By Justine Irish D. Tabile, Senior Reporter
THE GAMING INDUSTRY’S gross gaming revenues (GGR) could decline by as much as 19% this year, as geopolitical tensions in the Middle East and tighter restrictions on online gambling dampened demand, the Philippine Amusement and Gaming Corp. (PAGCOR) said.
“Personally, I believe that it will be a lower GGR compared to 2025. Probably we are looking at maybe P320-350 billion,” said PAGCOR Chairman and Chief Executive Officer Alejandro H. Tengco on the sidelines of the SiGMA Asia Summit on Tuesday.
Last year, the Philippine gaming industry posted a GGR of P396.14 billion.
Mr. Tengco attributed the expected decline in revenues to the de-linking of e-wallets from online gambling platforms. This move affected the electronic gaming segment as its GGR plunged by 22.43% to P39.9 billion in the first quarter.
Last year, the Bangko Sentral ng Pilipinas (BSP) ordered banks, e-wallet operators, and other supervised financial institutions to remove links to online gambling platforms from their applications.
“But I think it (the decline) is primarily because of the Middle East crisis. Prior to this crisis, the online gaming segment has already overtaken the land-based casinos, but we are not seeing the same after the Middle East crisis,” Mr. Tengco said.
“The class lower C segment and the upper D are the ones who are affected now by the crisis, and before placing their bets or playing online, they would make sure that they eat. They are able to buy the basic necessities,” he added.
Ateneo Center for Economic Research and Development Senior Research Fellow Ser Percival K. Peña-Reyes said he expects the gaming industry to face challenges in the next few quarters.
“Gaming revenues are likely to remain somewhat subdued in the near term, particularly while inflation stays elevated, and consumer spending remains cautious. Several factors suggest the environment could stay challenging over the next few quarters,” he told BusinessWorld.
“Higher fuel and transport costs are squeezing household disposable income, reducing spending on nonessential activities such as gaming,” he added.
Inflation accelerated to 7.2% in April, as elevated oil prices feed into food and utility costs. It marked the second consecutive month that it settled above the BSP’s 2%-4% target, while it also breached the 5.6%-6.4% forecast for the month.
Mr. Peña-Reyes said slower economic growth and weaker consumer confidence also affect mass-market gaming volumes, especially in online and electronic segments.
“The electronic gaming segment, which was previously the main growth driver, contracted considerably in the first quarter, indicating that even digitally driven demand is becoming sensitive to macroeconomic stress,” he added.
The slump in electronic gaming weighed on overall industry performance. In the first quarter, the Philippine gaming industry’s GGR declined by 15.87% to P87.6 billion from P104.12 billion a year ago.
“We expect muted revenues at least for the remainder of the year due to the ongoing Middle East crisis, elevated inflation, and higher fuel prices,” Colliers Research Director Joey Roi H. Bondoc said in a phone interview.
He said the Middle East conflict could dampen discretionary spending, while higher fuel costs may discourage visits to land-based casinos.
OFFSETTING FACTORS
Despite the weaker outlook, Mr. Tengco said rising tourist arrivals from some markets could provide support for integrated resorts and land-based casinos in the coming months.
“Tourism is on the upswing… I heard that there is now an uptick in the tourism sector. Definitely, that will help, that will bring in customers to the integrated resorts or land-based casinos,” he said.
Visitor arrivals grew by 8.97% to 2.295 million in the January-to-April period from 2.106 million a year ago, Department of Tourism (DoT) data showed.
Mr. Tengco said he is particularly optimistic about Chinese arrivals, which are an important source market for integrated resorts and land-based casinos.
“I heard it is increasing because of this 14-day no-visa policy,” he added, citing the policy which allows Chinese nationals traveling for tourism or business to stay in the country for two weeks without visa.
DoT data showed that arrivals from China, which used to be the country’s biggest market for arrivals before the pandemic, grew by 61.73% to 150,708 in the January-to-April period.
However, Mr. Bondoc flagged the decline in tourist arrivals from South Korea.
“In fact, we saw this even before the Middle East conflict. So, obviously, we need other sources of tourists,” he added, noting that South Korea is one of the key markets for integrated resorts and casinos.
Arrivals from South Korea declined by 6.18% in the first four months to 440,827.
Meanwhile, Mr. Peña-Reyes said he does not expect a prolonged downturn as land-based casinos remain resilient, and the Middle East conflict is resolved.
“Licensed integrated casinos remained relatively resilient and became the largest contributor to GGR in the first quarter,” he said, citing the segment’s P44.5-billion GGR in the first quarter, equivalent to 50.83% of the industry’s total.
Mr. Peña-Reyes said that if geopolitical tensions ease and oil prices normalize, “discretionary spending could gradually recover in the second half.”
“Overall, the near-term outlook is cautiously optimistic,” he said. “Revenues may remain muted or volatile over the next few quarters, but the longer-term structural growth story for Philippine gaming, particularly digital gaming, appears intact once macroeconomic conditions improve.”
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