PhilWeb revives proposal for SMS-based lottery

Beleaguered gaming technology firm PhilWeb Corp. has revived its proposal for a mobile phone-based lottery betting system, which it submitted to the Philippine Amusement and Gaming Corp. (PAGCOR) five years ago.

In a letter to the PAGCOR board of governors, PhilWeb President Dennis Valdes noted the "PAGCOR Text Bonanza" is part of efforts by PhilWeb to exhaust all effort to keep company from going belly-up.

PhilWeb's former chairman Roberto Ongpin offered to donate 49 percent of his 53.76-percent stake in the company to PAGCOR to save his beleaguered business.

But the gaming regulator rejected the offer, prompting Ongpin to revise the terms of donation.

“We submitted this project to PAGCOR some five years ago, but for unknown reasons, it was never acted upon. This project proposal ... has nothing to do whatsoever with ‘on-line gaming'," Valdes said.

The proposed project is based on proprietary software developed by PhilWeb. A player uses short-messaging service (SMS) to send PhilWeb/PAGCOR a text message with a particular lottery number via Smart Communications Inc. network.

"He then receives a confirmatory message regarding his chosen number and the bettor saves it in his mobile phone as his ticket," Valdez noted.

When the original proposal was submitted, PLDT/Smart owned 27 percent of Philweb.

"Therefore Smart had agreed to a 70 percent PhilWeb and 30 percent Smart sharing of the text revenue (in contrast to the normal sharing of 70 percent for Smart and 30 percent for the service provider),” Valdez noted.

The revenue-sharing arrangement will be retained, though PLDT has divested its PhilWeb shareholdings.

"It had agreed to continue this sharing formula as part of the divestment negotiations," Valdes noted.

He said Globe Telecom Inc. could be included in the project if the telco would agree to the same revenue sharing arrangement.

He cited the problem with the current PCSO Lotto set up.

"The bettors are required to physically queue at each Lotto outlet in order to purchase their tickets, and during times when the lottery jackpot is large, these lines can extend up to a kilometer long and bettors have to queue for up to an hour under the sun, or the rain, in other to buy their tickets,” Valdes said.

With over 100 million cell phones and 1.5 billion text messages per day, he said it was not difficult to see the advantage of "PAGCOR Text Bonanza" over PCSO’s lotto system.

Valdes emphasized that the mobile phone-based system would not replace or discontinue PCSO's existing operations, but could supplement government income many times over.

"We estimate that the potential revenue from PAGCOR Text Bonanza could easily hit P50 billion to P100 billion a year," he said.

With the income from the text-based lottery, PhilWeb could pay its e-Games operators over time and return their investment of P1.8 billion.

PAGCOR refused to renew its license agreement with PhilWeb covering the e-Games outlets.

“There is an existing Department of Justice opinion confirming that nothing prevents PAGCOR from engaging in PAGCOR Text Bonanza which is nothing more than a sophisticated technology lottery, clearly allowed in the PAGCOR charter,” Valdes noted. — Ted Cordero/VDS, GMA News