062007: Now, even lowly 'ending' reaps profits for online biz

By Emeterio Sd. Perez

Section Editor

THERE is money in gambling either as operator or provider of support services—so much so that Philweb Corp. is looking at it as a main revenue generator and profit maker. Specifically, the company hopes to cash in on the popularity of a two-number combination game called “ending,” taking the game away from the ordinary man on the street who collects bets from friends and acquaintances in the neighborhood. Though Philweb did not say anything about other companies, if it succeeds in maintaining its newfound profitability, then it could follow the lead of three other listed stocks on how to profit from gambling and pile up retained earnings for distribution as dividend. Philippine Racing Club Inc. (PRCI) and Manila Jockey Club Inc. (MJCI) make money on horses but don’t gamble on them. Instead, the two companies operate racetracks to provide venues for gamblers to bet on their favorite racehorses. Leisure Resorts and Hotels Corp. also generates revenues from gambling. It operates bingo parlors in various malls in Metro Manila. The three companies, which are old hands in games’ operations, have already proven that gambling pays handsome dividends. The proofs are found in their consistent profitability, which enabled them to pile up surpluses or accumulate profits. PRCI reported unappropriated retained earnings of P305,698,395 as of March 31, 2007; MJCI, P517,173,578; and Leisure Resorts, P186,532,079. Of the three, gambling pays more for MJCI, which recorded the biggest profit increase of 874.621 percent in the first quarter ending March 31, 2007, to P34,059,498.98 from P3,494,634.54 last year. Leisure Resorts registered net income of P41,414,011, up 139.462 percent from P17,294,616 in the first quarter of 2006. PRCI, however, made a disappointing financial performance from January to March 2007. Its net profit dropped 28.325 percent to P9,191,914 from P12,824,408 in the same period last year on what it called higher direct cost. Horseracing and bingo parlors are only two of the legalized forms of gambling institutionalized by companies which are so-called public because their shares, being listed on the Philippine Stock Exchange, are freely traded. Sabong  is also legal except when, just like any other kind of game of chance, operated without government permits. And it, along with other games such as “ending,” is among those sanctioned and considered as a potential money earner by the government-owned Philippine Amusement and Gaming Corp. (Pagcor).   Ending game Of most recent vintage for the internet buffs is a game of chance called “ending,” a favorite two-number combination among followers and aficionados of the Filipinos’ favorite sport—basketball—with an added innovation in a three-number combination consisting of “last two digits plus last digit of the highest pointer of the game.” As internet provider and consultant to Pagcor, Philweb also handles the sales and marketing aspect of the two-number combination ending game, launched only in April 2007. As Pagcor consultant, Philweb did not disclose how it would share in the revenues generated from the ending game combination, which can be played through Pagcor’s internet sports betting website called basketballjackpot.net. There really is big money and too much of it in gambling. Philweb told regulators that in operating its internet betting website, Pagcor is going international, targeting to get “a slice of the US$10-billion worldwide sport betting market.” The same filing shows the source of Philweb’s profitability, saying its “current main revenue business consists of nearly 50 ICS (internet casino stations), where one can play poker, blackjack, baccarat and other internet games. The search for profit has prodded Philweb into institutionalizing the “ending” game, as it needs good business or businesses to erase its deficit, which amounted to P818,647,767 in 2005. Then in 2006, it registered its first annual profit of P116,122,523. In the first quarter of 2007, it reported net income of P40,022,512. With its newly acquired profitability, Philweb explained to the Philippine Stock Exchange that this resulted from the “growth in revenue from internet gaming business,” among others.                 Texting service provider In teaming with Pagcor in its internet sports betting operations, Philweb is also tapping Smart Communications, through which one can place his bet through text. The filing did not show the mechanics of the ending game through text but told of an agreement having been finalized with PLDT and Smart. Philweb, understandably, did not have a hard time negotiating with Smart. Its partnership with PLDT began last year when a subsidiary, ePLDT Inc., bought 25.12 billion shares in Philweb Corp. for P502.4 million. As of March 31, 2007, ePLDT owns 33,157,692,308 shares, equivalent to 26.99 percent. Ongpin is Philweb’s biggest stockholder. He directly owns 1,820,000,100 shares, or 1.48 percent, while his companies hold 51,656,283,031 shares, or 42.05 percent.

 

http://www.businessmirror.com.ph/06202007/headlines07.html