PAGCOR: SO YOU KNOW

PAGCOR was established by PD 1869. In 2007 Congress  extended its life to 2033.

Today there are 13 casinos operating in 10 cities. There are also 28 satellite operations, 24 VIP clubs and 4 gambling arcades; some of which are suspected fronts for  jueteng.

The Government takes 52% of PAGCOR’s gross income by way of a 5% Franchise tax and an Income Share of 50% of the balance. The rest goes to a black hole for which there is no public accountability.

PAGCOR’s latest annual report is as of 2008. Presumably then Chairman Genuino expected to be canned this year– which he has- so he has not produced a report for 2009.

In 2008 the company had gross income of P30 billion. The money was distributed as follows:

Franchise Tax- 5% of gross or about P1.5 billion.

Government Income Share- This is 50% of the 95% left after the foregoing tax. This  was about P14.1 billion which was further distributed as follows:

Government Take- P11.1 billion.

Philippine Sports Commission- 5% of Government take or P556 million.

Board Of Claims- This fund is allocated to the Dept. of Justice, get this, “to compensate those who have been wrongfully detained by the Government”.  One can only imagine the scene : “Listen up, we will prosecute you for a crime you have not committed, you file charges for wrongful detention, then we split the money”.  The line of people claiming compensation is only shorter than that applying for jobs at the MWSS. Fortunately the fund is only P16 million.

Gasoline Station Training and Loan Fund- I kid you not, P120 million is allocated for whatever this is. What do they do? Train attendants at your friendly gas station on how to fill up your tank? Leaded or unleaded?

National Museum Act of 1998- P250 million. You could not tell from the state of our museums that this fund exists.

Host cities- The host cities get a fixed sum which in 2008 totalled P496 million. The report did not indicate whether the amount was paid in check or in casino chips.

Dangerous Drugs Act- P60 million goes to implementing this law. Much of it possibly goes to buying the drugs.

Early Childhood and Development Program- P456 million for immunization, nutrition and early education of children. We are lucky if half of that ends up as intended.

Sports Incentive and Dev. Act- P110 million, more money for the boys.

Barangay Micro Business Enterprises Development Fund- Impressive name, P100 million, even more money for the boys.I am in, where do I sign up?

Children’s TV Act- P30 million.

President’s Social Fund- P 1.1 billion. This is the personal kitty of the President.

There is some P14 billion left  after the above disbursements, publicly unaccounted. Imagine the possibilities.

So there, that is where gamblers’ hard earned (or stolen) money goes.

What happens to all these goodies when PAGCOR is privatized? The franchise tax and 50% Income Share of the Government will presumably remain as they are mandated by law. The balance goes to the new owners.

The incumbents in PAGCOR will fight tooth and nail against privatization. There is enough slush to go around so don’t be surprised if they succeed.

Already PAGCOR’s PR machinery is at work. Company officials claim the company can over the next 23 years make P690 billion compared to the P450 billion supposedly offered by San Miguel. This assumes an average of P30 billion a year in gross income, the current take.

Talk of smoke and mirrors.

First, Government takes  52.5% of the gross which would still be the case even in a privatization. So the real number is P14 billion a year, not P30 billion, or a total over 23 years of P322 billion, not P690 billion.

Second, even assuming PAGCOR could “net” P30 billion a year over the next 23 years, Government would still be better off privatizing and using the money to retire P450 billion of our debt. If unpaid, that debt including compounded interest of around 6.5% p.a. (our current borrowing rate) would over 23 years accumulate to over P1.8 trillion. By privatizing we would save the country P1.1 trillion (P1.8 trillion less P690 million)

I hope PAGCOR officials are doing a better job at running the casinos than they are at doing their math.

I would not bet on it.

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About Leo Alejandrino

The blog is principally a commentary on Philippine politics and economics.
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One Response to PAGCOR: SO YOU KNOW

  1. alice cruz says:

    the government should not sell PAGCOR as it is a means of generating funds for the government. why will you have a foreign group gain from this when if done right we can all benefit from this.
    if there are proper checks and balances the funds will surely go to
    better use. i know it is easy to say but since we have a leader that now wants to fix us then all should follow!

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