PAGCOR: COA report on P2.1-B losses of Casino Filipino Manila Bay not accurate

The Philippine Amusement and Gaming Corp. (PAGCOR) on Tuesday said the Commission on Audit's (COA) report that its Casino Filipino (CF) Manila Bay branch lost P2.1 billion of its income in the last five years was inaccurate.

"CF Manila Bay only commenced operations in August 2017, less than two years to date," PAGCOR said in a statement.

"The P2.11 billion worth of losses cited by COA, which dated back to 2014, was not accurate as it included the revenue deficits of CF Pavilion, which ceased operations last March 2018," the government-owned and controlled company said.

CF Pavilion is a branch independent of CF Manila Bay, the gaming industry regulator and state-owned casinos operator said.

In its report, COA noted that CF Manila has been incurring losses in the last five years:

• P352 million in 2014
• P458 million in 2015
• P386 million in 2016
• P413 million in 2017
• P502 million in 2018

COA said that “the decrease in the net income is a combination of a declining total income and a steady rate of mandated contributions and Corporate Social Responsibility financial assistance.”

“The aggregate net losses of P2.113 billion incurred by CF-Manila Bay cast doubt on its ability to continue as a going concern and the said condition was not disclosed in the Notes to Financial Statement as required,” state auditors said.

With this, PAGCOR said it cannot cease its operations in CF Manila Bay because of an existing contract entered into by the previous PAGCOR management with Vanderwood Management Corp.

"In the meantime, we want to focus on how to strengthen the branch’s revenue generation capacity," it said.

PAGCOR said CF Manila Bay has been operating “on a profit level after deducting the franchise taxes and the operating expenses.”

"It is only after deducting the mandated contributions and corporate social responsibility financial assistance, 'which are independent on the income from gaming operations,' that negative figures are registered," it said.

PAGCOR added that it deems it necessary for COA to consider CF Manila Bay’s steady contributions to its mandated beneficiaries – as part of the branch’s profits and contributions to nation building – and not as losses.

"Since the start of its operations in 2017, CF Manila Bay has already contributed a total of P875.58 million for PAGCOR’s mandated beneficiaries including the 50% government share, the Philippine Sports Commission, the Bureau of Internal Revenue for the 5% franchise tax and the host cities’ share," it said.

"It may be noted that CF Manila Bay’s gross gaming revenue has in fact been steadily increasing since it opened 23 months ago. This has resulted to a rise in net operating income from a monthly average of P4.22 million in 2017 to P13.38 million in 2018," it added.

The state-owned casino operator said it is rationalizing CF Manila Bay operations and reducing operating expenditures.  

"It is currently focusing its marketing efforts on the branch’s potential niche, the high limit and VIP table games,"PAGCOR said.

"Also, to generate additional revenues, CF Manila Bay is now pursuing the sublease of its second floor area to junket operators.  Furthermore, an income sharing scheme is being seriously contemplated for a guaranteed positive bottom line," it said.

PAGCOR also maintained that its casinos which have a distinct gaming market continuously contribute to its overall income, thereby supplementing efforts in fulfilling its mandated commitment to build the nation. — MDM, GMA News