Event
On March 16th Bloomberry Resorts' Solaire Manila, the first of four giant casino resorts that are to be opened the next four years, started trading in the capital.
Analysis
The resort lies at the heart of the Philippine government's ambitious plan to make Manila a major gaming hub in Asia, alongside Singapore and Macau.
The government wants to create a Las Vegas-style strip consisting of four casino resorts, Entertainment City, as a key element of its plans to develop tourism as a major industry. It is hoped that an increase in tourism will create jobs and boost incomes, especially in remote areas far from large cities. The government wants to raise tourist arrivals to 10m a year by 2016, from 4.3m in 2012.
The new casino's opening underscores the pragmatism of the president, Benigno Aquino, who allowed the project to go ahead after a brief review, despite the alleged murky circumstances surrounding the selection of the four investor groups that have been granted exclusive licences to build the casino resorts. The licences were awarded not through competitive tender but rather via negotiation, during the term of Mr Aquino's predecessor, Gloria Macapagal Arroyo. Speculation was rife at the time that some of the recipients of licences were her close allies.
Despite this, Mr Aquino has allowed the project to proceed. Currently, the government runs most of the country's casinos via the Philippine Amusement and Gaming Corporation (PAGCOR, the state-owned gambling company and regulator), while the few private casinos that exist are required to pay a share of their earnings to PAGCOR. Growth in gaming revenue has been slow in the past. The opening of the four mega-casinos is expected to cause gambling revenue to rise faster, from US$1.4bn last year to US$5bn-7bn a year by 2016.
Some industry analysts believe that in the next four years the Philippines will outpace Singapore, where gambling revenue amounted to US$6bn last year. But realising this goal will be tough. Continuing diplomatic spats between the Philippines and China over territorial disputes in the South China Sea may disrupt the expected steady flow of casino visitors from mainland China. Moreover, it is questionable whether the local market will grow fast enough to support four new casino resorts that will open at intervals of just one year.
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