Franklin Drilon, the former Philippines Senate Minority leader, has urged the government to consider privatizing PAGCOR and the Philippine Charity Sweepstakes Office (PCSO) as a way to finance the proposed Maharlika Investment Fund.

Privatization Is Meant to Support the Proposed Maharlika Investment Fund

The sovereign fund, if established, would see the Philippine government invest in financial markets and large-scale infrastructure projects worldwide. It was previously suggested that the fund would receive 10% of the gross gaming revenues from PAGCOR casinos.

However, Drilon stated that privatizing PAGCOR and PCSO would generate PHP 300 billion ($5.5 billion) in annual revenues for the fund and address the issue of the gaming regulator operating casinos. He added that the government should not be involved in lottery and casino operations and that privatizing the gaming industry would serve two purposes at the same time with one being the generation of funds and the other – eliminating corruption.

Critics of the privatization model argue that PAGCOR’s casinos generate significant revenues each year and have a substantial impact on the government. A previous attempt to privatize PAGCOR was abandoned due to the strong cash flows generated by its casino assets.

The Maharlika Investment Fund is currently planned to be funded by surpluses from government-owned and controlled corporations.

PAGCOR Under Pressure for the Past Few Months

PAGCOR has faced privatization proposals in the past. In 2016, former President Rodrigo Duterte attempted to sell 17 of the regulator’s 47 casinos, but the plan was eventually scrapped due to the profitability of PAGCOR’s casino operations.

With the election of President Bongbong “BBM” Marcos in 2022, the topic of privatizing PAGCOR’s casinos has once again arisen. The country’s Finance Secretary Benjamin Diokno has publicly advocated for the sale of PAGCOR’s casinos, and the newly appointed PAGCOR chief Alejandro Tengco, appointed by President Marcos, has indicated that he will consider the possibility of selling the casinos.

Senator Sherwin Gatchalian has also called for PAGCOR to be restructured due to its dual role as a gambling regulator and casino operator.

Recently Gatchalian also criticized PAGCOR in connection with revelations that PAGCOR awarded multi-million dollar contract to an unqualified tax auditor. Senator Sherwin Gatchalian expressed his concerns that PAGCOR is unable to enforce laws and regulations on Philippine Offshore Gaming Operators (POGOs). In particular, he has highlighted the cases of two companies, Brickhartz Technology Inc and MOA Cloudzone Corp, that have been implicated in kidnappings but are still operating in the country.

In answer, PAGCOR made a statement that the POGO sector is quite lucrative to the Philippine economy and, therefore, the regulator plans to foster its expansion.