National Government (NG) revenues as well as stocks of listed gaming-related companies, analysts said.

Unicapital Securities Equity Research Analyst Jeri R. Alfonso said the government is unlikely to shut down local online gambling operations which generate significant revenues.

“Shutting down online gambling entirely would deal a heavy blow to government funds. In our view, a full-on ban is unlikely,” she said in a Viber message.

Senate President Francis G. Escudero has called for a review of PIGOs, also known as local e-gambling businesses, saying that these are also as harmful as Philippine offshore gaming operators (POGOs).

Mr. Escudero suggested a ban on PIGOs if these are determined to negatively affect the lives of Filipinos. The Philippine government issued a total ban on POGOs last year.

“The gaming industry is a revenue provider for the government, with Philippine Amusement and Gaming Corp. (PAGCOR) ranking as the third-biggest revenue source after the Bureau of Internal Revenue and the Bureau of Customs,” Ms. Alfonso said.

Last year, PAGCOR remitted P4.59 billion in cash dividends to the Bureau of the Treasury. It represented 75% of its net income in 2023.

“Banning local online gaming will unduly deprive the government of billions of pesos in much-needed revenues. The PAGCOR already has a suitable regulatory framework for the industry to make sure we have a viable gaming sector that meets sizable market demand and contributes significantly to the government’s social programs,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.

Mr. Colet also said a ban on online gambling could drive Filipinos to use unregulated platforms.

“A ban might have the unintended effect of pushing many participants into a black market, which would be worse for everyone. The better approach is to regulate, not eliminate,” he said.

Gaming-related companies listed on the Philippine Stock Exchange (PSE) closed in the red on Monday.

Shares of Tanco-led digital entertainment company DigiPlus Interactive Corp. dropped by 3.31% or P1.15 to P33.6 apiece, while stocks of gaming technology provider DFNN, Inc. fell by 10.71% or 27 centavos to P2.25 per share.

“With the hanging uncertainty around this issue, we do expect gaming stocks to face volatility in the near term. Given the sector’s sensitivity to regulatory risks, investors must remain cautious on trading the stocks in the gaming sector,” Ms. Alfonso said.

“Rather than a full ban, we think the government will implement stricter policies instead, and not a complete ban. Besides this, thousands of Filipino workers will be displaced once this pushes through,” she added.

Mr. Colet said the ban could be a boon for land-based casinos as they could see more players.

“To a limited extent, (the ban is) potentially good for purely land-based casinos who might see a pickup in foot traffic,” he said

“That said, an outright ban creates regulatory uncertainty around the entire gaming sector because that means there is nothing that would stop the government from banning all forms of gambling altogether,” he added.

On Monday, shares of Bloomberry Resorts Corp., which operates integrated casino-resort Solaire, rose by 5.64% or 18 centavos to P3.37 each.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the proposed ban requires a “balancing act” by legislators.

“This is a delicate balancing act in view of traditional and online versions, which would require consistency in the application of legislation,” he said in a Viber message.

“The traditional version could be controlled better by authorities compared to the online version, given the potential adverse effects on society by both on different levels,” he added.

PAGCOR is eyeing to generate up to P480 billion in gross gaming revenue (GGR) this year, mainly driven by the electronic games segment. It recorded P410.5 billion in GGR for 2024, up by 24.8% from P328.88 billion in 2023.