Integrated resorts rarely play well online

Online gaming casts an increasingly dark shadow over land-based casinos globally. Sweden will shutter its last brick-and-mortar casino at the end of this year as online gaming dominates the market. Allwyn International is exchanging land-based casinos in Germany and Australia for online gaming assets in Greece and Cyprus.

In April, Las Vegas Sands, the company behind Marina Bay Sands, the world’s most admired integrated resort, withdrew from bidding for a New York land-based licence due to the spectre of iGaming alongside that state’s already formidable online sports betting volumes. MGM Resorts International followed suit this month.

In the Philippines, online gaming is out of the shadows and squarely in the spotlight. With a population of more than 116 million, the Philippines is the world’s largest jurisdiction to have both legal domestic iGaming and multiple billion-dollar integrated resorts. With gross gaming revenue approaching US$6.5 billion last year, the archipelago is now Asia’s second-largest gaming market, between Macau and Singapore. Those factors make the Philippines a living laboratory to observe the impact of online gaming on land-based play and society at large.

In the first half of this year, Philippines online GGR exceeded land-based for the first time, $US2 billion to $1.62 billion. The flip happened sooner than CLSA analyst Amos Ong expected. He forecast calendar year 2026 for online revenue at $3.9 billion to surpass Philippine licenced casinos at US$3.7 billion.

Record-breaking quarter

More specifically, the digital turn came in the second quarter, according to data from Philippine regulator PAGCOR analysed by iGB. Online gaming with livestreamed and digital casino games and slots, sports betting, plus e-games and e-bingo streamed to PAGCOR-licensed retail locations, accounted for 57% of record high quarterly revenue of $1.9 billion.

Overall, Q2 revenue rose 24% from US$1.55 billion last year. Land-based gaming comprised 43% of this year’s Q2 revenue, all but 3% from integrated resorts. Second quarter iGaming revenue of $1.1 billion produced more than $275 million in government revenue.

Compared to last year’s second quarter revenue, online rose 78%, licensees fell 11%, and PAGCOR fell 26%. At current exchange rates, second-quarter online revenue increased $485 million and $209 million from Q1. Licensee revenue fell $94 million year-on-year and $90 quarter-on-quarter. PAGCOR-operated venues’ GGR decreased $19 million and $6 million, respectively.

PAGCOR claims a ban on linking popular ewallets to iGaming accounts in August cut revenue by 50%. That’s likely a temporary stumble in online gaming’s vertiginous climb.

‘Healthy balance’, not competition

“Pagcor recognises land-based and online gambling as two distinct channels that cater to different player preferences, rather than viewing them as competitors,” the regulator writes in response to questions from iGB. “Each channel has unique features, but together they offer players more choice. Both platforms are intended to complement one another and Pagcor remains focused on maintaining this healthy balance.”

Online gaming in the Philippines took off during the Covid pandemic in 2020, with PAGCOR permitting integrated resorts to accept digital wagers from registered customers. That opening evolved into PIGO – Philippine Inland Gaming Operator – licenses for a wider range of enterprises and games.

Despite their head start on licensing, branding and customer data plus a reduced tax rate – currently 25% for online gaming levy versus 30% for others – Philippines IRs have struggled to succeed online. Similarly, in New Jersey, Atlantic City casino brands substantially trail market leading online specialists FanDuel and DraftKings.

First-mover laggards

A Philippines IR executive requesting anonymity confesses, “If we had known the size of the [online] market potential, we would have been more ahead of the curve.”

“The fundamental problem with most land-based casino operators is not a lack of opportunity – it’s a lack of understanding at the top,” EuroPacificAsia Consulting managing partner Shaun McCamley says. “Senior leadership, in many cases, remains either willfully ignorant or grossly underinformed about what it truly takes to succeed in the online gaming space.”

“Land-based operators are often built for hospitality and gaming, not for digital warfare,” Jade Gaming and Entertainment CEO Joe Pisano says. “Competing online means becoming a technology company, not just a casino brand. That requires different talent, mindset, speed and willingness to take calculated risks in a rapidly evolving, highly competitive environment.”

Brave ‘nuanced ecosystem’

Pisano, whose company runs online and retail sports betting in the Philippines, adds, “Success in online requires not just digital investment but also navigating a nuanced ecosystem of policy, culture and consumer behaviour.”

An estimated 75% of Philippine online play is via mobile devices, favoring fast-loading games. Low account deposit and bet minimums attract lower-income players. That’s welcome news to a gaming market hit by the slow recovery of tourism and constraints on VIP play from China’s crackdown on outbound money flows, plus tightened domestic anti-money laundering strictures leading to the Philippines’ removal from the global financial grey list in February. iGaming opens a fresh pool of Philippine players to gaming operators and the government treasury.

“With more dependence on the local market, socially responsible gaming becomes more important than ever in the Philippines,” Spectrum Gaming CEO Frederic Gushin says.

Does not compute

“Many land-based casinos have strong brands, loyal customers and years of valuable data,” marketing specialist Optimove head of APAC Jack Wheeler says. “However, most of them are running on legacy [on-premises data] systems that weren’t built with digital in mind. This makes it extremely challenging to extract and utilise the data effectively across online channels.”

“Land-based operators are hospitality companies with a dependence on tech, while online operators are tech companies with very little, if any, dependency on hospitality,” Wolsten and Associates principal Steve Wolstenholme says. “The core competence required of these companies is quite different, as is the expertise within their leadership teams.”

“Many of the Philippines IRs’ leadership are pure casino executives and very capable, but they are given a loose mandate from a board to ‘take us into online’, with no idea where to start, limited to no budget assigned, and the challenge of taking a share of a customer’s wallet from some very innovative, localised propositions which have developed rapidly in the last couple of years,” adds Kyprock Managing Partner Jonathan Pettemerides.

Nuts and bolts

“You cannot bolt an online product onto an existing land-based structure and expect results,” McCamley says. “Yet time and again, we see operators attempting just that – tasking land-based marketing teams, IT departments or casino GMs with running digital operations they simply don’t understand or grasp. This is particularly evident in the Philippines.”

With decades in land-based casinos and currently CEO of social gaming provider GameWorkz, McCamley adds, “To compete seriously in the online space, you need a dedicated, standalone team led by people with deep, real-world online gaming experience. Until that becomes non-negotiable at the executive level, most digital launches will continue to underperform, bleed budget and fail to capture market share.”

“I’m working with a number of land-based casinos globally that are making the move online,” Optimove’s Wheeler says. “The biggest challenge I see isn’t just the tech; it’s the change management. Getting teams aligned, adapting processes and shifting the mindset from hospitality or in-venue operations to digital engagement is a big piece of the puzzle.”

Hotel Stotsenberg, a PAGCOR licensee in the Clark Free Economic Zone two hours north of Manila, has blazed a trail for IRs to establish online presence through its CasinoPlus platform, and hiring longtime Asia-based digital gaming executive Evan Spytma as CEO. Along with its own brand, CasinoPlus offers B2B services to help rivals go digital. 

“CasinoPlus is proving that an IR can lead the online gaming revolution,” says Spytma, named Outstanding Leader at the 2025 Asia Gaming Awards. “We’re setting the benchmark for how land-based operators can expand their reach, grow their brand and capture the future, which is online.”

First class, third party

“What casino operators need is a great online gaming product,” says Klebanow Consulting principal Andrew Klebanow, a digital initiatives adviser to North American tribal and Asia-based casino operators. “If they do not develop that product internally, then the alternative is to partner with an online provider where the casino has to share their database and a big chunk of their revenue with the online provider.”

“The advantage with a third party is clear: It’s already been done, they have a track record,” Bay City Ventures managing director Joji Kokuryo says. “It’s a good opportunity to look at how it’s done to improve it yourself.” Arguably the most successful US land-based operator online brand, Bet MGM is a joint venture with longtime European digital operator Entain.

Bloomberry, parent of Philippine land-based market leader Solaire, launched MegaFUNalo in June. Operating in addition to conventional iGaming website Solaire Online, MegaFUNalo offers casino games, carnival games, arcade games and movies.

Putting out contracts

“Given that we have no inherent expertise on platform and content development, we have contracted a number of third parties to provide that expertise,” a Bloomberry spokesperson explains. “We have standard revenue/compensation arrangements with these parties appropriate for the industry expertise each brings to the table.”

“Online is an opportunity for us,” Bloomberry COO and President Greg Hawkins told Global Gaming Business Magazine in March. “Turning the business into something that has real impact requires a serious commitment.”

Bloomberry confirms committing at least PHP1 billion ($17.5 million) monthly to market MegaFUNalo. “We can exercise a great amount of flexibility” on that commitment, the spokesperson adds, given the current regulatory climate in the Philippines.

Removing the digital punch bowl?

Explosive growth is sparking calls for Philippines authorities to outlaw online gaming, owing to its social impact. In response, digital and land-based operators have pledged to conduct online gaming responsibly.

Pagcor says it is “conducting continuous review of the regulations for domestic electronic gaming operations”. This year, it has moved to restrict advertising and tightened rules governing PIGOs’ relationships with outside contractors. It also works with law enforcement to shut down unlicensed gaming websites, which licensed operators blame for negative social impacts.

While a long shot, a PIGO ban is not inconceivable, because the Philippines has shut down other lucrative forms of online gaming. In 2022, then President Rodrigo Duterte reversed his year-old decision to legalise eSabong, betting on livestreamed cockfighting. The emergency measure was designed to raise revenue during the Covid pandemic. Later, Duterte said it undermined “our values”.

Last year, President Ferdinand “Bongbong” Marcos Jr outlawed POGOs, Philippine Offshore Gaming Operators targeting players outside the Philippines that drew particular ire from Beijing, since POGOs primarily targeted mainland Chinese players.

POGOs spring into PIGO debate

Barred but not forgotten, POGOs may factor into PIGO deliberations. “Efforts to close down POGOs and the vendors that service POGOs have not been fully successful, as these same vendors have moved on to PIGOs,” says Gushin, a former US gaming regulator who advises multiple Asian jurisdictions.

“Banning legal gambling is a blunt, politically expedient tool that fails in practise,” Jade’s Pisano says. “It undermines good governance, harms compliant businesses and strengthens criminal networks. Government should issue a clear national policy on online gaming – whether through Pagcor or legislation – rather than reacting piecemeal to scandals or media pressure.”

“I feel strongly that the licence to operate online gaming should be restricted to those operating land-based properties,” says Wolstenholme, Okada Manila’s president for its 2016 opening and more recently, president and CEO at Vietnam IR Hoiana. “Land-based operators bring far greater employment opportunities and skill diversity to the host jurisdiction and the social implications are far more transparent and therefore easier to detect and manage.”

“Regulators need to actively guide the transition [for land-based operators online] through flexible frameworks, education and enabling partnerships,” McCamley says. “In markets like the Philippines, the PIGO licence is a start, but its limitations – and the lack of digital know-how among most land-based operators – mean that without regulatory clarity, flexibility and encouragement to work with digital experts, these licences will remain underutilised.”

Former US diplomat and current iGaming Business Asia Editor at Large Muhammad Cohen has covered the casino business in Asia since 2006 for Forbes among others and wrote Hong Kong On Air, a novel set during the 1997 handover about TV news, love, betrayal, high finance and cheap lingerie.

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