Philippine casino sector at risk of oversupply

The fastest growing gaming market in Asia could experience an overinvestment as lucrative returns are being chased.

Philippines.- Casino-to-ports magnate Enrique Razon Jr. told Reuters that overinvestment in the Philippines’ casino sector could become a reality. Investors keep seeking expansion opportunities in the fastest growing gaming market in Asia.

Razon, who is also chairman of Bloomberry Resorts and International Container Terminal Services, said that business is at risk of being cannibalised when state-owned Pagcor casinos get privatised next year. “Cannibalisation – it is always possible, over investment. With liquidity nowadays and (low) interest rates, people are making investments that 10 years ago (they) wouldn’t even think about, those kinds of returns,” he said.

Gross gaming revenue (GGR) has expanded over the last few months, achieving an impressive 27 percent in August due to robust demand for proxy betting via video streaming, strong visitor arrivals and a solid domestic market, Morgan Stanley said.

Moreover, the brokerage said that Manila casinos will experience revenue growth in the next few years. The development of the economy, mass penetration and a increase in visitation numbers will help boost the growth. Okada Manila, the newest casino resort in Manila, is growing exponentially with its mass floor being fully operational. More junkets are set to start operations during the next and quarter of the year, as the brokerage said. The resort’s growth will also be driven by gaming market growth and strong economy, consumer confidence, strong visitor arrivals and local mass penetration, the news outlet reported.

“We are not the ones coming in creating the oversupply. It is tougher for the entrant…if Macau companies came to try to buy the licences, we would try to compete with them to buy the licences,” added Razon.