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 station nationwide.

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.

Business Mirror

Thursday, July 27, 2006

‘Mobile gaming’ sweeps RP

SPORTS may soon take a backseat to mobile gaming, the betting-by-texting craze that is sweeping the Philippines and countries on three continents.

Local mobile-phone users already got a taste of the millions they could win from mobile gaming, also known as Text Entertainment Games or E-Games.

The recent “Mano Milyonaryo,” a texting game that capitalized on the Manny Pacquiao-Oscar Larios bout, made an instant millionaire out of a 32-year-old clerk.

Thirteen other lucky winners bagged cash prizes amounting to half a million pesos, making the text game a huge success.

The rising popularity of mobile gaming is no surprise. According to BBC News Online technology editor Alfred Hermida, mobile-phone companies are finding ways to increase their revenues by coming up with E-Games.

Gaming consultant Robert Tercek also said mobile gaming in Asia, Europe and North America is fast becoming a billion-dollar business.

“We’ve seen the first real signs of worldwide marketing opportunity,” Tercek said.

In Japan, mobile gaming is already popular, Hermida reported.

In the Philippines, the entry of new mobile gaming providers into the local market will boost the growth of E-Games. Two of them have been introduced into the Philippines and are fast gaining popularity.

One of them is Spin2Win “Magic 5,” which offers a P3-million jackpot and consolation prizes every week to lucky players. The game is based on five spins of the traditional roulette wheel and one spin of the “money wheel.”

The weekly jackpot prize of P3 million is divided evenly among all players matching the winning five-digit/one-letter combination.

Matching only the five digits, the player still wins P300,000. Match only three digits and the player still wins.

Another popular Spin2Win game is “Lucky Wheel,” which offers thousands of pesos in prizes to lucky winners every hour. The game is based on a single spin of the traditional roulette wheel, and a single spin of the money wheel.

Players younger than 21 years are not allowed to join. Each text costs P10.

As the PBA opens up a new betting game and virtually shutting down the possibility of a PBA endorsed “Ending” game, I’ll share an online-mafia idea few can think of. Few because my idea is absurd?

For years, the PBA stayed away from gambling and betting for obvious reasons. And so hearing (actually, reading) that the PBA and PAGCOR just tangled up for betting game is a surprise.

Yesteryear, I was thinking along the line too of making an online game. The entrepreneur in me gave me the idea of making a social PBA ending, a PBA ending game that can be played wherever you may be in the Philippines. A simple internet connection is needed, available at your nearest internet rentals or in bed using your laptop. (The idea came after I had a blog entry about this sports gambling site.)

But the idea is not possible coz the PBA is aloofly interested in gambling on well, gambling. Because the PBA won’t ever put a stamp on an “ending” game, the only way I could make an online ending game was operate in stealth mode. A project waiting to be grounded in case it took flight? With the chance of being shut down after becoming a hit is not a good business plan.

In fact, I was thinking of it seriously, that I had a chat with a web developer. But I am a netentrepreneur and not a mafia boss, so the IDEA remains to be that, an IDEA.

Continuing with the scheme… How would an online ending game be executed? Online interface only needs simple programming and creativity. Programming side, I’ll pass that up BUT on the creativity avenue, I can do something. A site only needs to have sheets or tabs where players, I mean bettors will place their, ahmm, bets?!

To simplify and for sampling, the site only needs to have 5 tabs for each game. Each tab progresses in jackpot value. Like, Tab 1 – a bet of P10 will net you P800. Tab 2 – A bet of 20, the pot is P1600. Finally, Tab 5 – a bet of P200 will give you a chance of winning P16,000.00. If ever each tabs are filled up and games is still a day (hours even) away, additional tabs will be available. (I wasted 15 minutes of my life just to get the numbers right. God, I will never get that 15 minutes back. And, about 2 hours making this whole thing.)

Bettors only need to load their accounts with bet-loads to be consumed and used at site. They could easily get their winnings or even their remaining loads via online banking to those who have net banking accounts. Via mobile banking using Smart and Globes mechanisms. Or via the old-fashioned, wired payments. Direct encashment from participating enterprises is also possible. Just to be in with the times, texting can be easily integrated with the betting scheme. Power to the Peso!

But wait, there’s more… A user can actually see his game-betting history, his placed bet, his lucky ending combinations, cash-outs, etc. by visiting his user account, aptly named, BetLogs (don’t you love that, the term alone, makes my plan a winner). Nice? Of course, being confidential and that it contain private details, your friend will not be able to access your BetLog. Much love is needed to access the BetLog. A password is needed. Ok?

Some sample predicaments: A. You won P16,000 and you’re checking your BetLog in bed in an air-conditioned room, that’s a Win-Win situation. Right? B. You’ve been placing bet for weeks, not winning even the lowest pot and checking your BetLog at a rented PC, that a loss-loss station. Loss-loss! Got it?

The PBA ending game is a simple one. It would have been easier (and a smashing hit) had the PBA just went the easy way of doing a PBA betting game. Even a fool can understand how “ending” works. Choose a number combo, watch the game (hell, you could even skip this part) or read the newspaper, surf the net and look for the final score. 97 - 85 scores nets a 7-5 “ending”; 80 - 70 final score gives you 0-0, and so on.

In fact, with the Ending Game’s non-complexity, it forced the PBA and PAGCOR to devise a new game to counter the possibility of players, coaches, teams and (most definitely) referees to control the results. PBA’s Hula-Hoops is on a soft launch. Will it ever be on Astig (hard/tough) mode? Soon, we will all find out if the PBA got a winner.

Mobile gaming in na in

Iba’t- ibang bansa na, kabilang ang Pilipinas, ang inaasahang tatangkilik sa mobile gaming—isang makabagong laro sa pama-magitan ng cellular phone at magpapasok ng magan-dang negosyo sa bansa.

Ang Pilipinas, bilang isang competitive country, ay hindi na rin nagpahuli dahil mayroon na rin dito na mobile gaming na lalong kilala sa tawag na Text Entertainment Games o E-Games. Katunayan, naging matagumpay ang inilunsad kamakailan na Text Enter-tainment Games (E-Games) na Mano Milyo-naryo mula sa Pacquiao-Larios fight. Sa pamama-gitan ng pagtaya ng supor-ta sa text, isang sekretarya ang naging instant milyo-narya at labing tatlong lucky texters ang humakot ng pera kalahating milyong piso.

Ngayon ay dalawang makabagong laro muli ang tiyak na tatangkilikin ng mga text addict sa Pinas dahil nasa merkado na ang Spin 2Win "Magic 5" at Spin2Win "Lucky Wheel."

Ang Spin2Win Magic 5 ay isang casino-style na laro kung saan ay ibabase ang resulta mula sa pa-paikuting dalawang roleta na magbibigay ng P 3 milyon jackpot prize kada linggo sa mga lucky tex-ters.

Ang P3 milyong prem-yo ay paghahatian ng mga papalaring mananalo. Sakaling walang makakuha ng premyo, ito ay ida-dagdag sa susunod na draw date.

Samantala ang Spin2 Win Lucky Wheel, sa halip na limang numero ang huhulaan ay isang numero lamang ang tata-yaan at magiging kumbi-nasyon sa isa pang ‘rou-lette wheel kung saan libu-libong cash prizes ang naghihintay sa mga lucky texters.

Abante

By MELVIN G. CALIMAG

In the sleepy fishing town of Sta. Ana, the northernmost municipality in the province of Cagayan, a new kind of IT activity -- something even the whole country has yet to experience -- is emerging: Online gambling.

The Philippines, a deeply conservative Catholic country, is not exactly familiar with online gambling, which is basically casinos and lotteries operated via the Internet. Perhaps, the only idea of Filipinos have of it is the failed and short-lived attempt of a company called Sage to introduce online gambling in the country a few years back.

So far, the closest thing to Internet gambling that Pagcor (Philippine Amusement and Gaming Corporation), the agency that has the sole mandate to operate legalized gambling in the country, has initiated is an online version of the once popular basketball "ending" betting game.

Internet Sports Betting Stations now slowly popping up in many parts of country.

In order to play, a bettor must of legal age and residing in the Philippines. A corresponding prize is given to the player who correctly picks the right number combinations in the final score of a game in the PBA (Philippine Basketball Association) or PBL (Philippine Basketball League).

But unknown to many, there are real online casinos being hosted right on Philippine soil -- but is ironically off-limits to Filipinos.

The online casinos are being "managed" by a Filipino-led company located at the Cagayan Special Economic Zone and Free Port (CSEZFP) in Sta. Ana town where it now operates an online gambling hub.

The company, First Cagayan Leisure and Resort Corporation, has been awarded by the zone’s administrator, the Cagayan Economic Zone Authority (CEZA), with a "master license" to operate "Internet gaming."

This master license allows First Cagayan to issue seven-year licenses to foreign entities to operate online gambling. In a June 2003 interview, Albee Benitez, president of First Cagayan, told Judi Kelly of www.GamblingLicenses.com that the company is allowed to issue as many licenses as possible.

Benitez said the application fee is $ 40,000, with $ 25,000 refundable should the applicant not be successful. "The application fee includes the first year’s annual fee. In the second and subsequent years, annual fees are set at $ 40,000 per annum and includes up to $ 15,000 as an advance against future taxes.

Taxes are set at 2 percent of gross win."

First Cagayan, in its website (http://www.firstcagayan.com), lists 16 foreign corporations that have been given licenses to host their services at the economic zone.

The company’s website also said: "First Cagayan regulates and monitors on behalf of CEZA all operators of Internet gaming in the Zone; it receives, processes, and issues licenses on behalf of CEZA."

Documents provided by CEZA on registered enterprises at the ecozone showed that First Cagayan has an initial capital investment of $ 128,000, with a total of 17 employees. It also listed Bayview Technologies Inc. as a locator with the investment capital of $ 10,000 although the website of First Cagayan classifies the company as its licensee.

According to CEZA, licenses are given only to offshore-based corporations in order not to intrude in the territory of Pagcor which is the only agency allowed to operate games of chance in the country.

This means that players based in other countries are the only ones allowed to access and place bets on the online games hosted at the CSEZFP. "Operators cannot accept bets originating from within the territorial jurisdiction of the Philippines and/or on sporting events held within the country," the website said.

LEGAL BASIS

But how is CEZA able to offer online gambling without infringing the license of Pagcor and encountering the legal roadblocks that have doomed the earlier effort of Sage?

CEZA officials pointed as legal basis a provision of Republic Act 7922, the law that created the special economic zone and which was passed in 1995 with Sen. Juan Ponce Enrile as the main author.

Section 6 (f) of the said law gave the CEZA the right "to operate on its own, either directly or through a subsidiary entity, or license to others, tourism-related activities, including games, amusements, recreational and sports facilities such as horse racing, dog racing, gambling casinos, golf courses, and others, under priorities and standards set by the CEZA."

As early as 1997, legal debates have already been conducted relating to the establishment and operation of casinos within the eco-zone. All of these seemed to have been resolved in favor of the legality of the provision.

And while the law did not specifically cite "Internet gaming" or "online casino" as among those classified as tourism-related activities, the CEZA said it has already resolved this issue through legal discussions, including one it conducted with Pagcor.

Due to this provision, the Cagayan eco-zone is currently the only eco-zone in the country that has the legal capacity to host and issue online gambling license to offshore companies, the CEZA said.

As for First Cagayan Leisure and Resort Corp, the company has hired the services of topnotch gaming lawyers to make sure it is standing on firm ground.

Apart from the resident corporate legal counsel, Katrina Nepomuceno, the company recently appointed Frank Catania, a New Jersey-based gaming lawyer, as its legal consultant.

LUCRATIVE AREA

Online gambling, or what it calls interactive gaming, is a lucrative niche market which the CEZA said it wants to promote as a core business for locators. This strategy is the reason why it crafted the "rules and regulations" and "code of practice" for interactive gaming early on.

The master license it gave to First Cagayan is the first step towards accomplishing that goal, although it is still not clear, as of this writing, whether the company has actually started its operations or has yet to complete its IDC (Internet data center) at the eco-zone.

Rene Nunez, CEO of First Cagayan, said his company is still on the process of putting up its facility and will officially launch the hosting services for online gambling in the next few months.

Nunez initially agreed to grant Infotech an interview to share the company’s plans but changed his mind and requested that the questions be sent instead via e-mail. As of this writing, however, Infotech has not received any reply from the official.

A visit by Infotech at the eco-zone complex in Sta. Ana, Cagayan and interviews conducted with First Cagayan staff confirmed that the company’s full hosting facility has yet to be installed.

But an information posted in its website said the company has partnered with telecommunications companies such as Pacific Century Cyber Works, AsiaNetCom, Teleglobe, and PLDT to offer "high quality, high speed direct Internet connectivity from fractional E-1, E-1 (2Megabits per second), DS3 (45Megabits per second), up to STM-1 (155Megabits per second) at competitive prices."

It also quoted a speech of CEZA administrator Jose Mari Ponce during the 2005 Global Interactive Gaming Summit and Expo held last June in Montreal, Canada who said that First Cagayan "offers state-of-the-art Internet data center facilities in Cagayan and also in Manila providing scalable server hosting services, secured environmental and climate control, and reliable power and backup power supply."

"Together with our partners, First Cagayan has access to the most diversely-routed, highest-capacity IP backbone in the Asia-Pacific region, with direct connectivity to the US and Europe," Ponce was also quoted as saying.

Whether the facility is ready or not seems immaterial at this point for offshore operators as long as they have their "interactive gaming license." One such recipient, Zipang Group, proudly features in its website (http://www.zipangcasino.com) a PDF version of the certificate issued by First Cagayan in behalf of CEZA.

AIR OF CAUTION

While CEZA, and consequently First Cagayan as the master licensor, appear to have the necessary legal foundation to issue licenses for offshore-based online gambling operators, a prominent Internet lawyer said the CEZA should exercise diligence in giving out licenses as these may be exploited by unscrupulous entities.

"The Philippine government, through CEZA, may unwittingly give these companies the legitimacy to operate legally," said Jesus "JJ" Disini, president of the Internet and Society Program of the UP College of Law.

Disini, who is also the author of the implementing rules and regulations of the E-Commerce Law, said it is the Philippines who would be put on the spot should an operator commit any shenanigans since its certificate was issued by the Philippine government.

In the website of First Cagayan, it said that although offshore operators are "required to domicile themselves" in the Philippines, eco-zone rules do not require them to incorporate a Philippine company.

"They only need an interactive gaming license and register as CSEZFP enterprise with the CEZA."

However, Disini said there seems to be no problem in allowing offshore-based online gambling firms to host their services here as long as they do not offer the games to the local population.

"It’s just like multinational companies hosting their back-up data in IDCs located here in Metro Manila or e-commerce websites being hosted here but whose clients are transacting abroad," he said.

In the same interview with www.GamblingLicenses.com, First Cagayan’s Benitez said the company has instituted strict rules before an operator is given a license.

"Firstly, a license will not be issued until the operator’s software has been tested and certified by a recognized testing agency. We have put in place a comprehensive reporting system along with stringent security measures that ensure the operation and its software are fair and remain accountable," he stated.

With regard to measures that would ensure players would be paid with their winnings, Benitez said operators would be required to maintain sufficient funds in a bank account to meet player winnings.

"These funds will be monitored by the regulator. In the event of a dispute, the regulator will arbitratein all cases. There are severe penalties involved for operators that do not comply with our code of practice," he added.

The Philippine Amusement and Gaming Corporation (PAGCOR) board of directors has approved a memorandum of agreement with tech firm PhilWeb Corporation for the operation of Pagcor?s Internet casinos.

"With this latest Pagcor approval, Philweb has now been appointed by Pagcor as its service provider for two major Internet gaming projects: Internet sports betting and Internet casinos," said Philweb corporate information officer Josephine Manalo in a disclosure to the Philippine Stock Exchange.

Philweb had earlier sold R104.49 million worth of its shares to a Hong Kong fund manager through a private placement to raise funds for its Internet gaming operations.

The private placement to Timford Investment Limited consists of a primary issue of 8.04 billion Philweb shares at R0.013 per share.

Timford Investment is an affiliate company of Yu Ming Investment Management Limited, one of the leading fund managers in Hong Kong.

"Philweb will utilize the proceeds to fund its Internet Sports Betting project with PAGCOR. Pagcor is launching the Internet sports betting project this month," Philweb said.

The firm recently announced its partnership with Pagcor in a bid to tap into the $10 billion Internet sports betting industry.

Philweb had previously signed a memorandum of agreement with Pagcor for Philweb to provide Pagcor with technical consultancy and services related to Internet sports betting.

Pagcor will be launching its Internet sports betting website called Basketballjackpot.net with the objective of getting a slice of the $10 billion worldwide sports betting market.

If you haven''t heard of people betting for the last 2 digits in a basketball game, then let me give you a crash course on luck betting-or betting where your gut tells you to.

Let''s say for example, the Lakers are playing the Kings-no big deal, just a regular season game with nothing on the line. You want o make it more exciting. So you and a bunch of pals get together and start betting who''ll win. The odds here are simple-it''s either one or the other.

But you want to make it more exciting.

You guys start betting that one team will beat the other by two points, or you bet the other will lose by a big margin, etc. The odds of that are much higher (unless you actually went to L.A. and paid off Kobe and Shaq to lose by two, which is highly unlikely). With this in mind, the odds get higher and higher until it’s almost impossible to win. And if you get more guys into the betting pool, whenever the no one wins the pot, the money gets higher and higher.

So to make things a little fairer and easier, each of you get to bet the last two digits of the game, doesn’t matter who wins. There are only a limited number of combinations, so if there are enough of you, someone is bound to win. So if the game ends 76 – 72, and you bet 6 – 2 as your last digits, you win the pot. Plain and simple.

Basketballjackpot lets you continue that betting tradition by giving you the chance to do some betting of your own! Just like you and your buddies, you can bet against players from the Philippines or even players from abroad. And there are more games available! Aside from the 2-digit ending format, there’s the 8 digit and 3 digit betting. You can even place bets via SMS!

You have to register first though because after all, you have to be above 18 to gamble, and once done you can start betting away. Once you have made a bet, it is considered final. Confirmed bet’s cannot be altered or cancelled. So be sure of your bet before you place them!

Winners are not notified personally so you have to check on the site or by newspaper if you won. If in case your are lucky enough, then you may claim your prize at any accredited PAGCOR thing… unfortunately they get a tax cut out of your winnings though.

Yehey!