Press Release
June 20, 2012

Pagcom bill to yield P250B in new revenues per year
Existing contracts to be upheld

Sen. Ralph G. Recto yesterday assured that his pet measure seeking to re-invent the Philippine Amusement and Gaming Corp. (Pagcor) into a full regulatory agency would uphold existing licenses, franchises and contracts once Congress enacts it into law.

"All contracts and licensing agreements forged under the old Pagcor would be respected while the prospective Philippine Amusement and Gaming Commission or Pagcom waddles through transition," Recto, Senate ways and means chair, said.

Recto cited "Saving Clause" in Section 23 of his measure which guarantees that "unless otherwise provided in this Act, rights and privileges vested or acquired under the provisions of Presidential Decree 1869, as amended by Republic Act 9847, its nature and term of franchise, prior to the effectivity of this Act shall remain in full force and effect."

"There will be no changing of contracts in the middle of the game," the senator maintained.

He stressed the bill's proviso is in line with the constitutional edict on non-impairment of obligations and contracts.

Recto also said the prospective Pagcom would further strengthen the gaming agency and prepare it for the challenges brought forth by the Entertainment City project.

"We're not abolishing or emasculating Pagcor. We are, in fact, shepherding its return to its main core function which is, to provide regulation over the gaming industry," he said.

Recto said once the Entertainment City project becomes fully operational, Pagcor as a regulatory body could realize as much as $6 billion in revenue share or about P250 billion in fresh revenues every year.

He said this would dwarf Pagcor's current remittance to government of around P15 billion annually.

"No timetable related to Entertainment City project would be waylaid. As a matter of fact, the shift to being a commission will fully make Pagcor capable of overseeing the four big casino-hotel projects in Entertainment City and protecting the government share," Recto said.

He added: "We're just correcting an anomaly wherein the one given the task to issue casino licenses is also allowed to operate its own outlets. It's tantamount to licensing Count Dracula to run a chain of bloodbanks while giving exclusive accreditation to blood donors."

Recto said without the right focus, Pagcor could not fully exercise competent supervisory and regulatory functions and ensure correct revenue share collection since it is also tied up with casino operations.

"And once these four major casino projects come in full swing, Pagcor-owned casinos would surely be losing money fast due to the stiff competition posed by the new modern casinos in Entertainment City, which would truly rival the gaming centers in Macao and Singapore," Recto said.

Recto stressed the privatization of Pagcor-owned casinos would naturally become inevitable once they start to incur huge losses from stiff competition, shrinking their revenues and ultimately, reducing government share.

The senator said the government could easily earn another P100 billion to P150 billion from the privatization of Pagcor's casinos.

He said affected Pagcor personnel could reap handsome severance packages as guaranteed by his proposed measure and who are more than qualified to steward privately-run casinos and get higher compensation in return.

Recto said the transformed Pagcor would likewise continue and enhance present funding support to Malacanang's priority projects like infrastructure, education and health.

"It is also not wishful thinking that with a P250-billion new cash going into the national coffers, there would be less pressure to collect new taxes," Recto said.

At least two congressmen have expressed opposition to Recto's bill seeking to transform Pagcor into the Philippine Amusement and Gaming Commission (Pagcom), dropping its second role of operating its very own casinos.

The lawmakers have said the Recto bill would affect the timely completion of the Las Vegas style $5 billion Entertainment City project in Pasay City.

They also said the shift to regulatory function might turn off present and future casino investors.

But Recto stressed that it was clear that during the last hearing on his proposed measure, casino operators and stakeholders were in agreement that stripping Pagcor of its operation arm "is the best way forward and a best international practice."

Under Senate Bill 3187, Pagcor would cease its operation of casinos and would sell the casino franchises where proceeds from the sale would be remitted to the treasury.

The new Pagcor or Pagcom would be fully focused on registering, overseeing and issuing license, authority, privilege or permit to gaming operators.

Recto, in filing the bill, has argued that Pagcor's two distinct functions - regulation and casino operation - should not be placed in one agency and is incongruent to the national policy of "levelling the playing field" in the gaming industry.

The Entertainment City project will be anchored by four major casino-hotels operated by Travellers group, Tiger Resorts, SM Consortium and Bloomberry with the first anchor-locator debuting early next year.

Pagcor is expected to draw revenue share of 15 percent from high-roller gaming, 25 percent from non-high roller games and another 5 percent from food and beverages.

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