Recently, market news reported that the Philippines' leading online gaming operator, DigiPlus Interactive Corp. (PLUS), is in negotiations with MGM's Melco Resorts & Entertainment to acquire its shares in the City of Dreams Manila integrated resort. The resort is currently co-operated by Melco and SM Group affiliate Belle Corp., with each holding a 50% stake.
DigiPlus operates multiple digital entertainment brands including BingoPlus, ArenaPlus, and GameZone, and is a significant player in the Philippine online gaming market. The background of this acquisition negotiation is seen by the industry as a strategic move to seek business structure optimization and tax rate adjustment.
It is understood that the current applicable tax rate for pure online gaming companies in the Philippines is about 30%, while transforming into an integrated resort (IR) operating model could reduce the tax rate to about 21%. This 9 percentage point difference is a key driver for DigiPlus to venture into physical gaming assets. If the transaction is completed, DigiPlus could significantly reduce its tax burden while retaining its online licenses.
On the other hand, Melco Resorts has been investing in the City of Dreams project since 2009, with a total investment of approximately $2.4 billion. However, continuous losses and debt pressure have forced it to consider divesting some assets. For DigiPlus, this acquisition could also alleviate the recent revenue pressure caused by the Philippine government's enhanced regulation of e-wallets and gambling advertising.
DigiPlus recently issued a statement saying that the company continues to evaluate various strategic opportunities to expand its digital asset portfolio, but no binding agreements have been reached, nor has a specific timetable been set.
Analysts believe that if DigiPlus successfully ventures into the offline integrated resort business, it could trigger structural changes in the Philippine gaming industry, affecting the future market competition landscape. This potential transaction is still in the negotiation stage, and further developments are worth watching.
