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Events


IAGA SUMMIT Macau 2018


Grant Govertsen, Managing Director & Head of Asia Equity Research, Union Gaming


WHAT’S HAPPENING IN THE PHILIPPINES?


Te Philippines casino market has been among the most robust in Asia over the last few years, with consistent double-digit growth that has propelled the market to nearly US$3bn in casino gaming revenue in 2017. It currently stands as the third largest market in Asia, behind only Macau at $33.2bn and Singapore at $4.7bn. In all likelihood, the Philippines will overtake Singapore and become the second largest gaming revenue market in Asia within the next several years owing to a variety of meaningful and visible growth factors.


Te engine that is driving growth in both revenues and profits is the mass market customer. In 2017, mass market casino gaming revenues grew by 19 per cent at the commercial casinos (or by 15 per cent when including the PAGCOR casinos). Tis compares favorably to the growth in VIP gaming revenue, which grew by 12 per cent last year. Much of this can be attributed to the general strength of the Philippines economy, which continues to grow at a mid-to-high single digit rate. In addition, we would point out the improvements in Manila's infrastructure have provided a significant boost to the four IRs that are now operating in Manila's Entertainment City.


Not unlike the ease of access to gaming that has resulted in sub-markets like the Las Vegas locals market becoming multi-billion dollar revenue stories, the roadway infrastructure improvements in metro Manila have literally opened up the market to a significantly larger customer base while at the same time making it much easier for the existing customer base to visit. More recently, incremental casino and hotel capacity has come online within Manila Entertainment City and has largely served to grow the


market rather than cannibalise the existing operators. Tis is cause for excitement and argues that there is likely enough demand to justify further new supply.


From a regulatory perspective, the Philippines is set to undergo a sea change. Namely, the country's gaming regulator, PAGCOR, which also happens to be a casino operator, is undertaking a privatisation scheme beginning with the sale of 17 of its casinos. Tis makes sense from an operational perspective as these properties are under-performing their revenue


From a regulatory perspective, the Philippines is set to undergo a sea change. Namely, the country's gaming regulator, PAGCOR, which also happens to be a casino operator, is undertaking a privatization scheme beginning with the sale of 17 of its casinos. This makes sense from an operational perspective as these properties are under-performing their revenue potential relative to what they could be doing in private, professional, hands.


potential relative to what they could be doing in private, professional, hands. If the privatisation of these casinos does indeed happen it will create opportunities for smaller regional casino operators to participate in what should be an enviable growth story driven by more efficient operations in the hands of private companies, as well as continued strength in the national economy. In certain instances it could provide opportunities for the existing Entertainment City operators to acquire smaller assets in order to develop a hub-and-spoke network. Te privatisation of PAGCOR casinos also represents an opportunity for gaming equipment manufacturers, as the new owners might be apt to replace some of the nearly 10,000 EGMs currently operated by PAGCOR.


Grant Govertsen co-founded Union Gaming in 2009 after spending 12 years on Wall Street predominantly in equity research covering the gaming sector. Mr. Govertsen was responsible for establishing and developing the company’s presence in Asia in 2011, and today remains the only gaming analyst based in Macau. Prior to Union Gaming, Mr. Govertsen was based in Las Vegas with Deutsche Bank Securities covering global casino operators and gaming technology companies. Mr. Govertsen began his career in the financial services industry with Coopers & Lybrand, now PricewaterhouseCoopers (PWC).


IAGA


The International Association of Gaming Advisors (IAGA) will hold its 37th annual International Gaming Summit May 14 - 16 at the Four Seasons Macao in Macau, China.


NEWSWIRE / INTERACTIVE /MARKET DATA P67


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