Leisure and Resorts World Corp. (LRWC) is a listed company. Even if it claims that 774.525 million shares, or 64.55 percent, of its outstanding capital stock is owned by the public, this huge percentage does not necessarily make it public.
For instance, the 64.55-percent holdings do not give the public control of the 11-person board. As a matter of fact, they don’t even have a nominee to report to them anything happening inside LWRC’s boardroom.
Because it is engaged in gambling, LRWC is among the country’s heavily taxed companies. It paid P10.837 billion in franchise fees and taxes from 2011 to the first three quarters of 2015. The amount should worry taxpayers if all of it has been put to good use by the national leadership.
How did LWRC, a listed company with less than P2 billion capital, would be paying an average of more than P2 billion a year in franchise fees and taxes?
The answers are found in the annual financial filings that LWRC posted on the PSE website. The company’s consolidated annual financial statements audited by SGV & Co. showed the following revenues: P6.58 billion in 2014, P5.061 billion in 2013, P4.533 billion in 2012, and P3.985 billion in 2011 or a total of P20.159 billion. The same filings showed the following franchise fees under “cost and operating expenses”: P2.748 billion in 2014, P2.026 billion in 2013, P1.725 billion in 2012, and P1.32 billion in 2011 or a total of P7.819 billion. It also reported additional “taxes and licenses” of P104.072 million in 2011 to 2014.
Based on unaudited financial filing, LWRC generated P6.583 billion in revenues and paid P2.866 billion in franchise fees and taxes in the first nine months of 2015. In addition, it reported P48.193 million under cost and operating expenses “taxes and licenses.”
The close to P11-billion government take from the gambling revenues of Leisure and Resorts World is only one of a number of items under the company’s “cost and operating expenses.” After it is an entry called “payouts – traditional bingo” amounting to P1.142 billion, which represented the winners’ take from their bets totaling P1.581 billion. The difference of P439 million went to LWRC, which, in turn, financed part of the government’s gambling collections.
Gaming vs gambling
Leisure and Resorts World and its owners may not agree with Due Diligencer on the use of “gambling” instead of “gaming.” There may be no difference at all between the two words but the use of “gambling” would be more appropriate. Whether traditional or electronic, bingo being a game of chance is gambling.
For the regulators, gaming is simply legalized gambling. This is the reason why the term would not apply to “jueteng” that, being illegal, is gambling. Has it been legalized, it could have been categorized as gaming and, as such, it could fattened even more the government coffers.
What a loss in great revenue opportunity from gambling money for the government!
Anyway, what the public probably would miss from LWRC’s financial filings is the revenues from electronic bingo. The company only reported “electronic bingo – net” under “revenues.” This probably means P2.634 billion represents LWRC’s winnings. Is detailing the revenues from electronic bingo not possible when LWRC has been religiously disclosing its earnings from traditional bingo?
By failing to make public its revenues from electronic bingo, Leisure and Resorts World could unknowingly be exposing itself to suspicion that it draws from the electronic bingo revenue the grease money or bribes to satisfy the cravings of the most corrupt among government men.
Footnotes not enough
Leisure and Resorts World is correct in leading the readers of its financial reports to the footnotes to accounting entries that include revenues. This is not enough, however, to explain some missing numbers. What are needed are the amounts on which is based the litany of percentages in the explanatory footnotes. The public investors may be well-educated on computations using the four mathematical operations, but may be able to find the answer or answers only when the source numbers are known.
The footnotes show only the percentages of the government’s share from the LWRC’s gaming revenues, which, by the way, come from eight subsidiaries. One of these units is AB Leisure Exponent Inc. (ABLE), which, together with its own subsidiaries, was granted by the government-owned Philippine Amusement and Gaming Operations “the sole authority to operate and conduct traditional bingo games…” It also holds a similar franchise to “conduct electronic bingo games.”
In return for its franchise, ABLE pays the government, through Pagcor, certain percentages of its revenues ranging from 15 percent to 50 percent. In addition, five percent of the revenues goes to the Bureau of Internal revenue. These percentages may make gaming a risky but, at the same time, profitable venture. Leisure and Resorts World has proven this.
Despite the impositions of Pagcor and BIR, Leisure and Resorts World reported net profits of P934.087 million in 2014, which was more than double its net income of P423.945 million in 2013. In 2012, its profits totaled P347.523 million. Again, the numbers which suggest the profitability of gambling in the Philippines may be the reason why the government and public officials do not worry at all about gambling, be it legal or illegal like “jueteng.”