Categories: CasinoIndustry

Philippines Casino Outlook Good Following Universal Gaming Announcement

Kazuo Okada, Chairman of the Universal Gaming Corporation, sent tremors through the Asian gaming markets following a recent announcement that he is preparing to open a $2.4 billion casino complex in Manila, Philippines. Should the project come to fruition, it will rival Singapore’s impressive gaming industry.

In addition to recent heavy-handed responses from President Duterte on drug use and crime in the country, his dedication to improving relations with China is expected to increase mainland tourists to the island nation according to the Japanese businessman. With Japan’s gaming market set to open soon as well, Universal’s chairman cautioned of diving headfirst into new territory, erring on the side of caution to establish a stronger foothold in already tested Asian markets.

The Okada Manila casino resort was originally predicted to open in November of last year, but developers were forced to push back the deadline of the 280,000 square foot complex. It will be the largest resort in the capital and third to open in the almost 300-acre Entertainment City bayside leisure and casino center.

According to Okada, the destination is expected to turn a profit within its first year and deliver on investments within five years of its opening, potentially meeting obligations by the third year of operation.

Investing In The Middle-Class

As Asia’s middle-class continues to experience a boom in growth, gaming centers are turning their attention toward the demographic and away from catering to the whims of high-stakes gamblers.  The shift comes after a series of corruption crackdowns in 2016 and a trend of money flowing out of casino investment in destinations like Macau. Japanese Parliament’s passage of gaming legislation at the end of 2016 only heightens the sense of competition in the region, which will be a blessing for tourists and host nations as billions of dollars pour in from domestic and foreign investors.

The Gaming group is estimating to receive 30% of its total guest traffic from the foreign sector, namely Japan, Korea, Taiwan and China, but the corporation would like to get those numbers as high as 50% according to Chairman Okada.

Forecast

Shares have already risen for Universal Gaming as a result of the projected casino resort to the tune of 6.5%, reaching 3,180 yen, on Thursday.

While outlook is very favorable for Asia’s gaming markets, the region is still perceived to be in turmoil with recent political developments in China and the surrounding regions’ gaming industry known to be struggling its way out of a three-year decline. The mainland crackdown on gaming and corruption is sure to have players looking at other markets for gambling and gaming activity, which only emboldens developers looking to strengthen emerging markets.

Revenue for the Philippine gaming industry has been forecasted to reach at least $3 billion and possibly climb as high as $3.6 billion by 2018, according to Maybank ATR Kim Eng analyst Rommel Rodrigo. While impressive, the forecast still pales in comparison to the reigning gaming center, Macau. Despite a three-year slump the iconic casino playground took in just under $29 billion in 2015.

Okada went on to state about the industry in his home country, “I am very much interested in investing in Japan also for a casino — but I feel that the rules would take a year to be fully-established, so we will consider it for one year”. Japan’s looming market looks good as well, but with no implementation rules in place for the so-called “integrated resorts”, it’s safe to assume the market won’t be open in time for the host country’s 2020 Olympic events.

President Duterte’s Take

Philippine president Rodrigo Duterte, who was sworn in June 30th of last year, has been an outspoken critic on the topics of drug use and crime in his country and has recently set his sights on online gambling. Shutting down online gaming and loosely regulated markets associated with internet gambling operations within the Philippines will be among his chief goals in the coming year. It remains is unclear where he stands on the development of the land-based casino industry in his country, but investors continue to move forward with plans for expansion in the sector.

His shift in foreign policy to a more Chinese-focused relationship will no doubt garner a substantial increase in investments as well as tourism from the world’s second largest economy.

Kody Miller

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