Digiplus Interactive Corp. (PLUS), the nation’s largest online gambling operator, has been the stock market’s darling since mid-2023 and has consistently delivered both capital gains and earnings growth since transforming itself from your grandma’s favorite bingo operator to an online gambling giant with aspirations to go global.
It all came crashing down when the sector became the political punching bag of the year.
Why do you build me up, just to let me down and mess me around?
It all started in August 2023, when state regulator Philippine Amusement and Gaming Corp. (PAGCOR) decided to slash gross gaming revenue (GGR) remittance rates on online gambling (going by its former euphemistic alias of e-gaming).
The rates were initially reduced from 55 percent to 42.50 percent for e-Bingo, while rates for both e-Casino and Virtual Sportsbetting saw a reduction from 47.50 percent to 41.25 percent.
PAGCOR also set a schedule to eventually reduce rates to 25.00 percent for e-Bingo, and 30.00 percent for e-Casino and Virtual Sportsbetting by July 2025.
We are not clear if the last tranche of tariff reductions materialized, but we are certain that PAGCOR pushed through with reducing the rates to 30.00 percent for all three back in January 2025.
All this was done to encourage investments in e-gaming, which PAGCOR saw as the next frontier for gambling revenues after brick-and-mortar revenues collapsed during the pandemic, and to incentivize illegal platforms to register and operate within the framework.
The regulator even touted in its 2022 Annual Report that it has amended the regulatory framework for remote gaming platforms to allow streamlined know-your-client (KYC) and verification procedures.
They also incentivized physical casino operators to get in on the action by offering a lower tariff rate of 25 percent for online gambling platforms operated by integrated resort license holders like Bloomberry Resorts Corporation (BLOOM).
So why do we now vilify gaming platforms for their ubiquity and loose regulations, when it was the government itself that incentivized this sector to expand?
This victim-blaming culture has got to stop.
Also, why is GSIS under fire for investing in PLUS, when the company was a perfectly viable investment?
At the time of their investment, PLUS was registering triple-digit earnings growth, had a history of 262.2 percent compound annual growth in share price over the past three years, and had a regular dividend policy in place.
The fund was only acting as every investor should, which is to put its money into a company that has a proven track record of growth thanks to a favorable regulatory environment.
GSIS, just like the rest of the retail investors who are currently underwater in their PLUS positions, had no way of knowing that in just a few weeks, PLUS would be in the eye of a storm that will engulf the industry.
After all, didn’t the government itself encourage investments in online gambling? Why would they tear everything down now?
The stock market investors (GSIS included) and countless Filipinos suffering from gambling addiction are all just victims of the government’s policy flip-flops and its failure to put sufficient safeguards in place before incentivizing a potentially dangerous industry.
And this might be the hottest take of the century, but PLUS, BLOOM, and the other gaming firms are also just victims in all this.
They were enticed with favorable regulations, and they were executing their business strategies with the confidence that comes with working within stable regulatory frameworks. However, all this might change this week when the Senate starts its hearing on online gambling regulations.
It’s not so fun in the Philippines?
It does not matter what the outcome of the Senate hearings will be, the damage has been done and investor confidence has been shaken yet again.
This is not just about online gambling regulations, and this is not the first time we have seen this.
We wonder why foreign money is not flowing into the country, we ask the PSE and SEC why they are failing to stimulate stock market participation, we demand explanations from our pension funds and private fund managers when they lose money in the stock market.
We ask these questions over and over, but this unfolding drama around online gambling reminds us that we knew the answer all along. Investors shun the Philippines because it is dangerous to invest here, where a tiny shift in political winds can bring everything crashing down.
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