Inside Asian Gaming

INSIDE ASIAN GAMING | July 2011 22 to our employees, to the communities where we operate, and to the provincial economies of those communities. Currently, we employ over 1,300 people, providing good wages and benefits. We continuously support the Provinces of Rizal and La Union through various community activities. Our facilities also support over 1,700 local vendors, spending with them over PHP 5.2 billion in the past 6 years. We have spent over PHP 27 million on various social responsibility initiatives. “These include monthly medical missions where we distribute medical care to the local areas in Rizal and Poro Point to over 10,000 constituents, an adopted school program affecting over 3,500 students in 2010, typhoon relief programs and donations to various other charities. In order to protect our employees and our businesses, ERI and TPHR had no choice but to seek the protection of the courts.” It seems fear of PAGCOR reprisal against those who speak out or resist its pressure is not merely paranoia on the part of the industry. On 29th June, PAGCOR paid for an advert in the Philippines media effectively telling gamblers not to use Thunderbird Resorts’ casinos because of the ongoing court case. PAGCOR said in the event that it wins the litigation battle with Thunderbird, then “players, officers and employees of the said casinos may be held criminally, civilly and administratively liable”. The advert added:“….the public is hereby informed that PAGCOR can no longer guarantee the integrity and fairness of the games and other gaming activities conducted in the said casinos.” This is an extraordinary development even by Philippines standards. Imagine the Nevada Gaming Commission taking out a full page advert advising players not to use a Las Vegas casino—before a piece of litigation between the Commission and an operator had even been decided in a state court or US Federal court. Unsurprisingly, Thunderbird Resorts responded robustly to this attack on it and the apparent attempt to undermine the judicial process. On 1st July, the company issued a press statement saying: “On 29 June 2011, PAGCOR published a ‘paid advertisement’ in the local Philippine newspapers that The Group believes violates the spirit and intent of the Regional trial judge’s writ of prohibitory injunction by making statements that appear to disparage the integrity of our operations. In order to protect our employees and our businesses, ERI and TPHR have filed a motion to compel PAGCOR to comply with the Injunction Order to prevent this sort of propaganda in the future.” PAGCOR has also been making life difficult for Resorts World Manila. Six months ago, PAGCOR slapped an embargo on the importation of spare parts for slot machines at Resorts World Manila. Industry sources add, though, that RWM has also created some problems for itself. It failed initially, they say, to provide sufficient generator back up on site to protect against Manila’s frequent interruptions to the mains electricity supply. This resulted in several power‘brown outs’at RWM that saw some customers migrating back to PAGCOR casinos. Road access to the casino and parking facilities are also not as efficient as they could be, resulting in long queues of traffic to the property at the weekends, add insiders. This tends to put off local high rollers, some of whom have gone back to PAGCOR’s Metro Manila properties. That might account for why PAGCOR showed a marked improvement in trading in the first four months of this year, posting P11.13 billion in revenues—up by more than P1 billion from the P10.07 billion it earned in the same period last year. The industry must hope that the rule of law will win out over PAGCOR’s unilateral ‘renegotiation’ of deals with the private sector. But industry sources canvassed by IAG suggest the real remedy for this kind of unilateral PAGCOR action lies not with the courts, but ultimately with the politicians. According to the industry sources, the country’s leaders need to end PAGCOR’s joint regulator-operator role. They say it hopelessly compromises the regulatory function, creating a conflict of interest when it comes to overseeing the private casinos. Nor ultimately does it help the casino operations wing of PAGCOR to protect it from market competition. It merely reinforces inefficiency and gives succour to those who may seek to misuse the system for their own private enrichment. A more efficient, competitive, public casino sector standing alone from the regulator and working in tandem with the private sector will ultimately deliver more revenue for the public purse than the current arrangement, they argue. In the end, even Philippines politicians may not have the final say. Markets have a tendency over the medium- to long-term of rewarding those investment destinations that offer the greatest transparency, by creating a net inflow of investment, and penalising the most opaque or difficult markets by creating a net outflow of capital. It’s difficult to see howunder thecurrent dispensation thePhilippineswill beable toattract significant amounts of foreign investment capital for the remainder of the Manila Bay project—especially as with time larger investors are likely to have other regional opportunities available to them, such as Taiwan, South Korea and possibly Japan. Good news travels fast in the investment community. Bad news travels even faster. Going negative—PAGCOR ad warned players to steer clear of Thunderbird’s Philippines resorts Darkness falls—Resorts World Manila faces PAGCOR embargo on slot machine spare parts Feature