First Cagayan Leisure and Resort Corporation plans to spend millions to boost its technical infrastructure in the hope of retaining its online gambling licensees, but it may be making beds in a burning house.
This week, online gambling operators licensed in the Cagayan Economic Zone Authority (CEZA) began receiving letters from First Cagayan President Francis Hernando outlining the corporation’s new “strategic direction,” which is intended to help operators craft their “short and long-term business plans.”
Hernando says First Cagayan’s new direction places a “particular focus on data and telecommunications facilities.” Specifically, First Cagayan is pledging to spend approximately $4m to upgrade its existing data center in Cagayan Cyberpark inside the Cagayan Freeport, while a further $3m will go toward upgrading data infrastructure outside the Freeport.
Hernando claims the upgrades will make First Cagayan’s hosting and connectivity capabilities on par with “established international gaming jurisdictions.” It’s also having discussions with unnamed parties regarding a project “to supply stable electricity to the Freeport.”
The 10-hectare Cyberpark is being pitched as a “fully functional, self-contained community with purpose-built buildings to house studios and call centers,” along with residential accommodations, convenience stores and recreational facilities.
Hernando insists that First Cagayan is ready “to make substantial investments and exert efforts to bring these strategic plans to fruition” and hopes its licensees “will take a similar long-term view as well.” First Cagayan says it will be consulting with its licensees over the next few weeks, particularly over the Cyberpark plans.
Hernando’s pitch closes with the hope that First Cagayan licensees will “continue to maintain your CEZA license(s) while we re-balance our regulatory and business model towards the Freeport in 2017.”
A HAIL MARY, FULL OF HOPE
Hernando’s pitch is a direct result of First Cagayan’s current plight, which stems from the anti-online gambling campaign that Philippine President Rodrigo Duterte launched within minutes of taking office last summer. Until that point, CEZA was the primary licensor for the Asian-facing Philippine online gambling industry.
But within weeks of Duterte’s announcement, the Philippine Amusement and Gaming Corporation (PAGCOR) confirmed that CEZA was in its sights. PAGCOR then announced that it was getting into the online licensing game and that all Philippine-based online operators would have to get a new Philippine Offshore Gaming Operator (POGO) license.
CEZA-licensed operators had always operated in something of a legal grey zone, but that grey is growing darker by the day. Duterte’s intentions are hard to forecast, and CEZA operators know they could come under much sharper scrutiny at any moment.
As such, First Cagayan is looking to do all it can to toe the line, and it likely recognizes that its best shot at survival is to keep its licensees’ entire operations confined within CEZA, hence the technology infrastructure upgrades.
Many CEZA-licensed operators were happy to hold a license in an isolated, largely undeveloped region on the country’s northern shore, but chose to base much of their business process outsourcing (BPO) and live dealer operations in more developed urban areas like Makati.
First Cagayan is hoping that its new strategy will allow it to retain a good portion of its existing licensees, while possibly attracting other operators who couldn’t score a PAGCOR POGO license. Will First Cagayan’s gamble work? Only time – and possibly Duterte – will tell.
