Megaworld to ride on growing demand for office space

MANILA, Philippines — Andrew Tan’s Megaworld Corp. will not limit its exposure to the fast-growing offshore gaming market as it continues to hitch a ride on the growing demand for office space as well as related industries.

In a briefing on Friday, Megaworld senior vice president Jericho Go said the company does not see the need to limit its Philippine Offshore Gaming Operations (POGO) despite possible backlash in case the regulatory environment changes in the long run.

“We don’t have to limit our exposure. We identify specific buildings and barriers to entry, but we feel these operations are sustainable,” Go said.

The offshore gaming industry has been pushing demand for office and residential space in Metro Manila since the Philippine Amusement and Gaming Corp. (Pagcor) introduced POGO in 2016.

But the market is still new and other property companies including Ayala Land Inc. are careful not to put all their eggs in one basket in case the regulatory environment surrounding this fast growing sector changes and slows down the business.

Go said there are challenges such as language and cultural differences, but these are manageable.

“We hired Chinese individuals who can speak the language. They follow and we are able to manage them,” Go said.

He also said the industry has spurred the growth of related industries such as Chinese retail outlets.

Last year, online gaming accounted for 223,902 square meters of office space from just 56,000 sqm in 2016, according to property consultant David Leechiu.

Megaworld has already reached one million sqm of office space in its inventory, of which POGO comprises at least 80,000 sqm.

Pagcor introduced POGO in 2016 as a means to “safeguard the welfare of the Filipinos and at the same time meet the agency’s revenue targets to help fund the government’s nation-building programs.”

Under the POGO landscape, Pagcor put in place probity checkers to check the background of operators and capability to sustain their business.

From each licensee, Pagcor charged application and processing fees of $50,000 for e-casino and $40,000 for sports betting, and another $200,000 and $150,000, respectively upon approval of the license. There is also a cash bond of $250,000.

Only foreigners based in another country are authorized to play, while foreign nationals in the Philippines and Filipinos residing abroad are not allowed to take part in the online gaming activity, according to the POGO rules.

Offshore gaming is conducted via the internet using a network and software to be offered exclusively to offshore authorized players who have registered and established an online gaming account with the licensee.

Pagcor has already issued 53 POGO licenses, but is open to issuing more licenses to deserving and worthy operators.

The gaming regulator expects to double its income from POGO to P7.8 billion as early as this year from P3.9 billion in 2017.

The increase in POGO revenues is expected to boost the country’s total gross gaming revenue to P186 billion this year from P172 billion in 2017.