The Philippine gaming market could soon surpass Singapore’s as improved ties with China promises more tourists, said Universal Entertainment Corp Chairman Kazuo Okada, as he raised the prospects for his upcoming US$2.4 billion (S$3.5 billion) casino.
The Japanese gaming tycoon said in Manila on Wednesday (Dec 22) that Philippine President Rodrigo Duterte’s move to thaw relations with China as well as his efforts to fight drugs and crime will increase the number of Chinese visitors. At the same time, he sounded a note of caution about jumping into the world’s newest casino market in Japan due to its ageing population.
“A lot of Chinese are coming into the Philippines, and that will improve more as improving bilateral relations between China and the Philippines increase tourism here,” said Mr Okada in an interview ahead of a public preview of his resort, starting Dec 21 and lasting till its official opening in the first quarter of 2017.
“The Philippine gaming market will become bigger than Singapore” within years, he said, without giving a specific timeframe.
The Philippines is competing with Macau and Singapore to become a gambling hub targeting Asia’s rising middle class, even as the prevalence of high-stakes Chinese gamblers has been weakened by government crackdowns on corruption and capital outflow.
Competition in the region is set to become more crowded, with Japan’s parliament passing a bill legalising casinos Dec 15, paving the way for billions of dollars of potential investments.
Details of Japan’s casinos, or so-called integrated resorts, must still be laid out in an implementation bill before any casinos can be built — meaning none are likely to open their doors in time for the 2020 Tokyo Olympics.
Universal Entertainment shares rose as much as 2.4 per cent in Tokyo trading on Thursday, the most since Dec 14 on an intraday basis. The benchmark Topix index fell 0.5 per cent. The company’s shares have surged 37 per cent this year.
“I am very much interested in investing in Japan also for a casino — but I feel that the rules would take a year to be fully-established, so we will consider it for one year,” said Mr Okada, whose company is a manufacturer of gaming machines known as pachinko. “It’s one way to promote tourism to Japan, and it’s also a way in Japan to provide a different form of gaming other than pachinko to the people.”
While Yokohama and Osaka have been touted as potential venues for Japan’s first casino resorts, Mr Okada said he sees the northern city of Sapporo as an attractive location due to its natural resources and good seafood, and its existing popularity with tourists. Still, the 74-year-old is keeping his expectations low.
“I don’t have very high expectations when it comes to the gaming industry in Japan because economic growth has been very stable,” he said. “Another reason is that Japan is an ageing society, so probably not a lot of people will be spending.”
Instead, he’s keeping his focus firmly on Okada Manila, which will be the Philippine capital’s largest casino resort with over 26,000 square metres of gaming space, and the third to open in Entertainment City, a 120-hectare site along the city’s bay that the government is developing into a casinos and leisure hub.
Philippine gross gaming revenue will probably reach US$3 billion this year and could reach US$3.6 billion in 2018, as new entrants like Mr Okada and improving relations with China bring in more overseas gamers, said Mr Rommel Rodrigo, an analyst at Maybank ATR Kim Eng. By comparison, gross gaming revenue from Singapore’s two casino resorts was US$4.8 billion in 2015, according to data compiled by Bloomberg.
Mr Okada expects his Manila casino, which missed its previous deadline to start operations in November, to be profitable in its first year of operations and to give a return on his investment in three to five years. The venture could seek a listing on the Philippine Stock Exchange in a year, he said.
“The gaming market here in Philippines has a lot of room for growth,” Mr Okada said. Mr Duterte’s controversial fight against drugs and crime is expected to improve the image of the country and draw foreign tourists, in turn boosting the local economy, he said. “We are very positive.”
Mr Duterte, who assumed office in June 30, has made a pivot to China in a bid to attract investments from the world’s second-largest economy and thaw relations that cooled in the previous six years due to a territorial dispute. In a state visit in October, Mr Duterte secured US$24 billion of investment and credit pledges, supporting his push to veer foreign policy away from the US, the Philippines’ top military ally.
“Our initial target is to have 30 per cent of the guests from the international segment, but we would eventually like to bring that up to 50 per cent,” said Mr Okada. “ We are looking at China, Taiwan, Korea and Japan — if you think about it from proximity, a lot of our guests will initially be coming from China and Taiwan.” BLOOMBERG