Privately run gaming sector seen to yield P300 billion revenues

MANILA, Philippines — The government does not have to look far to raise additional revenues and can seize upon an untapped “goldmine” that can generate up to P300 billion yearly in fresh revenues, Senate Minority Leader Frankin Drilon said.

At the Senate committee on finance’s hearing on the proposed budget of the Department of Finance (DOF), Drilon said if only the government does not dilly-dally on the plan to privatize the gaming industry, the government can increase its tax collection yearly.

He urged Finance Secretary Carlos Dominguez to move faster on its plan to privatize the gaming industry, currently being regulated and operated by the Philippine Amusement and Gaming Corp. (PAGCOR) and the Philippine Charity Sweepstakes Office (PCSO).

Once the gaming industry is privatized, Dominguez told Drilon that it could yield around P300 billion in additional revenues “with no effort.”

The senator said the revenues the government can generate from privatizing the gaming industry would be a lot higher than the taxes it expects to raise from the new round of sin tax on alcohol and e-cigarettes amounting P37 billion on the first year.

The government is hoping for Congress to raise taxes through the proposed excise tax on alcohol and e-cigarettes and the Corporate Income Tax and Incentives Rationalization Act (CITIRA).

 “I think if you privatize the gaming industry, you will realize 10 times more than what you can get from the sin taxes on alcohol and e-cigarettes,” Drilon said.

He added: “It is a rich source of revenue which I strongly feel is not being tapped properly. Do not let go of the low-hanging fruit that can generate huge revenues.”

He said the law that he authored, the Government-Owned and Controlled Corporations Governance Act, allows the President to amend the charter of state-owned corporations, including PAGCOR and PCSO, without going to Congress.

 Drilon and Dominguez agreed that PAGCOR should not act as both regulator and operator, with the senator seeing a possible “conflict of interest,” while the finance chief described the situation as “anomalous.”

“All over the world, in all jurisdictions where there is a gaming industry, the government only limits its role to regulatory, the state is never involved in gambling itself, because of the basic conflict of interest since you are regulating yourself,” he said. 

“This is not the business of the state to run a gaming industry,” he added. 

For his part, Dominguez said: “As soon as I joined (the government), that was the area that we looked at immediately as a source of fund and as a way of correcting a situation that we call anomalous, where you are regulating yourself.”

“I am not saying that PAGCOR will lose money. They will just be a regulating and a collecting agency,” he said.

By privatizing the gaming industry, Drilon said the loopholes and corruption could be prevented, citing the corruption issues in the PCSO.

 “If you look at the operating expense of PAGCOR and the PCSO, there are a lot of items there where you wonder where it is going,” he said.  

“With this privatization, you will be able to check on many of the income leakages all over the place,” he said. “This is something that can put order and correct a lot of things that had gone wrong because of the current setup.”