The Philippine Amusement and Gaming Corp. expects gross gaming revenues to decline by as much as 19% this year due to Middle East tensions and the de-linking of e-wallets from online gambling platforms, with electronic gaming segment particularly affected.
The Philippine Amusement and Gaming Corp. ( PAGCOR ) expects gross gaming revenues (GGR) to drop by as much as 19% this year, primarily due to the ongoing Middle East crisis and the Bangko Sentral ng Pilipinas' order to remove links to online gambling platforms from e-wallet applications.
PAGCOR Chairman and CEO Alejandro H. Tengco said during the SiGMA Asia Summit that GGR could fall to between P320 billion and P350 billion, compared to the previous year. This forecast marks a significant reversal from earlier growth expectations, as the industry grapples with multiple headwinds. Tengco noted that the de-linking of e-wallets from online gambling sites has severely affected the electronic gaming segment, which saw its first-quarter GGR plunge 22.43% to P39.9 billion.
The BSP's directive, issued last year, forced banks and e-wallet operators to sever ties with online gambling platforms, directly curbing digital betting activity. Tengco said that before the Middle East crisis, online gaming had overtaken land-based casinos as the main revenue driver, but the conflict has eroded demand among lower-income players. He observed that players in the lower C and upper D socioeconomic classes are prioritizing basic necessities like food over online betting amid rising inflation.
The broader economic environment continues to pressure the gaming industry. Inflation accelerated to 7.2% in April, exceeding the BSP's 2%-4% target and squeezing household disposable income. Higher fuel and transport costs have reduced spending on nonessential activities, including gaming. Ateneo Center for Economic Research and Development Senior Research Fellow Ser Percival K. Pena-Reyes said that subdued consumer spending and weaker confidence are likely to persist over the next few quarters.
He added that the electronic gaming segment's contraction in the first quarter indicates that even digitally driven demand is becoming sensitive to macroeconomic stress. Pena-Reyes also noted that slower economic growth and weaker consumer confidence affect mass-market gaming volumes, especially in online and electronic segments. The slump in electronic gaming weighed on overall industry performance, with first-quarter GGR declining 15.87% to P87.6 billion from P104.12 billion a year ago.
Colliers Research Director Joey Roi H. Bondoc said in a phone interview that they expect muted revenues at least for the remainder of the year due to the ongoing Middle East crisis, elevated inflation, and higher fuel prices. He added that higher fuel costs may discourage visits to land-based casinos. Despite the challenges, there are some bright spots.
Tourism is gaining momentum, with visitor arrivals up nearly 9% in the first four months to 2.295 million from 2.106 million a year ago. Chinese arrivals, a key market for integrated resorts, surged 61.73% to over 150,000, bolstered by a 14-day no-visa policy for Chinese tourists. Tengco expressed optimism that Chinese visitors could help offset the decline from other source markets.
However, arrivals from South Korea, traditionally the largest market, dropped 6.18% to 440,827 in the first four months. Bondoc noted that the tourism upswing could bring customers back to integrated resorts and land-based casinos, which could support the industry. Pena-Reyes, however, does not expect a prolonged downturn as land-based casinos remain resilient, and the Middle East conflict is likely to be resolved. He said that once the geopolitical situation stabilizes and inflation eases, gaming demand could recover.
Overall, the industry faces a challenging near-term outlook, but factors such as growing tourism and potential resolution of the Middle East crisis provide some hope for a rebound later in the year or early next year
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