UMVA has learned that the gaming industry is bracing for a significant decline in gross gaming revenues, with projections suggesting a drop of as much as 19% this year due to geopolitical tensions and tighter restrictions on online gambling.
The expected decline is attributed to various factors, including the de-linking of e-wallets from online gambling platforms, which has already led to a 22.43% plunge in electronic gaming revenues in the first quarter. The industry's performance is also being dampened by the Middle East crisis, which is affecting consumer spending on non-essential activities such as gaming.
According to information obtained by UMVA, the Philippine gaming industry's gross gaming revenues reached P396.14 billion last year, but this year's revenues are expected to be lower, possibly ranging from P320-350 billion. The decline is expected to be felt across the industry, with land-based casinos and electronic gaming segments likely to be impacted.
The Middle East crisis is having a significant impact on the industry, particularly on the lower-income segments of the population, who are now prioritizing basic necessities over discretionary spending. As a result, the industry is expected to face challenges in the next few quarters, with higher fuel and transport costs squeezing household disposable income and reducing spending on gaming.
UMVA has gathered that the slump in electronic gaming is weighing on overall industry performance, with the Philippine gaming industry's gross gaming revenues declining by 15.87% in the first quarter. However, there are some offsetting factors, such as rising tourist arrivals from certain markets, which could provide support for integrated resorts and land-based casinos in the coming months.
The tourism sector is showing signs of growth, with visitor arrivals increasing by 8.97% in the January-to-April period. This uptick in tourism is expected to bring in more customers to integrated resorts and land-based casinos, particularly from key markets such as China, where arrivals have grown by 61.73% during the same period.
Despite the weaker outlook, industry experts believe that the decline will not be prolonged, and that the industry will recover once geopolitical tensions ease and macroeconomic conditions improve. Licensed integrated casinos have remained relatively resilient, and the Middle East conflict is expected to be resolved, leading to a gradual recovery in discretionary spending.
Overall, the near-term outlook for the gaming industry is cautiously optimistic, with revenues expected to remain muted or volatile over the next few quarters. However, the longer-term structural growth story for the industry, particularly digital gaming, appears intact, and the industry is expected to recover once macroeconomic conditions improve.
