This refers to Doris Dumlao’s story titled “PCSO seeks lower rates from lotto contractors” (Page A10, Inquirer, 4/1/13).
The Philippine Charity Sweepstakes Office’s demand that Philippine Gaming Management Corp. (PGMC) drastically reduce its income, initially by half and later by a little less than half—“or else”—is arguably a criminal act in itself. The government cannot ignore contracts and unilaterally reduce contractually established payments.
In contrast, the PCSO trumpeted a mere P9 million in savings (from June to December last year) from Pacific Online’s rate reduction of 0.15 percent. Obviously it is not fair to require PGMC to effectively reduce its rate down to 5 percent from 10 percent of sales while requiring Pacific Online to reduce its rate down to only 9.85 percent from 10 percent.
According to the PCSO’s own press release, it expected PGMC to give up P35 million per month or a total of P245 million over the same seven-month period that Pacific Online saved for the PCSO P9 million.
After we pointed this out, the PCSO now claims that the savings from Pacific Online amounted to P1.3 billion, which is not possible. If that were true, Pacific Online would have virtually nothing left to pay its employees and suppliers because its total annual revenues amount to just a bit over P1 billion.
The reference to the Senate directing the PCSO to “seek” a lower rate as a justification for PGMC to cut its rate is pure obfuscation. The Senate did not instruct the PCSO to forcibly reduce PGMC’s income or resort to an uneven treatment between PGMC and Pacific Online.
Also, when Pacific Online’s contract expired last month, it could not possibly have voluntarily reduced its rates down to 7.7 percent. As its contract expired, Pacific had no more right to any revenue or contract. Thus, the “extension” granted it an increase in revenue from 0 percent up to 7.7 percent. By the way, 7.7 percent is still more than the 50-percent effective rate that the PCSO wanted to force down on PGMC.
Now we are told that because of the lack of prior bidding, no one has a copy of the Pacific Online contract for Luzon or the extension contract. How will the PCSO process payments to Pacific Online if there is no contract to support the payment vouchers or check preparation?
Finally, prior to the takeover of the PCSO’s current board, online lottery sales grew at an average rate of 16 percent annually. Thereafter, online lottery sales dropped by almost 2 percent after the current board’s first year of operations, and increased by 12 percent the next year.
PGMC is a major supporter and contributor to the PCSO’s growth. We helped grow the PCSO online lottery revenue from zero to over P30 billion and endured the very difficult first 10 years of online lottery. We helped build public trust that is a fundamental prerequisite to selling lottery. All the net-revenue-generating lotto games are provided by PGMC for free. A new lessor of lottery terminals is not authorized to use PGMC’s intellectual property. No one else provides revenue-generating lotto games to the PCSO. Unfortunately and unfairly, PGMC’s contributions are all too conveniently forgotten just because PGMC is not the favored contractor.
—JOSE BERNAS,
PGMC legal counsel