Morgan Stanley: Philippine Government’s Casino Sale Asking Price Too High

This week, Morgan Stanley analysts released an advisory note stating that the Philippines government’s asking price of nearly $1.5 billion for its state-owned land-based casinos may be too high. Casino Filipino, which is owned and operated by the Philippines Amusement and Gaming Corporation, has been put up for sale. However, due to the expensive $1.47 billion asking price, the analysts believe that prospective buyers may be deterred.

The Philippines is home to both commercial and government-run casinos, with the latter comprising of 41 casinos and satellite gaming venues under the Casino Filipino brand. The Philippines government has been considering divesting its gaming operations for many years. This would allow the Philippines Amusement and Gaming Corporation to transition from a regulatory-operator role to a regulatory-only capacity, as well as provide an immediate influx of cash to the state government.

The Morgan Stanley analysts concluded that the $1.47 billion asking price is likely too high and may cause a lack of buying interest. In 2019, the PAGCOR casinos generated gross gaming revenue (GGR) of US$680 million and won US$290 million last year, due to the effects of the COVID-19 pandemic. However, there is optimism for the Filipino gaming industry this year, as Chinese VIP junket groups that had targeted Macau have been redirected to the Philippines, specifically Manila’s Entertainment City.

PAGCOR is forecasting GGR to reach US$4.5 billion by 2023, which is US$1.2 billion more than the US$3.3 billion the commercial and government-run casinos won in 2022. Chair Alejandro Tengco is hopeful that PAGCOR will be able to sell off its casino assets during his tenure which runs until 2028. Regulatory initiatives are being implemented in order to benefit the industries and strengthen nation-building efforts.