INTEGRATED RESORT operators could see increased demand as proposals to tighten regulation of the online gambling sector may bring players to physical casinos.
Stricter online gambling rules could lead to a behavioral shift among mass-market gamblers that may result in improved foot traffic and gaming volume for integrated resorts, DragonFi Securities, Inc. Equity Research Analyst Jarrod Leighton M. Tin said in a Viber message.
“As access to online platforms becomes more restricted, some of this demand may migrate toward physical casinos, potentially benefiting integrated resorts through increased foot traffic and gaming volume from the broader market,” Mr. Tin said.
Listed integrated resort operators include Bloomberry Resorts Corp., which operates Solaire Resorts in Entertainment City and Quezon City, as well as Belle Corp., which is the landlord of the City of Dreams Manila.
Physical casinos are expected to be insulated from the potential negative impact of proposals to ban virtual gambling as they cater to a different segment of the market, he said, with the latter targeting the mass market.
“The current regulatory crackdown is squarely focused on online gambling, with little direct impact expected on physical casinos. These (integrated resort) operators primarily target the VIP (very important person)segment,” Mr. Tin said.
“Integrated resort and casinos already faced steep weakness in gaming revenues after the Philippine offshore gaming operator (POGO) ban, which caused a slump in their VIP segment. I don’t see the government imposing stricter regulations on physical casinos next as it will greatly hurt tax revenues collected by the Philippine Amusement and Gaming Corp. (PAGCOR),” he added.
Jayniel Carl S. Manuel, Seedbox Securities, Inc. sales and trading department assistant manager, said in a Viber message that the impact of the proposed online gambling rules on integrated casinos will be limited and minimal, even as there could be some spillovers from the crackdown.
Investors looking to shift their capital might consider other companies outside of the gaming sector, Mr. Manuel added.
“If investors do decide to rotate capital, I believe it would favor industries with stronger tailwinds or more compelling narratives, such as banking or select conglomerates,” he said.
“As for a shift in demand, I remain skeptical. Without DigiPlus Interactive Corp., which has been the main driver in the online gambling space, the sector lacks the same appeal.”
On Friday, gaming stocks retreated. Bloomberry shares fell by 8.72% or 41 centavos to close at P4.29 each, while Belle stocks dropped by 3.75% or six centavos to P1.54 apiece.
Shares of DigiPlus also slumped by 23.87% or P9.25 to close at P29.50 each. It operates sports betting platform ArenaPlus, digital bingo platform BingoPlus, and online gaming platform GameZone.
Mr. Manuel said the share prices of integrated resort operators could rebound in the coming days. “It’s normal for stocks to experience small upticks during major downturns like this.”
Meanwhile, stricter regulations could drive more people to underground operators instead of land-based casinos, China Bank Capital Corp. Managing Director Juan Paolo E. Colet warned.
“Many of those consumers of online gaming who are at risk of falling away due to regulatory tightening are more likely to be captured by underground operators rather than large land-based casinos,” he said in a Viber message.
Mr. Colet said companies in the gaming sector should continue to expand to widen their reach to minimize the impact of policy changes on their operations.
“The government’s evolving gaming policies and regulations will ultimately favor diversified gaming companies who have the resources, technology, and offerings to responsibly cater to as large a market as possible,” he said.
“Thus, it still makes sense for integrated resorts to pursue their expansion into online gaming, and it would make sense for online gaming companies to tap into the land-based casino market.”
Some lawmakers have filed measures seeking stricter regulation of online gambling, including online betting, amid reports of growing addiction among Filipinos.
The Finance department is also proposing a tax on online gaming, as well as studying potential policies to curb unrestricted access to gambling, including digital platforms.
Meanwhile, the Bangko Sentral ng Pilipinas said it will release a circular mandating banks and e-wallets to protect users of their digital platforms from risks associated with online gambling, which could include limiting gaming access.
PAGCOR said it is working to prevent the proliferation of illegal online gaming activities. — Revin Mikhael D. Ochave
