The motto of the Philippine Amusement and Gaming Corporation (PAGCOR, for short) is “Building lives that build the nation.” This phrase is certainly true, as PAGCOR is 100% owned and controlled by the government.
We will explore the history of the corporation, as well as their overall mission statement and activities within the gaming industry. I’ll also include a number of figures obtained from various financial reports to provide examples of how the Filipino casino business has flourished in the last decade.
All the figures in this article are expressed in Philippine pesos. In order to give you a better understanding of these amounts, keep in mind that a single U.S. dollar is equal to about 43.92 pesos. Therefore, 15 billion pesos would amount to just over $182 million American dollars.
History of Pagcor
Crime and the threat of Communism had been on the rise in the Philippines for years, and in 1972 then-President Ferdinand Marcos declared martial law.
Five years later, Presidential Decree No. 1067-A was enacted to combat the growing number of illegal casino operations across the nation. This brought the Philippine Amusement and Gaming Corporation into being, and later amendments were consolidated into one statute in July of 1983.
Upon its creation, the mandate of PAGCOR centered around three points. First, the new organization was tasked with regulating all games of chance in the nation, with special attention paid to casino gambling. Second, they were given the responsibility to raise funds for social programs and other national development efforts. Finally, it was intended to boost the country’s tourism industry, which had been adversely affected ever since Marcos placed the nation under martial law in the early part of the decade.
Thanks to the charter, the distribution of the corporation’s income was also laid out in an easy-to-understand fashion. While other donations can be made at the whims of the governing body, the following are mandatory contributions:
- The Bureau of Internal Revenue receives 5% of net winnings from PAGCOR in the form of a franchise tax.
- Of the remaining 95%, half goes to the national treasury of the Philippine government.
- All cities that contain licensed national casinos receive a specified amount for various community development projects.
- 1% of the net income goes towards the Board of Claims, a Department of Justice agency tasked with investigating claims of wrongful imprisonment and prosecution.
- The Philippine Sport Commission receives 5% of net winnings to help assist the growth of athletic programs throughout the nation.
Following the establishment of the Philippine Amusement and Gaming Corporation, the organization entered into a contract with the Philippine Casino Operators Corporation to oversee a floating casino located in Manila Bay. This business venture was short-lived, however, as a fire destroyed the casino in 1979. Afterwards, the corporation focused on land-based casinos and once again entered into a contract with the PCOC to build a gaming facility in Metro Manila.
While 1977 saw the birth of PAGCOR, the involvement of the government was incremental. For example, it wasn’t until 1986 that government officials became directly involved in the operation and management of casinos. Since that time, hundreds of billions in pesos have been generated as revenue.
The social ills of gambling became painfully evident in 2000, when a provincial governor and close friend of President Joseph Estrada accused him of receiving illegal profits from jueteng, and illegal numbers game popular throughout the country. Estrada was impeached on charges of corruption, bribery, culpable violation of the constitution, and betrayal of public trust.
Put on trial and facing possible incarceration, the former film star was able to gain enough support to keep confidential bank records from being used by the prosecution. This caused the trial to break down, although protests by millions of citizens still resulted in Estrada and his cabinet being peacefully ousted from power. It’s interesting to note that Estrada later got convicted of plundering around $80 million (American dollars), received a full pardon, ran for president, and then won the 2013 election to become mayor of Manila.
This controversy brought a great deal of attention to the corruption within the government and especially PAGCOR. Numerous individuals have been implicated in gambling-related scandals, and the organization responsible for the oversight of the industry has been called everything from “Santa Clause for a lot of government officials” to “a government institution where corruption is inherent and undeniable.”
The original charter called for PAGCOR to operate for 25 years. In June of 2007, the Philippine Congress voted to pass Republic Act 9847, which extended the corporation for another 25 years until July 11th, 2033. During this extension, the following amendments were also added to the organization’s charter:
- The sport of Jai Alai is not included under the operation of PAGCOR.
- If an area is chosen as a site for future PAGCOR operations, they must obtain permission from the government authority with territorial jurisdiction in that area.
- PAGCOR was given the power to enter into agreements and business ventures with the corporation, firm, person, or association of its choosing.
It should also be noted that charity sweepstakes and lotteries are not the domain of PAGCOR. Instead, they fall under the jurisdiction of the Philippine Charity Sweepstakes Office.
In recent years, the most important duty for PAGCOR has been implementing and overseeing the creation of the Bagong Nayong Pilipino-Entertainment City, which is commonly known as “Entertainment City.” Located on Manila Bay, this massive gaming complex (with an estimated cost of nearly $20 billion American dollars) is meant to rival the likes of Las Vegas and Macau. Establishments such as City of Dreams Manila and Solaire Resort & Casino have already opened, while Resorts World Bayshore and Manila Bay Resorts are expected to be in operation by 2016.
Assets & Net Income
The total assets of the corporation have risen steadily since the days of Ferdinand Marcos, although the net income has fluctuated wildly from one year to the next. For the purposes of this section, we’ll be examining financial data from 2007 to 2012.
The total assets of PAGCOR in 2007 were estimated to be 17,475,185,903 pesos, while the net income was 1,793,408,725. The total assets increased by six-billion the following year, and from 2009 to 2011 they increased at the rate of just over two-billion pesos each calendar year. In 2012, a four-billion jump brought the total assets to 34,397,429,569.
The net income has been less stable, although it has seen an overall increase in the years from 2007 to 2012. From 2007 to 2008, there was a dip of about two-hundred-million pesos, and 2009 saw a massive loss of about one-billion. PAGCOR staged a major comeback in 2010, however, increasing their overall net value to 2,781,947,606. That number climbed to over four-billion in 2011, while 2012 saw a decline back to 2,800,431,600 of net income.
As of this writing, PAGCOR is third among the revenue-generating branches of the government behind the Bureau of Customs and the Bureau of Internal Revenue.
Pagcor Stock Holdings
According to data released in 2012, PAGCOR had 41,378,500 pesos invested in various stocks throughout the nation. The 10 largest investments include the following:
- Wack-Wack Golf and Country Club
- Rockwell Land Corporation
- Cebu Golf and Country Club
- Alabang Country Club
- Tagaytay Highlands International Golf Club
- The Orchard Golf and Country Club
- Alta Vista Golf and Country Club
- Baguio Country Club
- Tagaytay Midlands Golf Club
- Riviera Golf and Country Club
Social & Business Accomplishments
In 2012, PAGCOR also released a detailed list of various accomplishments throughout the calendar year. These included the following:
- Opened two arcades and 4 mini casinos. The arcades were the CF Madison and CF Lancaster, both located in Mandaluyong. The four mini casinos were CF Amigo (Iloilo City), CF Midas (Pasay City), CF Misibis (Camarines Sur) and CF Las Isla Mactan (Mactan, Cebu).
- Upgraded gaming equipment, including 38 iShoe electronic card dispensers and 38 electronic multi-deck card shufflers for use in Metro Manila and large provincial branches. 1,406 lease-to-own slot machines were also installed in various casinos across the nation.
- In order to complete their social responsibility programs, PAGCOR funded the completion of 147 new classrooms. 27,738 school decks were also turned over to various institutions of learning. PAGCOR helped renovate hospital wards and construct health facilities for various medical locations at a cost of 16.334 million pesos.
- Provided 25 less fortunate wards and beneficiaries with gift packs, food, donations, and entertainment. This was part of an initiative known as “25 Days of Christmas, 25 Years of PAGCOR.”
Sources of Income
According to a financial audit released in 2012, the following list constituted the yearly income of the Philippine Amusement and Gaming Corporation. As always, these figures are expressed in Philippine pesos.
- Bingo Franchises – 3,543,932,979
- Rent Income – 326,389,829
- Internet/Mobile Gaming Operations – 1,762,307,416
- Licensed Casinos – 6,215,450,275
- Poker Operations – 230,745,758
- Income from SM Demo Units – 496,257,778
2014 Pagcor Expenses and Revenue
On June 30th, 2014, PAGCOR released a financial report detailing the current profits and expenses for 2014 (expressed in Philippine Pesos). Some of the more interesting details of this report included the following:
- The income for gaming operations amounted to 14,896,843,170.77, which was below the target figure of 15,860,081,570.07.
- The income for related services through June 30th was 4,474,829,394.20.
- The total gross income for the first six months of the year was 19,964,954,428.75. This was about 2 million less than the target projections.
- The total operating expenses for this period were 8,142,029,938.05. This was just over 1.5 million below the target number.
- Since PAGCOR is owned by the government, a large amount of their profits go to fund government projects and services. For the first half of 2014, some of these included: 250,000,000 for early childhood care and development; 50,000,000 for the National Commission for Culture and the Arts; 1,346,503,349 to the Office of the President’s Social Fund; 30,000,000 to the Dangerous Drugs Board; and 7,046,000,506.17 for the 50% claimed annually by the government.
- The final figures showed a net income of 1,319,419,388.54 for PAGCOR in the first six months of 2014, which was slightly below the target number of 1,535,710,021.14.
All Company and Commission Profiles: