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Pandemic threatens to burst Philippines’ online gaming bubble

With the twin global gaming centers of Macau and Las Vegas bleeding millions of dollars daily as casinos stand empty, the much smaller online gaming industry in the Philippines was supposed to benefit as gamblers logged into live-streamed bets to scratch the itch.

Instead, the $8 billion gaming industry is also fighting for survival, with stark consequences for the country’s property and retail sectors.

After being shuttered for months as they were considered “unessential” during the long lockdown to contain the virus, Manila’s online casinos can still only partially operate. The restrictions have been weighing on their operations, said Ben Lee, a Macau-based managing partner at Asian gaming consultancy IGamiX.

This could be the tipping point for the country’s gaming industry, which has faced waves of pressure including the threat of higher taxes, lawmakers’ calls for an outright gaming ban and divisions over ugly accusations its largely migrant workforce brought crime to the country, and also worsened the virus outbreak.

Already, two of the nation’s 60 licensed operators in what had been a robust industry have shuttered their doors since the pandemic began.

“There are more to come. We’re just convincing them to stay,” said Jose Tria, who works for the nation’s gambling regulator as assistant vice president for offshore gaming. Only 14 of the operators have resumed operations; the rest are in wait-and-see mode.

If the industry collapses, it could leave empty as much as 3.4 million square meters of combined office and residential space as the industry’s migrant workers head home, according to Leechiu Property Consultants Inc. That’s more than 600 football fields.

“They will just leave if nobody wants them,” said David Leechiu, chief executive officer at the property services company, which has one of the biggest shares of online gambling clients among brokers in the Philippines. Since the lockdown, operators have canceled expansion plans, he said.

After President Rodrigo Duterte began giving out casino licenses in 2016, more than 300,000 foreign workers — many of them Chinese nationals — have come to the metropolitan Manila area to work. The industry is propped up by demand from mostly Chinese punters placing bets from thousands of miles away, as gambling is banned in mainland China.

The migrants have a range of jobs including marketing, answering customer queries and processing payments for clients who place online bets on live-streamed games of baccarat, Dragon Tiger and Fantan.

Workers in the industry account for as much as 1% of the nation’s consumption spending, which has helped drive sales of retailers such as Hermes-seller SSI Group Inc., said Nicky Franco, vice president for research at Abacus Securities Corp. in Manila.

Yet some lawmakers are determined to shut down the industry amid accusations of money laundering. In May, a bill was filed in the legislature seeking to ban online gambling operations because they are “making a mockery of our laws, peace and order.” A group of licensed online gambling operators didn’t reply to requests for comment on the legislation.

If the industry in the Philippines doesn’t survive, possible beneficiaries include gaming companies in Vietnam, where coronavirus cases have been largely contained, and Myanmar, said IGamiX’s Lee. The two countries “are catching up very quickly” in terms of Internet links to China and power supply — two necessary criteria for online gaming to flourish.

Meanwhile, Sihanoukville in Cambodia serves as a cautionary tale of the boom-and-bust cycle in online gaming. Once a backpacker’s stop, the coastal town became an online-casino hub. But lockdowns and a ban on the industry that came into effect on Jan. 1 left it filled with unfinished condominiums and shuttered businesses.

In San Antonio Village, Makati City in the Philippine capital, passenger vans ferrying online casino workers that used to choke the roads have become a rarity. Most of the industry’s staff are cooped up in high-rise apartments and are closely watching to see what happens to the industry — and their jobs.

Property broker Leechiu is watching along with them. “To recover from the economic damage of Covid-19, we need as much economic activity as we can get,” he said.

Credit belongs to : www.mb.com.ph

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