Regulate gambling

The Philippines is another step closer to becoming a world-class entertainment and gaming center with the opening of the $1-billion Solaire Resort and Casino on March 16, with no less than President Aquino present. It is the first of four integrated resort complexes that will rise in “The Entertainment City,” a $4-billion undertaking of the state-run Philippine Amusement and Gaming Corp. Over the next three years, three other integrated resorts will be built on the 100-hectare reclaimed property with a view of Manila Bay—those of taipan Henry Sy, Japanese arcade game-maker Kazuo Okada, and tycoon Andrew Tan, who has tied up with Malaysian gaming giant Genting to form Travellers International Hotel Group, the same partnership that runs Resorts World Manila, the Philippines’ first private-owned integrated gaming-hotel complex.

Both the government and private investors have very high expectations of the Pagcor project, which was announced in 2007 but was set back by opposition mainly from the Church. The Philippines will become one of the world’s biggest gambling centers, joining the ranks of Macau, Singapore and Las Vegas. Studies project that the Philippines’ gaming revenues of $1.2 billion in 2011 will rise to $6 billion, which is what Singapore’s two casinos generate, in about five years. This will be bigger than the $5 billion in revenues made by Las Vegas annually.

The Entertainment City project is also a big job-generator. Solaire’s hotel-casino has 4,500 employees and will add another 500 in the next months. It has 500 hotel rooms, 1,200 slot machines and 295 gaming tables, eight restaurants, a spa, a nightclub and a 1,800-seat Broadway-type theater. With three other investor groups launching similar projects in the coming years, the economic impact in terms of tourism, taxes and job creation will indeed be enormous.

The project having hurdled opposition from the Church and other groups, it is now incumbent on the government to lessen the social costs associated with casinos. Studies abroad show that gambling addicts live a chaotic existence, using an average 25 credit cards by the time they declare bankruptcy, and that gambling disrupts family life and causes illness among the affected family  members.

The Philippines can learn a lesson or two from Singapore in this regard. The conservative island-nation made a surprise move in 2006 when it passed the Casino Control Act, which allowed the establishment of an initial two casinos that eventually opened in 2010. In an effort to avoid many of the social problems that plagued other countries with big gaming industries, Singapore set up the Casino Regulatory Authority (CRA) to control licenses and oversee the entire process of casino establishment and operation. The CRA exercises considerable power. For instance, it can investigate a casino operator’s background, accounts and business links, and the inquiries may involve key directors and management. Singapore believes that getting the right people to manage the casino operations helps to keep criminals away.

Perhaps the biggest lesson the Philippines can pick up is how Singapore protects its citizens from falling prey to the ills of gambling. Its casino gambling law put in place social safeguards, like entry levies, credit and loss limits, protection of minors, and exclusion orders that ban certain persons from entering the premises.

To discourage patrons from becoming problem gamblers, casino operators are required to collect an entry tax of S$100 from Singapore citizens and permanent residents for every 24-hour stay in the casinos, or S$2,000 for an annual membership. The government says the stiff charges underscore the message that gambling is an expense and not a means of getting rich. As problem clients tend to gamble beyond their means, the casino operator must also inform their customers about the games, including a loss-limiting system that allows patrons to commit upfront to a loss that they can afford. The CRA also prohibits casino operators and junket promoters from extending credit to Singapore citizens and permanent residents. Automated teller machines are also banned within the casinos so patrons will not have easy access to ready cash, which will allow them to gamble continuously.

We do not doubt the tremendous economic benefits that the spanking-new casino and entertainment complex will bring. But it behooves the government to address the social ills that accompany unregulated gambling. That is the least it can do.